Tuesday, April 17, 2018

RBI Tightens Monitoring of Liberalised Remittance Scheme (LRS) for Overseas Money Transferring


RBI Tightens Monitoring of Liberalised Remittance Scheme (LRS) for Overseas Money Transferring

R V Seckar FEMA , Corporate Law & Insolvency Law Consultant 09848915177


The Reserve Bank today tightened reporting norms for the Liberalised Remittance Scheme (LRS) under which an individual can transfer up to USD 2,50,000 abroad in a year.

R V Seckar FEMA , Corporate Law & Insolvency Law Consultant 09848915177


Declaration made by the Remitter

The LRS transactions are currently permitted by banks based on the declaration made by the remitter.

The monitoring of adherence to the limit is confined to obtaining such a declaration without independent verification, in the absence of a reliable source of information.

"In order to improve monitoring and also to ensure compliance with the LRS limits, it has been decided to put in place a daily reporting system by AD banks of transactions undertaken by individuals under LRS, which will be accessible to all the other ADs," the RBI said in a notification.

R V Seckar FEMA , Corporate Law & Insolvency Law Consultant 09848915177


To Upload Daily Transaction-Wise Information 


Now banks will be required to upload daily transaction-wise information undertaken by them under LRS.

Under the LRS, all resident individuals, including minors, are allowed to freely remit up to USD 2,50,000 per financial year for any permissible current or capital account transaction or a combination of both.

R V Seckar FEMA , Corporate Law & Insolvency Law Consultant 09848915177


Individuals can avail of foreign exchange facility for the purposes within the limit of USD 2,50,000 only.

The scheme was introduced on February 4, 2004, with a limit of USD 25,000.

The LRS limit has been revised in stages consistent with prevailing .



Courtesy - Indian Express 


Friday, April 6, 2018

SEIS Benefits on your Foreign Exchange Earnings under FTP 2015 - 2021 - Benefits for Service Exporters and Product Exporters


SEIS Benefits on your Foreign Exchange Earnings under FTP 2015 - 2021 - Benefits for Service Exporters and Product Exporters


R V Seckar Consultant in FEMA , Corporate and Insolvency Law consultant,

What is SEIS ?
Service providers of eligible services shall be entitled to duty credit scrip at notified rates on the net foreign exchange earned. Duty credit scrips can be used for the payment of custom duties, excise duties, service tax on procurement of services, custom duty in case of default in fulfillments of export obligation under Advance Authorization/EPCG, etc.,

 Further, the SEIS scheme has given relaxation to the actual user condition and duty credit scrips and goods imported using duty credit scrips are freely transferable. Duty credit scrip would be valid for a period of 18 months from the date of issue

As per new FTP announced on 1st April’ 15; you shall be eligible for benefits under the SEIS Scheme against the Services earned in Foreign Exchange/ Deemed Foreign Exchange.
R V Seckar Consultant in FEMA , Corporate and Insolvency Law consultant,


Who are All Eligible for Claiming the Benefits ?

For Company / LLP
Service Providers of notified services, located in India are eligible for the Service Exports from India Scheme. To be eligible, a service provider (Company / LLP / Partnership Firm) should have a minimum net free foreign exchange earnings of USD15000 in the preceding financial year to be eligible for duty credit scrips.

R V Seckar Consultant in FEMA , Corporate and Insolvency Law consultant,

For Partnership & Individual Service Providers

For proprietorships or individual service providers, a minimum net foreign exchange earnings of USD10,000 in the preceding financial year is required to be eligible for the scheme. Also, in order to claim reward under the SEIS scheme, the service provider shall have to have an active Import Export Code (IE Code) at the time of rendering such services for which rewards are claimed.

R V Seckar Consultant in FEMA , Corporate and Insolvency Law consultant,

Eligible Service Providers for SEIS Scheme

1
Professional Services 
2
Research and Development Services
3
Rental/Leasing Services without Operators
4
Audiovisual Services 
5
Construction and Related Engineering Services 
6
Educational Services
7
Environmental Service
8
Health and Social Services
9
Tourism and Travel Services
10
Recreational, Cultural and Sporting Services 
11
Other Business Services


What Service we are Providing ?

We do apply and get the Issuance of SEIS Scrip from the Government/ DGFT in your favour as per the prescribed guidelines of the FTP.

