Foreign Direct Investment : Facts

At last segment, we discuss about the person or entities who can invest in india. Today, in my article we will elaborate about Foreign Venture Capital Investor. How can they invest and what is the criteria

HOW CAN FOREIGN VENTURE CAPITAL INVESTOR (FVCI) INVEST IN INDIA

Foreign Venture Capital Investor (FVCI) means an investor incorporated and established outside India, which is registered under the SEBI (Foreign Venture Capital Investor) Regulations, 2000 {SEBI(FVCI) Regulations} and proposes to make investment in accordance with these Regulations

1. A SEBI registered FVCI may contribute up to 100% of the capital of an Indian company engaged in any activity mentioned in Schedule 6 of Notification No. FEMA 20/2000, including startups irrespective of the sector in which it is engaged, under the automatic route.

2. A SEBI registered FVCI can invest in a domestic venture capital fund registered under the SEBI (Venture Capital Fund) Regulations, 1996 or a Category- I Alternative Investment Fund registered under the SEBI

(Alternative Investment Fund) Regulations, 2012. Such investments shall also be subject to the extant FEMA regulations and extant FDI policy including sectoral caps, etc.

3. The investment can be made in equities or equity linked instruments or debt instruments issued by the company (including start-ups and if a startup is organised as a partnership firm or an LLP, the investment can be made in the capital or through any profit-sharing arrangement) or units issued by a VCF or by a Category-I AIF either through purchase by private arrangement either from the issuer of the security or from any other person holding the security or on a recognised stock exchange.

4. It may also set up a domestic asset management company to manage its investments. SEBI registered FVCIs are also allowed to invest under the FDI Scheme, as non-resident entities, in other companies, subject to FDI Policy and FEMA regulations.

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CA Sanskriti Jain
Mb. No- 8745961214
Email Id- [email protected]