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ODI Transfer

Published on

November 28, 2024

๐€๐ซ๐ž ๐ฒ๐จ๐ฎ ๐š๐ง ๐ˆ๐ง๐๐ข๐š๐ง ๐›๐ฎ๐ฌ๐ข๐ง๐ž๐ฌ๐ฌ ๐ž๐ง๐ญ๐ข๐ญ๐ฒ ๐จ๐ฐ๐ง๐ž๐ซ ๐ก๐š๐ฏ๐ข๐ง๐  ๐ซ๐ž๐ ๐ข๐ฌ๐ญ๐ž๐ซ๐ž๐/๐ฉ๐ฅ๐š๐ง๐ฌ ๐ญ๐จ ๐ซ๐ž๐ ๐ข๐ฌ๐ญ๐ž๐ซ ๐ฒ๐จ๐ฎ๐ซ ๐ž๐ง๐ญ๐ข๐ญ๐ฒ ๐ข๐ง ๐ญ๐ก๐ž ๐”๐’?

As per RBI & FEMA guidelines, it is mandatory for you to transfer your share capital value amount to the US entity that you register through ODI (Overseas Direct Investment) transfer. And this is mandatory, for Indian governing bodies to recognise your Indian person / entity as a shareholder in the US entity. But this is something Indian companies miss out on, in most cases.

Skipping the official ODI transfer can create a legal and financial minefield.

๐‡๐ž๐ซ๐ž'๐ฌ ๐ฐ๐ก๐ฒ ๐ข๐ ๐ง๐จ๐ซ๐ข๐ง๐  ๐Ž๐ƒ๐ˆ ๐ข๐ฌ ๐š ๐›๐š๐ ๐ข๐๐ž๐š:

๐๐จ๐ง ๐ซ๐ž๐œ๐จ๐ ๐ง๐ข๐ญ๐ข๐จ๐ง: India regulatory bodies doesnt recognize your US entity leading to troubles when you go for funding / exit.
๐๐ž๐ง๐š๐ฅ๐ญ๐ข๐ž๐ฌ: Non-compliance with RBI rules triggers fines, penalties, or even business shutdown.
๐…๐ฎ๐ง๐๐ข๐ง๐  ๐ฅ๐ข๐ฆ๐ข๐ญ๐š๐ญ๐ข๐จ๐ง๐ฌ: No proper ODI docs? No access to loans or credit to fuel your growth.
๐ˆ๐ง๐ฏ๐ž๐ฌ๐ญ๐จ๐ซ ๐๐ฎ๐ž ๐๐ข๐ฅ๐ข๐ ๐ž๐ง๐œ๐ž: Red flag during due diligence process of investment or M&A.

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