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FDI - Minimum lock in period

FDI - Minimum lock-in period

RBI/2013-2014/436
A.P. (DIR Series) Circular No. 86

(a) There is a minimum lock-in period of one year or a minimum lock-in period as prescribed under FDI Regulations, whichever is higher (e.g. defence and construction development sector where the lock-in period of three years has been prescribed). The lock-in period shall be effective from the date of allotment of such shares or convertible debentures or as prescribed for defence and construction development sectors, etc. in Annex B to Schedule 1 of Notification No. FEMA. 20 as amended from time to time;

(b) After the lock-in period, as applicable above, the non-resident investor exercising option/right shall be eligible to exit without any assured return, as under:

(i) In case of a listed company, the non-resident investor shall be eligible to exit at the market price prevailing at the recognised stock exchanges;

(ii) In case of unlisted company, the non-resident investor shall be eligible to exit from the investment in equity shares of the investee company at a price not exceeding that arrived at on the basis of Return on Equity (RoE) as per the latest audited balance sheet. Any agreement permitting return linked to equity as above shall not be treated as violation of FDI policy/FEMA Regulations.

 

2020-03-02 00:57:32

Incorporation in UK

Contents of Form IN01 for incorporation of Company

1. The proposed company name

2. Situation of registered office 

3. Type of Company - 

          Public limited by shares          

          Private limited by shares          

          Private limited by guarantee          

          Private unlimited with share capital          

          Private unlimited without share capital

4. Principal business activity

5. Choice of articles of association whether model article or subject to some restrictions

6. Details of the proposed director(s), and the secretary if it has one

      - Private companies must appoint at least one director who is an individual

      - Public companies must appoint at least two directors, one of which must be an individual

7. Details of people with significant control over the entity 

8. Directors’ service and residential addresses

9. A statement of capital and initial shareholdings or a statement of guarantee

10. Details of subscriber including capital taken by each of them 

11. Fees for online Registration £12 

 

2020-02-21 06:40:09

Requirement of resident individual

We like to draw your kind attention that the requirement of a resident individual in following entity structures as follows:

 

·In case Body corporate: As per section 149(2) of the Companies Act, 2013, every company shall have at least one Resident director under the composition of the board of directors in the company

 

·In case of LLP: As per section 7(1) of the LLP Act, 2013, Every LLP shall have at least 2 Designated Partners who are individual and out of one shall be resident in India.

 

Note: Resident individual is that individual who stays in India for a total period of not less than one hundred and eighty-two days during the financial year.

 

·In case of other place of business (Branch office, liaison office, project office): As per section 380(1)(d) of the Companies Act, 2013 , Every Place of business also require one or more persons resident in India authorized to accept documents on behalf of the company.

·In case of Partnership Firm: NRI can become a partner in Indian partnership firm subject to certain conditions such as

 

1.       Investment on Non repatriation basis: The NRI may invest into the partnership firm on non-repatriation basis.

 

2.        Investment on repatriation basis: If the NRI makes any investment on repatriation basis, then he shall take prior approval from government (RBI).

 

·In case of a Sole proprietorship: NRI can set up a Sole Proprietorship firm. But the investment will be on non-repatriable basis.

 

Note: Repatriation means: capital invested once cannot be taken back by the NRI to any country outside India.

 

Note: NRI cannot invest in a partnership firm or not act as a sole proprietorship business that is engaged in:

1.      agricultural

2.      plantation

3.      Real estate

4.      media 

2020-02-14 02:25:16

Incorporation in USA

#USAincorporate

USA Company incorporation details required -

1. Share capital

2. 2 Name suggestions in the order of preference

3. A brief about the business

4. Director - KYC documents which include two government photo ID proofs Email ID and phone number

5. Business Address

6. Mailing address (if different from business address)

7. Registered Agent

The following conditions must be met for a person or legal entity to qualify as Registered Agent for your company:

The agent must be a legal adult or a US-registered company in good standing.

