Things NRI Investors should know before Investing in Indian companies
Key Investment Guidelines for NRIs in India
1. There are overall limits prescribed by the RBI, in the case of a single individual NRI Investor, the investment is capped at 5% of the total paid-up capital of the company.
2. Repatriation options - NRIs can either invest through NRO or NRE account, money invested through NRE is fully repatriatble, NRO has some restrictions.
3. Foreign Direct Investment (FDI) Policy - If an NRI wishes to make investments in Indian startups then they should refer to the FDI policy as a detailed framework, as the FDI policy requries NRIs to seek prior approval for certain sectors.
4. Eligible Investment Instruments - NRIs can invest their capital into shares and convertible debentures of Indian companies using a wide variety of sources which include remittance from foreign bank accounts, NRE/FCNR(B) accounts, or investments from persons residing outside India, including NRIs.
5. Pricing Guidelines - Price of listed securities is listed on stock exchange however the price of unlisted securities has to be fairly valued by SEBI registered Category — I Merchant Banker or a Chartered Accountant using the Discounted Free Cash Flow Method (DCF).
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Key Investment Guidelines for NRIs in India
1. There are overall limits prescribed by the RBI, in the case of a single individual NRI Investor, the investment is capped at 5% of the total paid-up capital of the company.
2. Repatriation options - NRIs can either invest through NRO or NRE account, money invested through NRE is fully repatriatble, NRO has some restrictions.
3. Foreign Direct Investment (FDI) Policy - If an NRI wishes to make investments in Indian startups then they should refer to the FDI policy as a detailed framework, as the FDI policy requries NRIs to seek prior approval for certain sectors.
4. Eligible Investment Instruments - NRIs can invest their capital into shares and convertible debentures of Indian companies using a wide variety of sources which include remittance from foreign bank accounts, NRE/FCNR(B) accounts, or investments from persons residing outside India, including NRIs.
5. Pricing Guidelines - Price of listed securities is listed on stock exchange however the price of unlisted securities has to be fairly valued by SEBI registered Category — I Merchant Banker or a Chartered Accountant using the Discounted Free Cash Flow Method (DCF).