The scrips, if preferred so, may be transferred/sold to anybody in advance at best rate, which will be paid immediately against delivery of Scrip along with Transfer Letter duly attested by your Bankers and the Sale Invoice.

We do charge our commission for processing and preparing the Application for SEIS Scrip only after issuance of the same in your favour; except your direct payment of Governmental fee for it, as per Policy.

Monday, April 2, 2018

The Foreign Exchange Management (Cross Border Merger) Regulations, 2018


The Foreign Exchange Management (Cross Border Merger) Regulations, 2018

NO PRIOR APPROVAL IS REQUIRED FROM RBI IF CROSS BORDER MERGER IF IT IS IN COMPLIANCE WITH THE FEMA 389/ 2018-RB dated 20 March, 2018.

Section 234 of the Companies Act, 2013 (notified with effect from 13 April, 2017) provided for the cross border merger of Indian and foreign companies. Further, Companies (Compromises, Arrangements and Amalgamation) Rules, 2016, as amended by the Companies (Compromises, Arrangements and Amalgamation) Amendment Rules, 2017 (Co. Rules) were issued. Section 234 provides for prior Reserve Bank of India (RBI) approval in case of cross border merger.

R V Seckar Consultant in FEMA ,Corporate Law & Insolvency Law


On 26 April, 2017, the RBI issued draft regulations relating to cross border mergers for comments from the public. The Foreign Exchange Management (Cross Border Merger) Regulations, 2018 have now been notified vide notification no. FEMA 389/ 2018-RB dated 20 March, 2018 and are effective from the date of notification. As per the Regulations, merger transactions in compliance with these regulations shall be deemed to have been approved by RBI, and hence, no separate approval should be required. In other cases, merger transactions should require prior RBI approval.

The Cross Border Regulations, 2018 Makes International Merger And Acquisition Transactions More Flexible

The notification of FEMA regulations laying down the framework in relation to cross border mergers is an extremely positive development, which should facilitate international merger and acquisition transactions. Given that the guidelines deal with a new set of transactions, they are likely to evolve based on practical experience, as may be encountered in the due course of time.
The Salient Ingredients of the RBI Regulations are:

R V Seckar Consultant in FEMA ,Corporate Law & Insolvency Law


The Meaning of Inbound Merger

The resulting company (or transferee) is in India in case of inbound merger.
The Meaning of Outbound Merger

The resulting company (or transferee) is a foreign company in case of outbound merger.

R V Seckar Consultant in FEMA ,Corporate Law & Insolvency Law


Procedure to be followed by an Indian Company

 In an inbound merger, the Indian company can issue securities in compliance of pricing guidelines and within the limits of applicable sector cap and applicable regulations under Foreign Management Act, 1999 (FEMA).

R V Seckar Consultant in FEMA ,Corporate Law & Insolvency Law

Compliances under ECB Regulations

A period of two years is provided for compliance with External Commercial Borrowings (ECB) Regulations in respect of loans, borrowings or guarantees of the transferor company outside India.

Other Criteria

Further any asset not permitted to be acquired under FEMA needs to be disposed off twenty-four months immediately after merger.

Deemed Branch Office

 Offices of foreign company will be deemed to be branch office of Indian company post-merger.

R V Seckar Consultant in FEMA ,Corporate Law & Insolvency Law


Outbound Merger

The resident Indian is allowed to hold securities issued on the basis of fair market value and in terms of Liberalized Remittance Scheme (LRS) of RBI in the case of an outbound merger.

Foreign company can hold assets in India in subject to compliance of FEMA. Offices of Indian company post-merger will be deemed to be branches of the foreign company post-merger.

VALUATION

 Valuation of the Indian company and the foreign company to be conducted by Valuers who are members of a recognized professional body and further to be ensured that such valuation is in accordance with internationally accepted principles on accounting and valuation.

REPORTING TO RBI

 The resultant company and/or the companies involved in the cross border merger shall be required to furnish reports as may be prescribed by RBI.

CERTIFICATION

 A certificate from the Managing Director/Whole Time Director and Company Secretary, if available, of the company concerned ensuring compliance to these Regulations shall be furnished along with the application to be made to the NCLT for approval of the scheme.

