Fdi by a foreign national in real estate
This query is : Open
01 March 2012
Dear All,
Good Afternoon,
1. Can a foreign national be appointed as a director in a property related company?
2. Whether LLP can become a shareholder of the above mentioned property related company? where the foreign national is holding majority of shares in LLP
Please advice
Good Afternoon,
1. Can a foreign national be appointed as a director in a property related company?
2. Whether LLP can become a shareholder of the above mentioned property related company? where the foreign national is holding majority of shares in LLP
Please advice
01 March 2012
Hi
I think, review of FDI policy to allow FDI in LLPs is under consideration of the Government.
I think, review of FDI policy to allow FDI in LLPs is under consideration of the Government.
01 March 2012
Hi
Yes their is no restriction on appointment of foreign nation as director.
Yes their is no restriction on appointment of foreign nation as director.
01 March 2012
There is no restriction for a foreign national to become a director in a company where main object is dealing with property related issues.
thanks,
thanks,
01 March 2012
DCA Circular dated 16-2-1995 clarifies that there can not be any restriction for incorporation of a company whether all the subscriber to the MOA/AOA/ proposed directors are residing abroad, being either foreign nationals, or NRI subject to the approval of RBI, where necessary.
The RBI may issue such a general permission also under FEMA, 1999 also. The FEMA(Permissible Capital Account Transactions) Regulations, 2000 allow persons resident outside India to invest in an issue of security by body corporate or an entity in India.
The RBI may issue such a general permission also under FEMA, 1999 also. The FEMA(Permissible Capital Account Transactions) Regulations, 2000 allow persons resident outside India to invest in an issue of security by body corporate or an entity in India.
01 March 2012
Mr. Siddhartha and Mr. Ajay, thanks for your reply on my query.
Can you clarify on the below relating to FDI in LLP?
FDI in Limited Liability Partnerships (LLPs): FDI in LLPs is permitted,
subject to the following conditions:
(a) FDI in LLPs will be allowed, through the Government approval route, only for
LLPs operating in sectors/activities where 100% FDI is allowed, through the
automatic route and there are no FDI-linked performance related conditions (such
as 'Non Banking Finance Companies' or 'Development of Townships, Housing,
Built-up infrastructure and Construction-development projects' etc.).
(b) LLPs with FDI will not be allowed to operate in agricultural/plantation activity,
print media or real estate business.
(c) An Indian company, having FDI, will be permitted to make downstream
investment in an LLP only if both-the company, as well as the LLP- are operating
in sectors where 100% FDI is allowed, through the automatic route and there are
no FDI-linked performance related conditions.
(d) LLPs with FDI will not be eligible to make any downstream investments.
(e) Foreign Capital participation in the capital structure of LLPs will be allowed only
by way of cash consideration, received by inward remittance, through normal
banking channels or by debit to NRE/FCNR account of the person concerned,
maintained with an authorized dealer/authorized bank.
(f) Investment in LLPs by Foreign Institutional Investors (FIls) and Foreign Venture
Capital Investors (FVCIs) will not be permitted. LLPs will also not be permitted
to avail External Commercial Borrowings (ECBs).
(g) In case the LLP with FDI has a body corporate that is a designated partner or
nominates an individual to act as a designated partner in accordance with the
provisions of Section 7 of the LLP Act, 2008, such a body corporate should only
be a company registered in India under the Companies Act, 1956 and not any
other body, such as an LLP or a trust.
(h) For such LLPs, the designated partner "resident in India", as defined under the
'Explanation'to Section 7(1) of the LLP Act, 2008, would also have to satisfy the
definition of "person resident in India", as prescribed under Section 2(v)(i) of the
Foreign Exchange Management Act, 1999.
(i) The designated partners will be responsible for compliance with all the above
conditions and also liable for all penalties imposed on the LLP for their
contravention, if any.
(j) Conversion of a company with FDI, into an LLP, will be allowed only if the
above stipulations are met and with the prior approval of FIPB/Govemment.
(C) Renumbering of the present paragraph 3.3.5, as paragraph 3.3.6: The present
paragraph 3.3.5 is renumbered as paragraph 3.3.6, to read as below:
"3.3.6 FDI in other Entities: FDI in resident entities, other than those mentioned
above, is not permitted."
3.0 The above decision will take immediate effect.
4.0 The above provisions will be incorporated in the next Circular on Consolidated FDI
Policy to be issued on 30.09.2011.
I have found the above notification relating to LLP pertaining to FDI and below is the subject of its notification.
Subject: Review of the policy on Foreign Direct Investment- Allowing FDI in Limited
Liability Partnership firms-amendment to paragraphs 2.1, 3.3.5 and 3.3.6 of
'Circular I of 2011-Consolidated FDI Policy'
Can you clarify on the below relating to FDI in LLP?
