FEMA · For companies and startups
A checklist for receiving foreign investment into an Indian company. General legal information only.
Before the investment
- Sector: check whether the sector is open under the automatic route or needs government approval, and any sectoral caps or conditions.
- Investor: check whether the investor is eligible. Investors from land-border countries face additional scrutiny.
- Instrument: equity shares, compulsorily convertible preference shares and compulsorily convertible debentures are generally permitted forms. Other instruments are treated differently.
- Pricing: shares must be issued at or above the fair value determined under the pricing guidelines.
After the investment
- Receive the funds through banking channels and obtain the foreign inward remittance certificate.
- Allot the shares within the time permitted after receipt of funds.
- Report the issue to the RBI through the authorised dealer bank on the prescribed portal and form, within the prescribed time after allotment.
- File the annual return on foreign liabilities and assets where applicable.
Common slips
- Late reporting or allotment
- Issuing at a price below the fair value
- Investment in a sector or form that was not permitted
Many such slips can be regularised through compounding, but it takes time, so correct compliance from the start is easier.
Related: FEMA and cross-border · All FEMA guides · Send an enquiry
Important disclaimer: This article is general legal information, not legal advice. It does not create a lawyer-client relationship and is not an advertisement or solicitation under Bar Council of India rules. Verify current statutes, rules and judgments before relying on it.