The agent must maintain a Registered Office in the state of company registration.

Registered Office must have a physical address in the state of registration.

Agent must always be present at the Registered Office during business hours.

In most states, the Agent must sign a consent to serve in that capacity. Commercial Registered Agent service is often recommended as a better alternative to serving as one for your company

2020-02-13 00:42:58

Notification of Non-Debt Instruments Rules, 2019

The Ministry of Finance, Government of India has now classified instruments issued under Foreign Exchange Management Act, 1999 (FEMA) as debt and non-debt instruments and has notified the rules/ regulations in this regard. On 15th October 2019, the Ministry of Finance, Government of India, notified the provisions of Sections 139, 143 and 144 of the Finance Act, 2015 (the "Notified Sections"). The Notified Sections amends certain provisions of the Foreign Exchange Management Act, 1999.

Background:

  1. Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2017 ("TISPRO Regulations") and the Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, 2018, stands repealed with effect from 17th October 2019. 
  2. Debt Instruments

Government Bonds

Corporate Bonds

All tranches of securitization structure  which are not equity tranche

Borrowings by Indian firms through loans

Depository receipts whose underlying  securities are debt securities

 

  1. Non-Debt Instruments
  1. All investments in equity in incorporated  entities (public, private, listed, unlisted) Capital participation in LLPs
  2. Instruments of investment as in FDI policy
  3. Investment in units of AIFs, REITs and  InVITs
  4. Juniormost layer (e.g. equity tranche) of  securitization structure
  5. Acquisition, sale or dealing directly in  immovable property
  6. Contribution to trusts
  7. Depository receipts issued against equity  instruments

All other Instruments which are not notified as Debt or Non-Debt Instruments shall be deemed as  Debt-Instruments

  1. Equity Instruments: The expressions "equity instruments" means equity shares, convertible debentures, preference shares and share warrants issued by an Indian company.
  2. Hybrid Securities: The term "hybrid securities" means hybrid instruments such as optionally or partially convertible preference shares or debentures and other such instruments as may be specified by the Central Government from time to time, which can be issued by an Indian company or a trust to a person resident outside India.
  3. Press Note 4 of 2019 (the "Relevant Press Note") had introduced many changes to the foreign investment norms governing single-brand retail trading, contract manufacturing, coal mining and digital media. The Relevant Press Note clearly provides that policy pronouncements contained therein would take effect from the date of notification of amendments to the TISPRO Regulations. The expectation was that the Government would use this opportunity and notify the changes by way of incorporating the changes in the Non-Debt Instruments Rules. However, the Government has not fulfilled this expectation.

NDI Rules has brought about a substantial change in the Schedule II stating that effective from April 1, 2020, the aggregate limit would be the sectoral cap applicable to such Indian company. An Indian company may, with the approval of its board of directors and members, by a resolution and a special resolution, respectively: (i) decrease the aggregate limit before March 31, 2020 to a lower threshold of 24% or 49% or 74% as deemed fit, or (ii) increase the aggregate limit to 49% or 74% or the sectoral cap or statutory ceiling respectively as deemed fit. However, once the aggregate limit is increased, the limit cannot be reduced la

2020-02-12 00:32:59

Merchanting Trade New Rules

Reverse Bank of India by circular dated January 23, 2020 has issued the revised guidelines of Merchanting Trade Transaction (MTT).

In Indian Context, the trade is called Merchanting Trade when,

(i)   The supplier of goods will be resident in one foreign country

(ii)  The buyer of goods will be resident in another foreign country

(iii) The merchant or the intermediary will be resident in India.

In simple terms, Merchanting transaction is one which involves shipment of goods from one foreign country to another foreign country involving an Indian Intermediary. Hence, it is also called Intermediary Trade.

 

Company X France

Company Y Singapore

Company Z India

2

3

1

5

4

Outside India

India

Export the good directly

To Company X

 

For ease of understanding, buyer and seller is referred as Company.

(1)   Company X of France places an order on Company Z in India for supply of certain spares and makes payment for the same.

