Non-Resident Indian (NRI) Venture-Debt Instruments: FEMA Compliance And Crowdfunding Platforms
- IJLLR Journal
- Jul 13
- 1 min read
Nikita Banerjee, LL.B., Jindal Global Law School
ABSTRACT
In this research paper, the regulatory regime applying to Non-Resident Indian (NRI) investments in venture-debt instruments using equity-based crowdfunding platforms under India’s Foreign Exchange Management Act, 1999 (FEMA) is scrutinized1. Analysis aims at scrutinizing FEMA’s categorization and permissibility of financial instruments such as convertible notes, compulsorily convertible debentures (CCDs), optionally convertible debentures (OCDs), and non-convertible debentures (NCDs). The article analyses compliance requirements for Indian startups and NRIs, analysing sectoral limits, minimum investment levels, and procedural reporting measures. It further discusses the nexus of FEMA with the Securities and Exchange Board of India (SEBI) regulations on crowdfunding, discussing regulatory shortcomings and proposing reforms to standardize these frameworks. Judicial rulings and enforcement tendencies detail doable hurdles in compliance. The article ends by providing particular suggestions directed at simplifying FEMA regulations for the purpose of promoting NRI investment in India’s startup ecosystem.
