Ad Free CAclubindia and Daily Updates on your Mobile. Subscribe Now!

Investment by HUF

Shridhi Jain (Company Secretary) (1678 Points)

09 May 2011

Dear members,

I have a query and its urgent.

In FEMA, its regarding FDI abroad by Indian residents.

There are rules n regulation regarding investment by Indian co., Indian Partnership firm, Indian individuals etc. but nothing is mentioned about the FDI abroad by HUF.

Kindly tell me whether HUF can invest abroad ? What are the rules and regulations for that ? Can a HUF invest in foreign company abroad (purchasing shares)?

Kindly tell me.....Its a bit urgent.

Thanks in advance....

Reply
Follow
Share

6 Replies

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 09 May 2011

through recognized stock exchange its ranked at par as individual.

Upgrade to CAclubindia Pro. Subscribe Now!

Shridhi Jain (Company Secretary) (1678 Points)
Replied 09 May 2011

Thanks sir for replying.

Kindly explain in detail. (or pls tell me where is it mentioned that HUF is at par with Individual)

HUF is planning to invest in the foreign company in Singapore (by purchasing its shares).

Can u pls elaborate on this?

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 09 May 2011

The Foreign Exchange Management Act, 1999

An Act to consolidate and amend the law relating to foreign exchange with the objective of facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange market in India.

BE it enacted by Parliament in the Fiftieth Year of the Republic of India as follows –

................

2-	In this Act, unless the context otherwise requires,

(u)	"person" includes –

			(i)	an individual,
			(ii)	a Hindu undivided family,

			(iii)	a company,
			(iv)	a firm,

			(v)	an association of persons or a body of individuals, whether incorporated or not,
			(vi)	every artificial juridical person, not falling within any of the preceding sub-clauses, and
			(vii)	any agency, office or branch owned or controlled by such person;

		(v)	"person resident in India" means- (i) a person residing in India for more than one hundred and eighty-two days during the course of the preceding financial year but does not include –

(A)

a person who has gone out of India or who stays outside India, in either case –

		(a)	for or on taking up employment outside India, or
		(b)	for carrying on outside India a business or vocation outside India, or
		(c)	for any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period;

(B)

a person who has come to or stays in India, in either case, otherwise than –

		(a)	for or on taking up employment in India, or
		(b)	for carrying on in India a business or vocation in India, or

(c)

(i)

for any other purpose, in such circumstances as would indicate his intention to stay in India for an uncertain period;

(ii)

any person or body corporate registered or incorporated in India,

(iii)

an office, branch or agency in India owned or controlled by a person resident outside India,

(iv)

an office, branch or agency outside India owned or controlled by a person resident in India;

source:https://www.netlawman.co.in/acts/foreign-exchange-management-act-1999.php

Shridhi Jain (Company Secretary) (1678 Points)
Replied 09 May 2011

Sir,

Here you have given the definition of 'PERSON' but where is it mentioned that the rules applicable to Individual will also be applicable to HUF (in case of foreign investment) ?

Is it mentioned anywhere expressly or it will be taken as implied ?