Regulatory actions in respect of Non-Compliances under FEMA

 Regulatory actions, if any, with respect to non-compliance, contravention under FEMA shall be completed prior to merger by the companies involved in cross border merger.

Compensation

Compensation by the resultant company, to a holder of a security of the Indian company or the foreign company, as the case may be, may be paid, in accordance with the scheme sanctioned by the NCLT.

Friday, January 26, 2018

Changes in Consolidated FDI Policy 2017


Changes in Consolidated FDI Policy 2017

Department of Industrial Policy & Promotion release consolidated Foreign Direct Investment (“FDI”) Policy every year, with amendment to bring in line with the RBI guidelines and FEMA regulation and based on the requirement from Corporate, towards ease of doing business and encouraging Foreign Investor at large, to invest in Indian Corporate.




Last year, Consolidated FDI Policy came into effective from August 28, 2017 and will be effective till the next Consolidated FDI Policy come into force for 2018. To bring in line with RBI guidelines and as amendments required, DIPP released Press Note No. 1 (2018) dated January 23, 2018, amending few important clauses in the Consolidated FDI Policy 2017.

 Following are the brief summary of few important amendments:

Prohibition of restrictive conditions regarding audit firm
Within the FDI in Investee Companies, if Investor Company is intending to call for Joint Audit, whereby one of the auditor should not be forming part of the same audit network. Hence, this will increase the Corporate Governance check on bring brands, where the Foreign Investor will have stake and decision making power.

100% FDI is allowed in NBFC
Investment by Foreign Investor in NBFC will no longer require Government approval. 100% FDI is permitted in NBFC Companies under automatic route as against approval route.
Activity / Sector
Administrative Ministry Department
Application involving instruments from Countries of Concern falling under automatic route sectors/activities, requiring security clearance as per the extant FEMA 20, FDI Policy and security guidelines, as amended from time to time
Department of Industrial Policy and Promotion
Cases pertaining to Government approval route sectors/activities requiring security clearance as per the extant FEMA 20, FDI Policy and security guidelines, as amended from time to time
Nodal Administrative Ministries / Departments


FOREIGN INVESTMENT IS ALLOWED IN AIR-INDIA NOW

Existing policy allowed foreign airlines to invest in the Indian aviation companies up to 49% of capital, operating scheduled and non-scheduled air transport services, subject to the approval from Government. This policy was not allowed to M/s. Air India Limited. However, the restriction is removed from M/s. Air India Limited with the amendment.



100% FDI IS ALLOWED IN THE REAL ESTATE BROKING SERVICES

100% FDI is allowed in the real estate broking services (which does not tantamount to be real estate business) 

AMENDMENT IN SINGLE BRAND RETAIL TRADING :

(i)
100% FDI permitted
(ii)
Product should sold out in single brand at international market as well
(iii)
Single Brand means brand used during the manufacturing process
(iv)
Sourcing of 30% of value of goods purchased by the Indian business, should be from domestic market, after FDI above 51%. These are mandatory requirement and duty of statutory auditor to check the accounting system to ensure the procurement is done from the domestic market.

EXPANSION OF ISSUE OF EQUITY SHARES FOR PRODUCTS IMPORTED

In addition to the existing conditions for conversion/issue of equity shares for sector(s) under automatic route, issue of equity shares are allowed as against import of capital goods, machinery, equipments, and pre-operative expenses, subject to the approval from Government and filing of FC-GPR as per RBI reporting norms.


Courtesy : Mr Ashish Baid 

Monday, December 11, 2017

THERE IS A STRONG NECESSITY OF UNIFORMITY BETWEEN FEMA AND COMPANIES ACT ,2013.


MY REQUEST HAS BEEN ACCEPTED BY RBI AND NOW FEMA PROVISION FOR ALLOTMENT OF SHARES ARE MADE IN LINE WITH COMPANIES ACT 2013


For details ,please click the following link:




I POINTED OUT EARLIER MY POST, THAT THERE IS A CONTRADICTION BETWEEN COMPANIES ACT AND FEMA FOR THE NUMBER OF DAYS WITHIN WHICH ALLOTTMENT OF SHARES HAVE TO BE MADE

I PLEADED THAT THERE IS A STRONG NECESSITY OF UNIFORMITY BETWEEN FEMA AND COMPANIES ACT ,2013.

