Investment in Individual name

[Sanjeev Sharma]

An Indian Party wishes to enter into a JV with a local party in Tanzania with 46% equity in a new company there. Indian party would also be one of the directors on the Board of Tanzanian Company. Equity Investment would be direct and shares will be allotted by the Company directly. Should Indian party invest in in individual name under Liberalised Remiitance scheme of US $ 2 million or should it invest through his Company by filing Form ODI ?? Which route is better ?? Are there any factors to be consider for comparison ?? Sir, I need your help and guidance on this.

[Rama Krishana]

I suggest you to refer rule 6 and 7 of the FOREIGN EXCHANGE MANAGEMENT (TRANSFER OR ISSUE OF ANY FOREIGN SECURITY) REGULATIONS, 2004 = https://www.taxtmi.com/acts?actId=194 read with circular dated 3-6-2008 = https://www.taxtmi.com/circulars?id=4318

[Sanjeev Sharma]

Disappointed. Rule 6 or 7 do not answer the question. Please appreciate the crux of problem.

[Rama Krishana]

Kinldy not be disappointed. I have used my little knowledge. But before, further discussion to the issue, as I know it is more complex query, you are requested to provide the details and referneces to the rules, regulations and circulras which you rely upon and options available before you. If you have only one option to invest in JV at foreign country, I think there are very little scope would be there for planning. I would try my best to give answer, if you provide the inputs first.

AI Summary

Overseas Direct Investment versus Liberalised remittance: choice determines FEMA compliance and ODI filing obligations. An Indian resident proposes taking 46% equity and a directorship in a Tanzanian joint venture by subscribing for shares directly. The central question is whether to remit under the Liberalised Remittance Scheme or to route the investment through a resident company as an Overseas Direct Investment requiring Form ODI, with applicability governed by the Foreign Exchange Management (Transfer or Issue of Any Foreign Security) Regulations, 2004 and related circulars; further factual details are sought to determine the correct compliance path.