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Best way for Silicon Valley company to take in an investment from India II?

We have several of our technological partners in India trying to put some seed money into us, a Silicon Valley company, in initial X00k tranches. Is anyone aware of the appropriate methods to achieve this transfer in the most economic and efficient manner? I realize that there are strong governmental controls in India on the currency. The companies wishing to make an investment are located in India. The company to receive the investment is located Silicon Valley. The monies are to flow from India to US. There is no legal relationship currently between the investors and investee. Thanks.

Answers

Anonymous
(Director/Partner) |

There are new restrictions that the Reserve Bank of India has imposed on companies wanting to invest in the US. This is to protect the Rupee. Companies can invest upto 400% of their networth through ECBs and 100% of their networth through the "automatic route."

Best to structure it as an investment into the US entity. Is the US entity an LLC or S/C Corp?

Carl Wiseman
Title: B2B CFO
Company: Partner at B2B CFO®
(B2B CFO, Partner at B2B CFO®) |

The US entity is a C Corp.

Topic Expert
David OBrien
Title: Treasury Consultant
Company: EE Treasury
(Treasury Consultant, EE Treasury) |

Dear Anonymous:

The financial parameters of outbound investments are noted above. If the entity in question is a US C corporation you have 3 alternatives: borrow from the Indian investor, have the investor make an equity investment, have the investor make an investment in the form of Preferred shares. End of the day, RBI guidelines are not overly burdensome. The primary issues are: how much do you need, what form does the investment take.

David

Carl Wiseman
Title: B2B CFO
Company: Partner at B2B CFO®
(B2B CFO, Partner at B2B CFO®) |

Thanks David!

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