📌 There are two ways to Purchase of Shares by NRI / OCI & Foreigner in Indian Companies -
I) Automatic Route (no prior permission required) -
The companies operating in most of sectors or activities as specified in the Regulation 16 of FEMA 20 (R) are eligible for FDI through the automatic route. Under FEMA regulations, an Indian Company can issue shares under the automatic route to a person resident outside India except in bordering countries.
II) Approval Route (prior permission required) -
The sectors or activities not covered under the automatic route requires prior approval of the Government of India. Procedure for applying for Government approval is given at fifp.gov.in/Forms/SOP.pdf. For any questions or support, please email to: ask@fema.in
📌 Payment for Share Issued to NRI / OCI or Foreigner:
The most preferred way is the inward remittance through normal banking channel. Please, note NRO (or NRE) bank account can't be used for this purpose.
📌 RBI Compliance Filing for Issue and Purchase of Shares by NRI / OCI & Foreigner in Indian Companies.
There are only 3 compliance filings.
1) For foreign investment made by NRI / OCI and foreigner on a repatriable or non-repatriable basis, a report is to be filed with the Regional Office of the RBI within 30 days from the date of receipt of the amount by AD Category-1 bank.
2) FC-GPR for the acquisition of right shares and bonus shares.
3) FLA annual return at RBI operated FLAIR portal by the company before 15th July every year. To learn about it, please visit to: https://flair.rbi.ozg.in
📌 Board Resolution Sample for Issue of Shares to NRI / OCI & Foreigner in Indian Companies -
RESOLVED that subject to the terms and conditions specified from time to time by the Reserve Bank of India and/or Central Government under the Foreign Exchange Management Act, 1999 and subject to such other approvals, permission and sanctions as may be considered necessary and subject to the applicable provisions, if any, of the Companies Act, 2013, and subject to such conditions as may be prescribed by any of the authorities while granting such approvals/permissions/sanctions, and further subject to the approval of the Company at a General Meeting the Board of Directors of the Company be and is hereby authorised to allow Foreign Institutional Investors (FIIs), Non-Resident Indians (NRIs), and Overseas Citizens of India (OCIs) to acquire shares/debentures of the Company through direct subscription or thorugh stock exchanges in India under Portfolio Investment Scheme, and/or in accordance with other permissible modes.
RESOLVED FURTHER that the Board of Directors of the Company be and is hereby authorised to do all such acts, deeds, matters and things and to execute such documents or writings as may be necessary, proper or expedient for the purpose of giving effect to this resolution and for matters connected therewith or incidental or ancillary thereto.
RESOLVED FURTHER that the Company Secretary be directed to convene an Extraordinary General Meeting for this purpose and issue the notices with the relevant explanatory statement as per drafts placed before the meeting and approved.
📌 To get consultation on your case, please book a tele-appointment with Ozg Lawyers or please write an email to: ask@fema.in
Ozg Lawyers: FEMA Advisory