(2)   Company Z, which trades in such spares, then places a purchase order with Company Y of Singapore

(3)   Company Z makes payment to Company Y in Singapore. This is the import leg of the transaction.

(4)   It also requires Company Y of Singapore to directly export the goods to Company X in France. Here one can note that the goods ordered with Indian company will not enter the boundary of India but will be directly exported to Company A by Company Y on behalf of the Indian Company Z. This is the export leg of the transaction.

(5)   The Company X makes payment to Company Z in India now Merchanting Trade is completed.

As per A.P. (DIR Series) Circular No.115 March 28, 2014, or a trade to be classified as Merchanting trade following conditions should be satisfied:

?    Goods acquired should not enter the Domestic Tariff Area and

?    The state of the goods should not undergo any transformation

 

New Changes:

Considering that in some cases, the goods acquired may require certain specific processing/ value-addition, the state of goods so acquired may be allowed transformation subject to the AD bank being satisfied with the documentary evidence and bonafides of the transaction.  A.P. (DIR Series) Circular No.20 January 23, 2020

 

The AD bank may, if satisfied, rely on online verification of Bill of Lading/ Airway Bill on the website of International Maritime Bureau or Airline web check facilities. However, the AD bank shall ensure that the requisite details are made available /retrievable at the time of Inspection/Audit/investigation of the transactions.

Any receipts for the export leg, prior to the payment for import leg, may be parked either in Exchange Earners Foreign Currency (EEFC) account or in an interest-bearing INR account till the import leg liability arises. It shall be strictly earmarked/ lien-marked for the payment of import leg and the liability of the import leg, as soon as it arises, shall be extinguished out of these funds without any delay. If such receipts are kept in interest-bearing INR account, hedging thereof may be allowed by the AD bank at the request of its customer, as per extant regulations. No fund/non-fund-based facilities shall be extended against these balances.

Merchanting traders may be allowed to make advance payment for the import leg on demand made by the overseas seller. In case where inward remittance from the overseas buyer is not received before the outward remittance to the overseas supplier, AD bank may handle such transactions by providing facility based on commercial judgement. It may, however, be ensured that any such advance payment for the import leg beyond USD 500,000/- per transaction, the same should be paid against bank guarantee/LC from an international bank of repute

2020-02-10 00:01:21

Guidelinesfor calculation of total foreign investment in Indian companies [Rule 23 (3)of FEM (non debt instruments) rules, 2019]

(1)      Any equity holding by a person resident outside India resulting from conversion of any debt instrument under any arrangement shall be reckoned for total foreign investment.

(2)     FCCBs and DRs having underlying of instruments in the nature of debt will not be reckoned for total foreign investment.

(3)      The methodology for calculating total foreign investment would apply at every stage of investment in Indian companies and thus in each and every Indian company.

(4)     For the purpose of downstream investment, the portfolio investment held as on March 31 of the previous financial year in the Indian company making the downstream investment will be considered for computing the total foreign investment of the investee Indian entity.

(5)     The indirect foreign investment received by a wholly owned subsidiary of an Indian company will be limited to the total foreign investment received by the company making the downstream investment

2020-02-06 01:57:34

Reporting of other Transactions in ECB (powers delegated to AD Bank I)

Reporting of other Transactions in ECB (powers delegated to AD Bank I)

 

Transaction

conditions

Form

Approval/Intimation

Department

1. Changes/ Modification in the Drawdown/repayment schedule

Average maturity period as declared while obtaining LRN is maintained

Form ECB

Prior Approval of AD bank

Through AD Bank to Department of Statistics and Information Management (DSIM)  Reserve Bank of India