FDI in Limited Liability Partnerships (LLPs): FDI in LLPs is permitted,
subject to the following conditions:
(a) FDI in LLPs will be allowed, through the Government approval route, only for
LLPs operating in sectors/activities where 100% FDI is allowed, through the
automatic route and there are no FDI-linked performance related conditions (such
as 'Non Banking Finance Companies' or 'Development of Townships, Housing,
Built-up infrastructure and Construction-development projects' etc.).
(b) LLPs with FDI will not be allowed to operate in agricultural/plantation activity,
print media or real estate business.
(c) An Indian company, having FDI, will be permitted to make downstream
investment in an LLP only if both-the company, as well as the LLP- are operating
in sectors where 100% FDI is allowed, through the automatic route and there are
no FDI-linked performance related conditions.
(d) LLPs with FDI will not be eligible to make any downstream investments.
(e) Foreign Capital participation in the capital structure of LLPs will be allowed only
by way of cash consideration, received by inward remittance, through normal
banking channels or by debit to NRE/FCNR account of the person concerned,
maintained with an authorized dealer/authorized bank.
(f) Investment in LLPs by Foreign Institutional Investors (FIls) and Foreign Venture
Capital Investors (FVCIs) will not be permitted. LLPs will also not be permitted
to avail External Commercial Borrowings (ECBs).
(g) In case the LLP with FDI has a body corporate that is a designated partner or
nominates an individual to act as a designated partner in accordance with the
provisions of Section 7 of the LLP Act, 2008, such a body corporate should only
be a company registered in India under the Companies Act, 1956 and not any
other body, such as an LLP or a trust.
(h) For such LLPs, the designated partner "resident in India", as defined under the
'Explanation'to Section 7(1) of the LLP Act, 2008, would also have to satisfy the
definition of "person resident in India", as prescribed under Section 2(v)(i) of the
Foreign Exchange Management Act, 1999.
(i) The designated partners will be responsible for compliance with all the above
conditions and also liable for all penalties imposed on the LLP for their
contravention, if any.
(j) Conversion of a company with FDI, into an LLP, will be allowed only if the
above stipulations are met and with the prior approval of FIPB/Govemment.
(C) Renumbering of the present paragraph 3.3.5, as paragraph 3.3.6: The present
paragraph 3.3.5 is renumbered as paragraph 3.3.6, to read as below:
"3.3.6 FDI in other Entities: FDI in resident entities, other than those mentioned
above, is not permitted."
3.0 The above decision will take immediate effect.
4.0 The above provisions will be incorporated in the next Circular on Consolidated FDI
Policy to be issued on 30.09.2011.
I have found the above notification relating to LLP pertaining to FDI and below is the subject of its notification.
Subject: Review of the policy on Foreign Direct Investment- Allowing FDI in Limited
Liability Partnership firms-amendment to paragraphs 2.1, 3.3.5 and 3.3.6 of
'Circular I of 2011-Consolidated FDI Policy'
01 March 2012
Hi
Prohibition on investment in India
(i) Foreign investment in any form is prohibited in a company or a partnership
firm or a proprietary concern or any entity, whether incorporated or not
Website :www.fema.rbi.org.in 3 Email : fedcofid@rb i.org.in (such as, Trusts) which is engaged or proposes to engage in the following activities2:
(a) Business of chit fund, or
(b) Nidhi company, or
(c) Agricultural or plantation activities, or
(d) Real estate business, or construction of farm houses, or
(e) Trading in Transferable Development Rights (TDRs).
(ii) It is clarified that “real estate business” does not include development of
townships, construction of residential / commercial premises, roads or bridges, educational institutions, recreational facilities, city and regional level infrastructure, townships. It is further clarified that partnership firms
/proprietorship concerns having investments as per FEMA regulations are not allowed to engage in print media sector.
Prohibition on investment in India
(i) Foreign investment in any form is prohibited in a company or a partnership
firm or a proprietary concern or any entity, whether incorporated or not
Website :www.fema.rbi.org.in 3 Email : fedcofid@rb i.org.in (such as, Trusts) which is engaged or proposes to engage in the following activities2:
(a) Business of chit fund, or
(b) Nidhi company, or
(c) Agricultural or plantation activities, or
(d) Real estate business, or construction of farm houses, or
(e) Trading in Transferable Development Rights (TDRs).
(ii) It is clarified that “real estate business” does not include development of
townships, construction of residential / commercial premises, roads or bridges, educational institutions, recreational facilities, city and regional level infrastructure, townships. It is further clarified that partnership firms
/proprietorship concerns having investments as per FEMA regulations are not allowed to engage in print media sector.
01 March 2012
But the real estate business is till the extent specified in Notification No. FEMA 136/2005-RB dated July 19, 2005
Which aims at large scale and not for small pvt ltd company
Which aims at large scale and not for small pvt ltd company
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