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January 2025
Introduction Round-tripping, a practice in which funds are routed through foreign jurisdictions and then reinvested into India, has raised significant concerns for regulators. While it may seem like a legitimate means of financing, round-tripping often violates the Foreign Exchange Management Act (FEMA) and other anti-money laundering regulations. This article explores the complexities surrounding round-tripping in...
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IntroductionConvertible Notes and SAFE agreements are widely used by startups raising capital. These instruments provide flexibility by deferring the valuation of the company until a future funding round. While beneficial for both startups and investors, these financing instruments can attract Enforcement Directorate scrutiny, due to potential violations of the Foreign Exchange Management Act (FEMA), 1999,...
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IntroductionForeign Direct Investment (FDI) is a critical source of capital for Indian startups. However, attracting foreign investors comes with regulatory obligations under the Foreign Exchange Management Act (FEMA), 1999. FEMA governs FDI in India through specific rules and compliance measures, and failure to adhere to these can lead to scrutiny by authorities, including the Enforcement...
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IntroductionConvertible Notes and SAFE (Simple Agreement for Future Equity) Agreements are popularfinancing tools for startups, offering flexibility to founders and investors alike. However, theircomplex legal nature can attract regulatory scrutiny, particularly from the Enforcement Directorate(ED), which monitors foreign exchange and money laundering violations. This blog explores the legalframework, stakeholders involved, and key compliance risks associated...
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