𝐀𝐫𝐞 𝐲𝐨𝐮 𝐚𝐧 𝐈𝐧𝐝𝐢𝐚𝐧 𝐛𝐮𝐬𝐢𝐧𝐞𝐬𝐬 𝐞𝐧𝐭𝐢𝐭𝐲 𝐨𝐰𝐧𝐞𝐫 𝐡𝐚𝐯𝐢𝐧𝐠 𝐫𝐞𝐠𝐢𝐬𝐭𝐞𝐫𝐞𝐝/𝐩𝐥𝐚𝐧𝐬 𝐭𝐨 𝐫𝐞𝐠𝐢𝐬𝐭𝐞𝐫 𝐲𝐨𝐮𝐫 𝐞𝐧𝐭𝐢𝐭𝐲 𝐢𝐧 𝐭𝐡𝐞 𝐔𝐒?
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.
𝐇𝐞𝐫𝐞'𝐬 𝐰𝐡𝐲 𝐢𝐠𝐧𝐨𝐫𝐢𝐧𝐠 𝐎𝐃𝐈 𝐢𝐬 𝐚 𝐛𝐚𝐝 𝐢𝐝𝐞𝐚:
𝐍𝐨𝐧 𝐫𝐞𝐜𝐨𝐠𝐧𝐢𝐭𝐢𝐨𝐧: India regulatory bodies doesnt recognize your US entity leading to troubles when you go for funding / exit.
𝐏𝐞𝐧𝐚𝐥𝐭𝐢𝐞𝐬: Non-compliance with RBI rules triggers fines, penalties, or even business shutdown.
𝐅𝐮𝐧𝐝𝐢𝐧𝐠 𝐥𝐢𝐦𝐢𝐭𝐚𝐭𝐢𝐨𝐧𝐬: No proper ODI docs? No access to loans or credit to fuel your growth.
𝐈𝐧𝐯𝐞𝐬𝐭𝐨𝐫 𝐝𝐮𝐞 𝐝𝐢𝐥𝐢𝐠𝐞𝐧𝐜𝐞: Red flag during due diligence process of investment or M&A.