The company registered in India can receive foreign funding/investment under following routes. There is only two way to receive foreign investment after following the guidelines and procedure issued by the Reserve Bank of India.
The courses under which c company registered in India can receive foreign investment are as follow:
- Automatic Route: Automatic route is a way under which one organization can receive foreign funding without approval of department. The company registered in India wish to receive foreign Investment under automatic route without prior written approval of Reserve Bank of India. However company can take investment in all activities notified by the RBI under Regulation 16 of FEMA 20 (R).
- Government Route: Government route is also called approval route. Under this route the company who wish to receive foreign investment need to take approval in advance from the government or RBI. Company wishing foreign investment need to take approval for all those activities which not covered under the automatic route.
Procedure for approval route /Government Route
Standard Operating Procedure (SOP) for Processing Foreign Direct Approval Proposals is as follows:-
Online Filing of Approval Application
- Government approval required for proposals for foreign direct investment in permitted sectors/activities as per consolidated FDI Policy issued by RBI in year, 2016. Company need to file application for approval using Department of Industrial Promotion Board (DIPP) designated portal Foreign Investment Facilitation (FIPB). FIPB portal is only way to submit the application for FDI under approval route.
- Applicant Company need to file the proposal for foreign investment (FDI) in application in format issued by RBI and need to attached document as per the requirement under the law. And the list of document need to be submitted by company receiving foreign investment is as follow:-
- Certificate of Incorporation/ Registration certificate issued by Ministry of Corporate Affairs (MCA) of the company/entity / Investee Company proposing for FDI. However Investee Company may be a proposed entity and may not be registered.
- True Copy Memorandum of Association (MOA) issued by MCA of the Investee & Investor Companies/Entities. However MOA of proposed entity must be a clause to receive FDI.
- Board Resolution approving the FDI of the Investee & Investor Companies/Entities. Board resolution must contain the amount, amount, purpose, name of company/ individual investing in company.
- True copy Audited Financial Statement of Last Financial Year of the Investee & Investor Companies/Entities. However if company not incorporated or newly incorporated as on date of application company have to file a declaration with commencement of business certificate.
- Article of Association (AOA) of the Investee & Investor Companies/Entities. However AOA must authorized company to receive foreign investment in company.
- A complete list of all foreign collaborators along need to submit along with Passport Copy/ Identification Proof/ Entity Names and addresses of the Investor Company’s promoters.
- Pre and Post shareholding pattern of the Investee Company including graph of fund flow from the investor to company receiving FDI.
- A certify true copy of the JV agreement/shareholders agreement/ technology transfer/trademark/brand assignment agreement (as applicable). This document should be signed and stamped.
- A True certify copy Board resolution of any joint venture company
- Certificates of Incorporation and document constituting MOA and AOA of joint venture/company which is a party to the proposed transaction in English.
- Copy of Downstream Intimation
- Copy of any previous approval of FIPB/SIA/RBI, connected with the current proposal
- Foreign Inward Remittance Certificate (FIRC) issued by Bank in case FDI has already come in company and in case of post-facto approval
- In the cases of pooled investment funds by the company themselves, the brief details such as names and addresses, contact details of promoters, investment managers as well as contribution of promoters, investment managers.
- In case of a scheme of arrangement Order copy of High Court
- Valuation certificate issued by independent Chartered Accountant
- Certificate issued by statutory auditors as compulsory in the FDI policy, if any applicable.
- List of subsidiary companies of Indian company including details of equality shares held by Indian company along with activity details.
- If Investment is made pharmaceutical sector Non-compete clause certificate
- Ones application submitted online Department of Industrial Promotion Board (DIPP) will identify the appropriate department and transfer the application to concern department for approval in two working days. Applicant need to submit all document signed digitally to DIPP portal. If an application is not submitted digitally signed he have to submit a hard copy of all document filed online with portal on within 5 days from the date of receipt of communication form department to submit application in Hard copy. It is advisable to applicant file physical copy of application within 7 days from the date of intimation received form department.
- Time limit for disposal of application is depends on the list of document submitted on DIPP portal and hard copy submitted documents.
