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Chinese funds to face more scrutiny on board appointments

Chinese funds to face more scrutiny on board appointments

Chinese nationals as well as those from Hong Kong appointed as directors on boards of Indian companies will need security clearance along with people from countries that share land borders with India, according to a government notification issued on June 1. This will largely impact Chinese manufacturing companies that have subsidiaries in India and China or Hong Kong-based private equity or venture funds that have invested in startups here.

People with knowledge of the matter said this requirement has been imposed after it was found that China and Hong Kong investors were devising alternate structures to circumvent April 2020 restrictions on foreign investments from neighbouring countries.

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