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Generally, when an investment comes in foreign currency:
Step 1: Bank will issue FIRC (Foreign Inward Remittance Certificate) and KYC (Know your customer) of the investor.
Step 2: File form FC-GPR according to FEMA compliances.
In your case, since funds are transferred from NRO account then FIRC and KYC cannot be issued...
Wazzeer Professional Network
ProfessionalOne of my NRI friends wants to invest in my company through his NRO Account. Do FEMA rules still apply in this case?
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Wazzeer Professional Network
ProfessionalGenerally, when an investment comes in foreign currency:
Step 1: Bank will issue FIRC (Foreign Inward Remittance Certificate) and KYC (Know your customer) of the investor.
Step 2: File form FC-GPR according to FEMA compliances.
In your case, since funds are transferred from NRO account then FIRC and KYC cannot be issued by the banks since the funds come in Indian rupees and not foreign currency. Without FIRC and KYC we cannot file form FC-GPR. We can Inform MCA with the shareholding pattern every year. When the MCA finds out that there is a foreign investment it may intimate RBI which will, in turn, take action against the company for not following FEMA compliances. However RBI has relaxed this FEMA compliance in case the investors are either NRI (Non-Resident Indians), PIO (Persons of Indian Origin) or OCI (Overseas Citizens of India) and the funds are invested on the non-repatriable basis
almost 3 years ago
View answer
One of my NRI friends wants to invest in my company through his NRO Account. Do FEMA rules still apply in this case?
-
Wazzeer Professional Network
ProfessionalGenerally, when an investment comes in foreign currency:
Step 1: Bank will issue FIRC (Foreign Inward Remittance Certificate) and KYC (Know your customer) of the investor.
Step 2: File form FC-GPR according to FEMA compliances.
In your case, since funds are transferred from NRO account then FIRC and KYC cannot be issued by the banks since the funds come in Indian rupees and not foreign currency. Without FIRC and KYC we cannot file form FC-GPR. We can Inform MCA with the shareholding pattern every year. When the MCA finds out that there is a foreign investment it may intimate RBI which will, in turn, take action against the company for not following FEMA compliances. However RBI has relaxed this FEMA compliance in case the investors are either NRI (Non-Resident Indians), PIO (Persons of Indian Origin) or OCI (Overseas Citizens of India) and the funds are invested on the non-repatriable basis
almost 3 years ago
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