Monday, 4 September 2017

FDI Updates

New FDI Policy

1.     The Department of Industrial Policy and Promotion recently released the consolidated FDI Policy vide circular no. D/o IPP F. No. 5(1)/2017-FC-1 dated August 28, 2017 (“New FDI Policy”). Under the New FDI Policy:

i.        Conversion of a LLP having foreign investment into a company and vice versa, is allowed under automatic route, where there are no FDI linked conditions;
ii.         Start-ups have been recognized under the New FDI Policy and have been allowed to issue equity shares, equity linked instruments or debt instruments to FVCI. Conditions for issue of convertible notes[1] by start-ups to a person resident outside India have also been prescribed;
iii.    The proposals requiring government approval will be dealt by the competent authority which has been defined under the New FDI Policy to mean the concerned administrative ministry/department empowered to grant government approval for foreign investment under the extant FDI Policy and FEMA Regulations;
iv.   The approval of Reserve Bank of India shall not be required for establishment of branch office, liaison office or project office or any other place of business in India if the applicant is engaged in the business of telecom, defence, private security or information and broadcasting and the applicant has been granted a license/permission by the concerned ministry/regulator.

[1] Convertible notes have been defined to mean an instrument, issued by a start-up against receipt of money repayable at the option of the holder, convertible into equity shares within a period not exceeding 5 years.

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