I was reading about overseas direct investment as individual.
Individual can invest in foreign company who has 10 % stake in indian company without any limit ?
For Example Unilever has subsidiary in india as Hindustan Unilever Limited.
So we can buy stake in Uniliver without any limit ?
@nithin
Do you have any updates on this ? And If we can.
Can you tell me we will able to invest from zerodha ?
BTW, can you please give ETA for US investment from Zerodha ?
Hey Bharath! Do give me until next week, let me get back to you on this one.
We’re working on this & would like to ideally go live once more banks have enabled online remittance via their NetBanking systems, to reduce our overall support burden. Will definitely keep you updated on this as well.
How stocks are held in USA. They don’t have demat account.
So when individual or investment company buy stock without broker. How they hold it.(excluding offline share certificates).
Check this post, have explained here
The structure of our depository system, like our payments system, is a newer and advanced system as compared to the US. This is mainly because India didn’t have a legacy when we went online in the 1990s. We have depositories like NSDL and CDSL where we hold Demat accounts that remain unaffected even if a brokerage firm goes into trouble. In the US all securities are essentially held in book or street name with the respective brokers, what they call a “books and records system”. This means the securities are all held by brokers. This also gives an opportunity for the brokerage firm in the US to be able to lend these securities to people looking to short stocks or borrow for various trading strategies and earn an additional source of income (Unlike India, borrowing stocks to short is extremely popular in the US). The earning potential for these stocks held by the broker is typically based on the number of people wanting to short the stock. For example, early this year when Marijuana stocks were moving wildly, there were periods of time where one could earn as much as 100% or more annualized returns just by lending these stocks. Regulations in the US does mandate the brokerages to share some of the lending fees with the person who owns the stock, but the entire thing is quite opaque to the customer. Most never get to know how much was earned.
In India, brokers can’t lend securities as they sit in the clients’ Demat accounts with the depositories. Also, with the new set of regulations that came out on the 1st of Oct 2019, even securities bought by a customer that are unpaid for, cannot be pledged.
India does have an SLB (Stock Lending and Borrowing) platform where clients can participate directly, and know the exact lending fees being earned. This platform sees very little activity today, but may grow over time.
My question was how they hold their shares. Even broker use depositary in India. Right ?
How trading firm hold shares in USA. If they don’t have depositary.
I don’t understand how their system works without depository. Who keep record of the ownership of shares. If someone buy shares without broker.
Found this
It is held in the brokers name also called in Street name. So not really in a beneficiary demat account , but almost like in the pool account of a broker in India. But even when in this pool, there is something called a books and record system which keeps tab on all securities lying with the broker.
This is the reason why brokers can lend securities on behalf of customers, as explained in the post I had shared earlier.
I was asking you about updates on invest in foreign company who has 10% stake in indian listed company.
Better you check with some CA.
I asked this because somnath248 told me that he will give me update in one week.
Ok, but yeah these kind you can ask CA or post here without tagging anyone.
When Zerodha start US investment platform.
Can we invest in foreign company without any limit of that company has 10% stake in Indian company ?
Anyone ?
I think the FAQ that is being referenced above isn’t applicable any longer. If one checks Question 4 in it -
Q.4 Where can one get the guidelines pertaining to overseas investment?
- These guidelines have been notified by Reserve Bank of India in its Notification FEMA No.19 dated 3rd May 2000 as amended from time to time which can be accessed at the Reserve Bank’s website fema.rbi.org.in.
That notification has been superseded/suppressed by Notification No. FEMA 120/RB-2004 dated July 7, 2004. If one checks the new FAQs for the Notification No. FEMA 120/RB-2004 (specifically Question 3 and Question 43), the limits under the Liberalised Remittance Scheme (LRS) now apply for investments (irrespectively of whether the foreign company whose shares are being acquired has 10% stake in an Indian company or not)