2. Changes in currency of borrowing

Freely convertible

Same as above

Prior Approval of AD bank

Same as above

3. Change of AD Bank

NOC from existing designated AD

Same as above

Prior Approval of AD bank

Same as above

4. Change in the name of Borrower company

ROC certificate

Letterhead of borrower

Intimation

Same as above

5. Change in Recognised lender

New lender should be as per ECB norms

Letterhead of borrower

Intimation

Same as above

6. Cancellation of LRN

No drawdown for said LRN has taken place

Letterhead of borrower

Intimation

Same as above

7. Reduction in all cost of ECB

The consent of lender has been obtained

Letterhead of borrower

Prior Approval of AD bank

Same as above

8. Change in End use of ECB proceeds

Proposed end use is permissible under the Automatic route as per ECB guidelines

Letterhead of borrower

Prior Approval of AD bank

Same as above

9. reduction in the amount of ECB

The consent of lender has been obtained

Form ECB

Prior Approval of AD bank

Same as above

10. Prepayment of ECB

MAMP is maintained

Letterhead of borrower

Prior Approval of AD bank

Same as above

 

Change in currency from INR to Foreign currency is not within AD powers

In case of Partially or Full conversion of ECB into equity, the ECB 2 return will be with suitable remarks ECB partially converted to equity or ECB fully converted to equity.

 
 
 
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2020-02-05 23:12:20

Reporting under External Commercial Borrowing

Reporting under External Commercial Borrowing

 

Particulars

Name of the Form

 

Period in which to be reported OR Prior Approval of RBI

Allotment of Loan Registration Number

Form ECB

Prior approval of RBI for drawdown of ECB tranche

Monthly return regarding use of ECB Reporting of actual transactions

Form ECB 2 with signature of Chartered Accountant

Within 7 working days from the close of month to which it relates.

Application for ECB under approval route

Form ECB

Prior approval of RBI

 

FORM ECB to be submitted in duplicate by the borrower to designated Authorised Dealer (AD) for all categories and any amount of external commercial borrowing (ECB). After examining conformity with the extant ECB guidelines, the AD may provide requisite details in the Summary Sheet of the Form and forward one copy (within 7 days from the date of signing loan agreement between borrower and lender) for allotment of Loan Registration Number (LRN) to: The Director External Commercial Borrowings Division Department of Statistics and Information Management (DSIM)  Reserve Bank of India C-9 Bandra-Kurla Complex Mumbai – 400 051  

2020-02-05 23:12:49

State filing fees in India

No Forms Purpose Nominal share capital Fees Remarks Bracnch office  Laison office  Project office Foreign subsidary Company Indian Private Company
1 DIR-3 Apply for DIN Not Applicable 500 NA NA NA NA Applicable Applicable
2 RUN Service Apply  for Name of the company
 
Not Applicable 1000 1. Two Names are Allow for apply.
2.  Reserved name Valid for 20 days
NA NA NA Applicable Applicable
3 Spice form-32 incorporation form upto 15,00,000
more than 15,00,000
Nil
500
NA NA NA NA Applicable Applicable
4 Spice form -33 Mamorandum of Association  upto10,00,000
more than 10,00,000 upto 50,00,000
More than 50,00,000 up to 1,00,00,000
More than 1,00,00,000
Nil
36000+300 for every 10,000
156000 +100 for every 10,000
206000+75 for every 10,000
Depends Upon the Registered office of Company NA NA NA Applicable Applicable
5 Spice fom -33 Article of Association  upto 10,00,000
10,00,001 to 24,99,999
25,00,000 to 99,99,999
1,00,00,000 or more
NIL
400
500
600
Depends Upon the Registered office of Company NA NA NA Applicable Applicable
6 FC-1 Information to be filed
Registrar of Companies
Not Applicable 6000 file to roc after approval of RBI Applicable Applicable Applicable Applicable Applicable
7 INC-22 Registered office Depend upon capital 600 NA NA NA NA Applicable Applicable
8 INC-20A  Declaration of Commencement of Business Not Applicable 600 NA NA NA NA Applicable Applicable
9 FNC  Application to RBI Not Applicable NIL File to RBI through AD Bank
and RBI issue UIN 
Applicable Applicable Applicable NA NA

2020-02-05 23:13:09