Angel investment in India


vineetvb

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Hello all, 

 

I am an Indian citizen on an H1-B in the US, valid till 2/2019, I-140 approved. Currently waiting in what could be a decade long queue for a green card. 

 

My sister and a friend, who are residing in India, are about to start a software company there and want me to be an angel investor. I believe in the product they are trying to build and I think it is a great investment for my money.  Legally, it seems possible for me to own a large part of a company in India, as long as I don't work for them. In my current capacity, I do not have the time nor the domain expertise to work for the said company. However, I do not want to be completely passive either. I would want to attend meetings periodically to stay up-to-date with their progress, provide high-level guidance on where the product is going, see what they are doing with the money, etc. 

 

So, my first question is labour law related as follows: What is an acceptable role for me to take in this company ? Director ? Angel investor ? Does my title matter ? I am hoping this level of involvement in a foreign company does not count as "work" to the USCIS. Do I need to report this to the USCIS voluntarily and they decide if it does ?

 

My second question is tax law related: 

Now software startups tend to have a much faster life cycle than my wait for the green card. I expect that this company to be successful in the next year and start making some profits if all goes well (or it might just die out). Am I entitled to earn dividends on this investment if said company starts making profits ? Of course, I would duly report this income on my tax returns in each country. 

 

 

 

 

 

 

 

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a title that does not insinuate a verb would be ideal, say partner or founder rather than director or COO..

 

while the common guideline is to "not involve yourself in a way that constitute work"...if you talk to ur sister once a week about progress, uscis is not gonna wire tap your phones to verify..But if you visit India for a month long and work on the company stuff it is ok as H1 rules don't apply while you are outside..

 

No problem with receiving returns on the investment, as long it is documented as so and reported, but not as a salary..

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A passive investor can of course attend shareholder meetings where he, together with other shareholders, gets informed about the business process. Think of it as similar to investing in a company listed on the stock market. These companies have shareholder meetings, shareholder newsletters, etc.

So, you can sure get informed about the company's progress. Giving general advise like "look into x, that may be a good opportunity" isn't a problem, either.

Why would you need a title? A title implies a formal role in the company. If I invest in a company, I'm a shareholder. That's it. A Founding shareholder/co-founder may have additional privileges like having preferred status in a buy-out or IPO, but such things would have to be specified in the company by-laws. A good business lawyer would have to handle creating such by-laws.

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a title that does not insinuate a verb would be ideal, say partner or founder rather than director or COO..

 

while the common guideline is to "not involve yourself in a way that constitute work"...if you talk to ur sister once a week about progress, uscis is not gonna wire tap your phones to verify..But if you visit India for a month long and work on the company stuff it is ok as H1 rules don't apply while you are outside..

 

No problem with receiving returns on the investment, as long it is documented as so and reported, but not as a salary..

 

Thank you cap-gap. Is there any such thing as voluntary disclosure to the USCIS, of your role in this foreign company ? 

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