Illiquid assets · room 13 of 13
Holding Indian land.
The lawful instrument above Indian land is an Indian company, and everything else in a cross-border structure follows from that sentence. These are the architectures that sit above an Indian real asset, the trap between them, and the exit fabric all of them is built against.
Where complexity arises · Illiquid assets · thirteen rooms
01 · The base fact
Where every structure begins
The land is held by an Indian company, or it is not held.
Under India's exchange-control rules the lawful instrument above Indian land is an Indian company, which the law treats as resident regardless of who owns it, and on our reading, the direct route stays closed to a person resident outside India who is neither a non-resident Indian nor an overseas citizen of India, short leases aside. The diaspora position is different, and it is set out separately at the diaspora rulebook. Every other inbound structure is therefore a downstream Indian entity, and the questions that decide the transaction live in how that entity is owned, funded and exited.
It is the entry ticket, and structures that try to be clever about it stop being structures and start being findings.
02 · The company route
The default
Own the company, inherit its conditions.
A wholly owned subsidiary or a joint-venture company is the default holding instrument. Once foreign-owned or foreign-controlled, the company's own downstream investments count as indirect foreign investment, and the sector's conditions follow the money down the chain. Owning an Indian company is how the rules attach, not an exemption from them.
- Control brings consequences
Majority beneficial ownership, or the right to appoint most of the board, makes the company foreign-controlled. Its downstream equity then carries the entry route, the caps and the sectoral conditions of whatever it invests in.
- The funding rule most entries break
A foreign-controlled company does not fund downstream equity from domestic borrowings. Internal accruals or fresh foreign equity, nothing else. This is breached routinely in the market and found routinely in diligence.
- Pricing is not negotiable paper
Entries and exits between residents and non-residents price against fair value, certified under a recognised methodology. A non-resident does not buy below it or sell above it, and the certificate is part of the file.
- Filings are the structure's pulse
Every instrument issued, transferred or pushed downstream has a reporting form and a deadline. We diarise them at entry, because a structure with missed filings is a structure with a discount attached.
One consequence for the sequence of an engagement. Where an investor reaches the asset by acquiring the holding company, or by taking a minority position or a fund interest, the arrangements for that acquisition are made by the investor's own authorised advisers, each within its own permissions. What is designed here is the structure those arrangements are made against, and the order in which they have to be made. The perimeter itself is read at the regulated perimeter.
03 · The partnership trap
A common, expensive error
The partnership vehicle reads cheaper and narrows the exit.
On our reading, foreign investment into a limited liability partnership is permitted only where the sector carries no investment-linked conditions. Construction development carries them, which closes the partnership route for development almost entirely, and takes the partnership's downstream investments with it. Capital comes to the vehicle for its lighter compliance and meets the wall at the worst moment: when your structure already holds land.
04 · The pooled routes
The pooled route
Two Indian entry routes, chosen before we are appointed.
Indian law also recognises a regulated domestic investment vehicle whose sponsor and manager are Indian owned and controlled, and whose downstream investment is treated as domestic. Alongside it sits the international financial services centre regime, with its own regulator and its own tax treatment. These routes are described because a development mandate has to be built to whichever one the investor and its own regulated advisers have already chosen. The choice of vehicle is the investor's and its authorised advisers'. What we return is each route drawn, with the constraint that would remove it.
The analysis turns on facts that shift with control, with the manager, and with amendment cycles, so the entry memorandum records not just the route chosen but the routes rejected and why. Your counsel signs the law. We hold the commercial logic their advice is set against. And this is only the Indian end of the question: where Gulf capital commits through a manager in ADGM or the DIFC, the source end is read behind the restricted door, at the two centres.
05 · The exit fabric
Where money comes home
An exit is built, not found.
- Completion and the municipal test
The direct route's exit follows completion or trunk infrastructure, as the municipality defines them. The definition is not contractual and the parties do not own it, so it is a fact to be evidenced item by item, from the first month rather than in the year the exit is wanted.
- Phase-wise release
Each phase is a separate project. A well-cut phase map turns one long lock into a sequence of shorter ones, and a badly cut one does the reverse.
- Offshore transfer
A transfer between non-residents, without repatriation, sits outside the lock-in entirely. For platform capital, the secondary sale of the holding structure is an exit lane in its own right. Whether that lane is open turns on where both parties sit and whose law reaches them, and that question is read under the law that reaches each party where it sits.
- Income, not disposal
Rental income on leased assets sits expressly outside the prohibited land-trading definition. Hold-for-yield is a lawful strategy in a way buy-to-sell land is not, and the structure should know which one it is from day one.
- The listed channel
India's listed real estate trusts admit completed, income-producing assets against a published standard. What that means for a development mandate is a specification point rather than a market one: an admission standard is the only one of the exit standards knowable at entry, so an asset specified and evidenced to institutional and regulatory grade keeps every route open, including that one. The structure is built to it for its own sake.
06 · Structure follows exit
The decision rule
Choose the way out, then build the way in.
Every architecture here is judged by one test: how does the capital come home, on what date, under whose definition of done. That test is settled at the first of the Eight Gates and written into the entry memorandum, with the lock calendar and the rejected routes attached. Structures chosen for entry convenience are re-chosen later at a price.
We are an independent specialist transaction-architecture firm. The structure is drawn here; the instruments that constitute it are drafted, signed and filed by the manager's own counsel and appointed regulated counterparties.
Where complexity arises · 20 minute readIlliquid assetsEntry routes, the holding chain, title read before capital commits, the mechanism staged funding is released by, and the constraints that bite only on the illiquid.
Where complexity arises · 16 minute readExit designWhat must be true at entry so a trade sale, a listing and a sponsor-to-sponsor sale are all still live at year five. Choose the way out, then build the way in.
Where complexity arises · 6 minute readThe Indian lexiconThe working vocabulary of Indian development as it is used in files. Entry and exchange control, land and title, consents and delivery, regulation and reporting.
The last of the thirteen. The published work runs on from here.