Overseas Investment by Proprietorship Concerns/Registered Trust or Society

.1. How can overseas investment by proprietorship concerns be done?

The proprietorship concerns and unregistered partnership firms have been allowed to set up a Joint Venture outside India with the prior approval of RBI subject to satisfying certain eligibility criteria.

Investments by established proprietorship or unregistered partnership exporter firms are subject to the following criteria;

  • The partnership/proprietorship firm is a DGFT recognized star export house (export exceeding 15 crores) per annum.
  • The AD bank is satisfied that the exporter is KYC compliant, is engaged in the proposed business, and has turnover as indicated.
  • The partnership/proprietorship has proven his track record e. exports outstanding does not exceed 10% of the average export realization of the preceding three years and consistently high export performance.
  • The proprietorship concern / unregistered partnership firm in India has not come under the adverse notice of any Government agency like the Directorate of Enforcement, Central Bureau of Investigation, Income Tax Department, etc. and does not appear in the exporters’ caution list of the Reserve Bank or in the list of defaulters to the banking system in India; and
  • The amount of proposed investment outside India does not exceed 10 percent of the average of the last three years’ export realization or 200 percent of the net owned funds of the proprietorship concern / unregistered partnership firm in India, whichever is lower.
  1. How can overseas investment by Registered Trust/Society be done?

Registered trust or society are allowed to make investments in a joint venture or wholly-owned subsidiary outside India subject to the approval of RBI.

Eligibility criteria for trust are:-

  • The trust should be registered under the Trust Act 1882;
  • The trust deed permits the proposed investment overseas;
  • The proposed investment should be approved by trustee/s;
  • The trust has been in existence at least for a period of 3 years;
  • Authorized dealer bank is satisfied that the trust is KYC compliant and is engaged in a bonafide activity.
  • The trust has not come under the adverse notice of any regulatory/enforcement agencies like the Directorate of Enforcement, CBI, etc.

Eligibility criteria for society are entirely the same as that of trust except for one following point

  • The memorandum of association and rules and regulations permit the society to make a proposed investment which should also be approved by the governing body/council or a managing/executive committee.

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