Will the Government of India through the Ministry of Commerce and Industry will amend the Industrial policy issued in June 2016 by making amendment as “shares have to be allotted within 60 days of receipt of inward remittance by the non-resident investor.

This will go long way to remove the confusions and misunderstandings as regards to number of days within which the shares have to be allotted

Now , The Reserve Bank of India has clarified the query in relation to time limit of Allotment of Shares for the Foreign Direct Investment received by the company through notification no. FEMA 20(R)/2017-RB dated 07 November 2017.


As per this notification, Capital Instruments such as Equity, CCPs, CCDs shall be issued by the Indian company to the Investors making foreign direct investment within sixty (60) days from the date of receipt of the consideration.


Now , FEMA and Companies Act 2013 stresses that shares shall have to be allotted within 60 days of the receipt of consideration.


Friday, November 3, 2017

Now, You have to compound the offence under FEMA for not filing the Annual Return on Foreign Liabilities and Assets (FLA return), by all Indian companies on July 15th Every year.

Now, You have to compound the offence under FEMA for not filing the Annual Return on Foreign Liabilities and Assets (FLA return), by all Indian companies on July 15th Every year.


Earlier, there is no provision under FEMA for mandatory filing of the Annual Return on Foreign Liabilities and Assets (FLA return), by all Indian companies on July 15th Every year.

Now, it has been made the filing of the Annual Return on Foreign Liabilities and Assets (FLA return), by all Indian companies on July 15th Every year as mandatory.

If you fail to file FLA with RBI on or before July 15th Every year, you have to contravene the same with the Regional RBI.

The Relevant circular is reproduced below:


BI/2016-17/220 A.P. (DIR Series) Circular No. 29 February 02, 2017

To
All Category- I Authorised Dealer Banks
Madam / Sir,
Foreign Exchange Management Act, 1999 (FEMA)
Foreign Exchange (Compounding Proceedings) Rules, 2000 (the Rules) -
Compounding of Contraventions under FEMA, 1999

Attention of all the Authorised Dealer Category - I (AD Category - I) banks and their constituents is invited to A.P. (DIR Series) Circular No. 117 and 36 dated April 4, 2014 and October 16, 2014 respectively, and the Foreign Exchange (Compounding Proceedings) Rules, 2000 notified by the Government of India vide G.S.R.No.383 (E) dated 3rd May 2000, as amended from time to time, regarding delegation of powers to the Regional Offices of the Reserve Bank of India to compound the contraventions of FEMA.

2. In partial modification thereof, it has been decided to delegate further powers to Regional Offices as under:

FEMA Regulation
Brief Description of Contravention
Delay in filing the Annual Return on Foreign Liabilities and Assets (FLA return), by all Indian companies which have received Foreign Direct Investment in the previous year(s) including the current year

3. The powers to compound the contraventions at Paragraph 2 above have also been delegated to all Regional Offices (except Kochi and Panaji) without any limit on the amount of contravention.

4. Kochi and Panaji Regional offices can compound the above contraventions for amount of contravention below Rupees One hundred lakh (Rs.1,00,00,000/-) only. The contraventions of Rupees One hundred lakh (Rs.1,00,00,000/) or more under the jurisdiction of Kochi and Panaji Regional Offices will continue to be compounded at Central Office as hitherto.

5. Accordingly, applications for compounding the above contraventions as at Paragraph 2, up to the amount of contravention stated in paragraph 3 and 4 may be submitted by the concerned entities to the respective Regional Offices under whose jurisdiction they fall. For all other contraventions, applications may continue to be submitted to Foreign Exchange Department, 5th floor, Amar Building, Sir P.M.Road, Fort, Mumbai - 400001.

6. The above modifications will come into force with immediate effect. All other instructions on compounding shall remain unchanged. This provision is being clarified in Para 3 and 7.4 of the Master Direction on Compounding of Contraventions under FEMA, 1999.

7. Authorised Dealers may bring the contents of this circular to the notice of their constituents and customers concerned.

8. The directions contained in this circular have been issued under Sections 10 (4) and 11 (1) of the Foreign Exchange Management Act, 1999 (42 of 1999).
Yours faithfully,
(Shekhar Bhatnagar)
Chief General Manager-in-Charge