FEMA requires observation of its provisions in letter and spirit and if any contravention may land in penalties on the erring company and individuals. There are various conditions and stipulations in case of FDI , ODI , investment by individuals in foreign shares , purchase of assets in foreign countries , extending guarantees , availing ECBs , supplier's credit . In this column , I will discuss all intricacies and complications involving the interpretation of FEMA Act provisions in detail.
Tuesday, April 23, 2013
Conversion of ECB/Lump sum Fee/Royalty etc. into Equity
of ECB/Lump sum Fee/Royalty etc. into Equity- Waiver of Condition for valuation from an Independent valuer from country of import
As per the FDI Policy, the
companies are allowed to issue equity shares against the import of capital
goods/ machinery/ equipment (excluding second-hand machinery), subject to
compliance with the various conditions specified therein.
One of the conditions
in the FDI policy was mandatory requirement of independent valuation of the
capital goods/machinery/equipments (including second-hand machinery) by a third
party entity, preferably by an independent valuer from the country of import
along with production of copies of documents/certificates issued by the customs
authorities towards assessment of the fair-value of such imports.
condition has been dispensed with through introduction of the new Consolidated
FDI Policy dated 5th April, 2013.