Making investment or financing decisions involving persons resident outside India requires more than just business foresight—it demands meticulous planning aligned with FEMA compliance. Whether it’s acquisition or transfer of stake in an Indian entity or obtaining/providing loans to or from non-residents, proper structuring of agreements is key to avoid regulatory hurdles.
Cross-Border Investment Structuring
Transactions involving acquisition, sale, or transfer of equity stakes—either by or to foreign entities—are governed by FEMA and its related rules. Poorly structured deals can lead to violations, penalties, and blocked approvals.
Key Considerations:
Identify the correct entry route (automatic vs. government approval)
Verify sectoral caps and FDI-linked performance conditions
Evaluate valuation norms and pricing guidelines under FEMA
Draft share purchase or shareholder agreements with FEMA provisions in mind
FEMA-Compliant Documentation Includes:
Share Purchase Agreements (SPA)
Shareholder Agreements (SHA)
Investment Agreements
Transfer Deeds and Board Resolutions
Financing Transactions with Non-Residents
Loans, guarantees, and security arrangements between Indian residents and persons resident outside India require strict compliance under FEMA.
Common Scenarios:
Indian companies borrowing from foreign lenders (ECB)
Indian residents giving loans to overseas group entities
Corporate guarantees to foreign banks
Promoter-level loans and group restructuring
Regulatory Essentials:
Adherence to ECB guidelines
FEMA provisions on borrowing/lending in foreign currency
Reporting and approval from RBI (when applicable)
Interest rate, end-use, and tenure restrictions
Institutional Planning for Legal Agreements
Strategic institutional planning ensures that all agreements, contracts, and understandings involving foreign parties are not just commercially sound but also legally valid under FEMA.
Documents That Need FEMA Alignment:
MoUs and Term Sheets with foreign parties
Technology transfer agreements
Loan or security agreements
JV and collaboration contracts
Key Compliance Areas:
FEMA Sections 5 & 6 on current and capital account transactions
FEMA-compliant drafting of contracts and investment documents
Guidance on regulatory approvals and sectoral norms
Integrated advisory for FDI, ODI, ECB, and ESOP compliance
End-to-end support in executing foreign-involved commercial deals
Reach us
Start Smart – Stay Compliant
Ensure your business is built on a strong legal foundation. Whether it’s entering into an investment deal, executing loan agreements, or planning a restructuring involving foreign stakeholders, we help you get it right from the start.
Contact us today for institutional planning that ensures FEMA compliance, reduces risks, and supports your international business goals.
