As an unincorporated entity through.

• Liaison Office/Representative Office.
• Project Office.
• Branch Office.

Automatic Route

FDI up to 100% is allowed under the automatic route in all activities/sectors except the following which require prior approval of the Government :

• Activities/items that require an Industrial License;
• Proposals in which the foreign collaborator has an existing financial / technical collaboration in India in the same field,
• Proposals for acquisition of shares in an existing Indian.
• All proposals falling outside notified sectoral policy/caps or under sectors in which FDI is not permitted.

FDI in sectors/activities to the extent permitted under automatic route does not require any prior approval either by the Government or RBI. The investors are only required to notify the Regional office concerned of RBI within 30 days of receipt of inward remittances and file the required documents with that office within 30 days of issue of shares to foreign investors.

Government Route

FDI in activities not covered under the automatic route requires prior Government approval and are considered by the Foreign Investment Promotion Board (FIPB), Ministry of Finance. No fee is payable. General permission of RBI under FEMA

Indian companies having foreign investment approval through FIPB route do not require any further clearance from RBI for receiving inward remittance and issue of shares to the foreign investors. The companies are required to notify the concerned Regional office of the RBI of receipt of inward remittances within 30 days of such receipt and within 30 days of issue of shares to the foreign investors or NRIs.

FDI is prohibited under Government as well as Automatic Route for the following sectors:

• i. Retail Trading
• ii. Atomic Energy
• Lottery Business
• Gambling and Betting
• Housing and Real Estate business
• Agriculture (excluding Floriculture, Horticulture, Development of Seeds, Animal Husbandry, Pisciculture and Cultivation of Vegetables, Mushrooms etc. under controlled conditions and services related to agro and allied sectors) and Plantations (Other than Tea plantations)].

A two-stage reporting procedure has been introduced for this purpose.

On receipt of money for investment:

• Within 30 days of receipt of money from the foreign investor, the Indian company will report to the Regional Office of RBI under whose jurisdiction its Registered Office is located, a report containing details such as:
• Name and address of the foreign investors
• Date of receipt of funds and their rupee equivalent
• Name and address of the authorised dealer through whom the funds have been received, and
• Details of the Government approval, if any;

On issue of shares to foreign investor:

Certificate from Statutory Auditors or Chartered Accountant indicating the manner of arriving at the price of the shares issued to the persons resident outside India.

A minor shall not eligible becoming a member

• Foreign citizen
• Non Resident
• Any person incapacitated by contract.

• Mandatory Conversion of One Person Company (OPC) to Private Limited Company (PLC) is required in case a One Person Company meets certain parameters, like:
• Effective date of increase in the paid-up share capital of a One Person Capital beyond rupees fifty lakhs, AND
• An increase of average annual turnover during the period of immediately preceding three consecutive financial years is beyond rupees two crores.
• In the above case, the One Person Company shall be mandatorily required to convert itself into either a private or a public company Within a Period of Six Months. In this article, we also look at the procedure for conversion of one Person Company into a private limited company or limited company.
• Voluntary Conversion of OPC to Private Limited Company:
• When a One Person Company gets incorporated, it cannot convert itself to Private or Public company before two years from the date of incorporation.
  • If the time period has elapsed and two years time period is over, a One Person Company can apply for converting itself to Private Limited Company or Public limited company.
  • The Conversion process should be done as per the rules and regulations laid down by the Companies Act, 2013 under Section 18, and Rule 7(4) of the Companies (Incorporation) Rules, 2014.