CONDITIONS FOR INVESTMENT OTHER THAN ROUTE AND CAPS

1)    Entry to the investment can be through automatic route or Government route.  Apart  from  this  conditions, the new Policy  require  some  entry  condition like   norms  for  minimum  capitalization,  Lock and period  etc  apart  from  other  condition like to comply with all  relevant  sectoral  laws  regulation,  rules  security  condition  and state / local / laws  and regulations in India.

2)    Foreign  investment into an Indian  company  which is  engaged is the activity  of investing  in capital  of other company/companies / LLP,  will require  prior government / FIPB  approved,  regardless of the amount  or extent of foreign  investment.

3)    Those companies which are core investment companies will have to follow RBI’s Regulatory framework too.It is to be noted that Foreign Investment into other Indian Companies /LLPs would be in accordance / compliance  with the relevant  sectoral conditions on  entry route, conditionalIties  and  caps. 

CONDITIONS TO BE FULFILLED IN DOWN STREAM INVESTMENTS

The  eligible  Indian entities / LLPs need  to notify  SIA, DIPP  and FIPB  of its  downstream  investment  along  with other requirements like  the  resolution of Board of directors, issue / transfer / pricing / valuation of capital  shall be in accordance  with applicable SEBI/RBI guidelines, have to bring  the  fund from abroad and not the leverage find from the domestic market.  This does not preclude down streams companies / LLPs from raising debt in the domestic market, eternal accruals. 

—The author is Founding and Managing Partner of Anand Law Practice. He can be reached at KamalKAnand@yahoo.com, kkanand_6@yahoo.co.in