New Rules Define Non-Business Connection for Foreign Investment Funds: Key Conditions and Exceptions Explained
The statutory provisions outline conditions under which certain activities do not establish a business connection in India for eligible investment funds. These funds must be established outside India, have minimal Indian participation, adhere to investor protection regulations, and meet specific membership and investment criteria. Key conditions include limiting Indian investment to 5% of the fund's corpus, having at least 25 members, and ensuring no single member holds more than 10% interest. The fund should not manage business in India and must pay a minimum remuneration to its fund manager. Exceptions apply to government or sovereign funds, and the Central Government can modify conditions for funds in International Financial Services Centres.
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