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NRI Investment in Private Limited Company – NRI stands for Non-Resident Indians. As per FEMA Act, 1999 Non-resident Indians are classified into two categories which are as below:
Since India is developing a country and having booming economy attracts the NRI’s and Foreigners to invest in India. Many relaxations of regulatory regimes have encouraged NRIs to enter into Indian Market. With faster, simplified procedures and electronic submission of documents, NRIs are finding it convenient to start businesses in India. Private Limited Company is a popular mode for the NRI or Foreign Investors to start on with business in India. Compliances of a private limited company are much simpler compared to that of a Public limited company.
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NRI’s are permitted to subscribe to the Memorandum and Articles of Association and to take up the shares of Indian companies for their incorporation. NRI can start a business type of private limited company or limited liability of the company. Investment in private homes under the automatic route. NRI can invest in a business only who have limited company.
Investment in shares and debentures by non-residents in Indian companies are as a foreign direct investment and regulated by the reserve bank of India. NRI are allowed to invest in accordance with the policy laid down by the RBI. The following are the conditions to be followed by the NRI while purchasing share/equity/stock/preference shares/convertible debentures.
Such transfer shall be in accordance with the RBI guidelines. The RBI permission is required for such transfer. It can also be done by way of gift to a resident in India.
This needs prior permission from the Reserve Bank of India as the shares are being transferred to a person resident outside India to a person resident in India.
The Reserve Bank of India has given permission to carry forward this transfer of shares of a Company from one NRI to another NRI/PIO.
In India, a Private limited company is a most popular mode of investment by NRI. Non-Resident Indians can make direct investment in Private Limited Company. The compliance provision and incorporation procedure are simple. India has diverse nature and huge population which gives the large market to investors.
Also Read: An overview of the NRI Portfolio Investment Scheme
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