FDI by a USA Citizen

[RAJEEV JAIN]

Dear all,

Please throw some light on whether a person (being a USA resident and citizen) can hold shares in his own name if he transfers funds from his company in which he is a shareholder and Director in USA?

For Eg. Mr A wants to be a shareholder in ABC Ltd in India but wants to transfer funds to ABC ltd from XYZ Inc. USA and become shareholder of ABC Ltd himself. Mr. A is not bringing funds from his own bank account.

Thanks in advance.

AI Summary

US Citizen Seeks to Invest in Indian Company; Must Comply with FEMA, RBI Rules, and Companies Act, 2013. A USA resident and citizen inquired about the feasibility of holding shares in an Indian company by transferring funds from a US-based company where they are a shareholder and director. The responses indicated that such a transaction requires compliance with the Foreign Exchange Management Act (FEMA) and potentially obtaining permission from the Reserve Bank of India (RBI). Additionally, compliance with the Companies Act, 2013, was advised. Two routes for foreign direct investment were mentioned: the Automatic Route and the Approval Route.