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Service Details
Downstream Investment
Home / Downstream Investment
Expert Guidance on Downstream & Indirect Foreign Investments
At Startup Solicitors, we provide specialized advisory services for Downstream Investments, a critical area of FEMA compliance. A downstream investment occurs when an Indian company that is foreign-owned or controlled makes an investment in another Indian entity. Such transactions are treated as 'Indirect Foreign Investment' and are subject to a specific regulatory framework.
Our team helps clients navigate the complexities of these regulations, ensuring that investments made by Foreign Owned or Controlled Companies (FOCCs) are structured correctly and comply with all pricing, reporting, and sectoral cap requirements. We provide end-to-end support, from structuring the investment to handling the necessary filings with the RBI.
Our Downstream Investment Services
1
Structuring & Advisory
We help you structure downstream investments to ensure they are compliant and strategically sound.
- Determining if an Indian company qualifies as a FOCC
- Assessing sectoral caps and conditions in the target entity
- Ensuring compliance with pricing guidelines for the investment
- Advising on the source of funds for the investment
Key Focus: Ensuring the investment structure does not breach India's FDI policy, both at the investor and investee level.
2
Regulatory Compliance & Approvals
Managing all regulatory requirements, including necessary approvals and filings for the downstream investment.
- Filing of Form DI with the RBI within 30 days of investment
- Intimation to the Secretariat for Industrial Assistance (SIA), DPIIT
- Obtaining government approval if the investment is in a sector requiring it
- Ensuring compliance with Companies Act, 2013 provisions
Assurance: We manage all filings and approvals, ensuring your investment is correctly reported to all authorities.
3
Due Diligence
Conducting due diligence on both the investing FOCC and the recipient Indian entity to ensure full compliance.
- Verifying the foreign shareholding pattern of the investing company
- Confirming the investing company has brought in requisite foreign funds
- Assessing the sectoral compliance of the investee company
- Reviewing board resolutions and statutory filings
Benefit: Our due diligence uncovers any compliance gaps that could jeopardize the downstream investment.
4
Investment vs. Non-Investment Companies
Advisory on the specific rules applicable if the investing Indian company is a Non-Banking Financial Company (NBFC) or a Core Investment Company (CIC).
- Guidance on RBI regulations for NBFCs making investments
- Compliance with CIC registration and investment norms
- Structuring holding company investments
- Navigating the specific rules for investment companies
Expertise: We have specialized knowledge of the complex rules governing investments by financial services companies.
5
Annual Compliance
Ensuring ongoing compliance for both the investing and recipient companies post-transaction.
- Annual filing of Form FLA by both companies
- Ensuring the investment is reflected correctly in statutory records
- Advisory on any changes in FDI policy affecting the structure
- Compliance support for future rounds of funding or exit
Peace of Mind: We provide continuous support to ensure your investment structure remains compliant year after year.
Why Choose Us for Downstream Investments?
Niche Expertise
Downstream investment is a complex area of FEMA; our team has the specialized expertise required.
Holistic Approach
We consider the implications under FEMA, the Companies Act, and Income Tax for a complete solution.
Risk Mitigation
Our thorough approach helps mitigate the risk of non-compliance, which can have serious consequences.
Business-Centric
We structure transactions to meet your commercial goals while staying within the regulatory framework.
Clear & Simple Guidance
We demystify complex regulations and provide clear, actionable advice.
End-to-End Support
From the initial structuring to the final filings, we are with you at every step.
Frequently Asked Questions (FAQs)
1. What makes an Indian company a 'Foreign Owned or Controlled Company' (FOCC)?
An Indian company is considered a FOCC if more than 50% of its equity interest is beneficially owned by non-residents, or if non-residents have the power to appoint a majority of its directors.
2. What are the main conditions for a compliant downstream investment?
The key conditions are: the investment must comply with sectoral caps and conditions of the investee company, the FOCC must bring in requisite funds from abroad for the investment, and the investment must be reported by filing Form DI with the RBI.
3. Is a downstream investment by a FOCC always considered 'Indirect Foreign Investment'?
Yes. Any investment made by a Foreign Owned or Controlled Company (FOCC) into another Indian company is deemed to be an Indirect Foreign Investment for the purpose of FDI policy.
4. What is Form DI and when is it filed?
Form DI is the prescribed form for an Indian company to report a downstream investment. It must be filed with the RBI through an Authorized Dealer Bank within 30 days of making the investment.
🔗 Structure Your Corporate Investments with Confidence
Downstream investment rules are complex and a common source of non-compliance. Partner with Startup Solicitors to structure your corporate group's investments correctly, ensuring your expansion in India is built on a solid regulatory foundation.
- Avoid violations of FDI sectoral caps
- Ensure all inter-company investments are fully compliant
- Manage complex holding structures effectively
- Receive expert guidance on a niche area of FEMA
Contact us today for a detailed consultation on your downstream investment strategy and compliance requirements.
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