Monday, January 23, 2017

Comments and Photos taken at FULL DAY FEMA WORKSHOP HELD AT BENGALURU ON 21 JANUARY 2017 AT HOTEL CHALUKYA , RACE COURSE ROAD , BENGALURU



Comments and Photos taken at Full Day Workshop on FEMA  Held At Bengaluru on 21st January 2017 at Hotel Chalukya 


We enjoy learning from you. Wish you all the very best.-
Naresh Kumar K  - Asst. Manager | Corporate Secretarial & Compliance, Wipro Limited


CS - ASHOK KUMAR TRIPHTHY - PCS - Thank you So much for seminar and also sharing for PPT. I hope the Seminar will helps us  a lot .

CS Suresh Sitaram - Thanks a lot for the sharing your valuable knowledge and expertise.



FORMALITIES FOR THE TRANSFER OF SHARES OF A PRIVATE / UNLISTED COMPANY FROM RESIDENT TO NON-RESIDENT

FORMALITIES FOR THE TRANSFER OF SHARES OF A PRIVATE / UNLISTED COMPANY FROM RESIDENT TO NON-RESIDENT

a) Is the transfer of shares allowed to non-residents?
·         Subject to the FDI Sectoral Cap policy, non-resident investors can invest in Indian Companies by purchasing/acquiring existing shares from resident shareholders.
·         A person resident in India can transfer shares by way of sale under private arrangement to a person resident outside India subject to the FDI guidelines issued in this regard.
·          
b) What are the RBI reporting obligations under FEMA in a case of transfer of shares between resident and non-resident?
·         The transaction of transfer of shares between resident and non-resident should be reported by submission of form FC-TRS to the AD Category – I bank, within 60 days from the date of receipt/remittance of the amount of consideration. The onus of submission of the form FC-TRS within the given timeframe would be on the person resident in India, i.e. the transferor in the case of sale of shares by a resident to non-resident.


c) What are guidelines for valuation of shares in case of transfer of shares of existing companies?
·         In case of unlisted companies/Private Companies, the valuation of shares shall not be less than the fair value of shares arrived at as per the internationally accepted pricing methodology on arm’s length basis to be determined by a SEBI registered Category-I Merchant Banker/Chartered Accountant.
·         The most common methodology used for the valuation of shares is Direct Cash flows method.
·         A certificate from a practising Chartered Accountant/SEBI registered Category-I Merchant Banker for determining the value of shares is required in this regard.

d) What is the method of payment or remittance/credit of sale proceeds in case of transfer of shares between resident and non-resident?
·         The sales consideration in respect of the shares purchased by a person resident outside India shall be remitted to India through normal banking channels.
·         The sales consideration so remitted into India shall be subject to the Know Your Customer (KYC) check by the AD-I Category Bank receiving the remittance.
·          
e) What are the documents required for transfer of shares from resident to non-resident under the existing RBI/FEMA Guidelines?
·         The documents required for transfer of shares from resident to non-resident will be as follows:

1) Share Valuation certificate by a SEBI registered Category-I Merchant Banker/Chartered Accountant.
2) (Share Purchase agreement between the buyer and the seller of shares.
3) KYC documents of non-resident making the remittance of sales consideration.
4) Foreign Inward remittance certificate (FIRC) issued by the recipient bank.
5) Consent Letter duly signed by the seller and buyer or their duly appointed agent and in the latter case the Power of Attorney Document.
6) The shareholding pattern of the investee company after the acquisition of shares by a person resident outside India.
7) Declaration from the buyer to the effect that he is eligible to acquire shares / compulsorily and mandatorily convertible preference shares/debentures/others under FDI policy and the existing sectoral limits and Pricing Guidelines have been complied with.
8) No Objection/Tax Clearance Certificate from Income Tax Authority/ Chartered Account.
f) What are the compliances to be done under the Companies Act’2013 in respect of the transfer of shares?
·         Once the transaction is settled, the transferee or his duly appointed agent shall approach the investee company to record the transfer in their books/registers along with the certificate in Form FC-TRS from the AD Bank branch.
·         The transfer of shares shall be done through form SH-4 (instrument of transfer) duly stamped, dated and executed as prescribed under section 56 of The Companies Act’ 2013 within 2 months from the date of transfer of shares.
·         On receipt of the certificate from the AD Bank (FC-TRS) and duly signed, stamped and dated Form SH-4, the company may record the transfer in its books/registers by delivering the share certificates of all securities transferred within a period of one month from the date of receipt by the company of the instrument of transfer.
·          
g) What is tax implication of transfer of shares from resident to non-resident?
·         The transfer of shares of an unlisted company from resident to non-resident will attract capital gains for the seller.
·         Here the fair market value of shares has to be determined by the prescribed methods.
·         Any sale of shares above the fair market value will be subject to capital gains tax.
·         Capital gains will be calculated as follows:
Capital gains= Price at which shares are sold Less Fair market value
·         The gains will be taxed @ 20% or 30% depending on the whether it is Long term capital gain or short term. Long terms gains are taxed at 20% while short term at 30% (or at the slab rates in case of an Individual transferor).

·         Since, here we are analysing the sale of shares of an unlisted/private company therefore period of holding to determine whether the gains are long term or short term will be 24 months. So, if the transferor held the shares for more than 24 months before transfer, the capital gains will be long term and will be subjected to 20% tax otherwise it will be short term.


Article Courtesy: CA Pratik Anand

Monday, January 16, 2017

Will the Reserve Bank of India honour the Press Note No 7 (2015 series) dated 18.6.2015 issued by the Ministry of Commerce and Industry thereby treating the investments made by the NRIs will be considered at par with Investments made by Resident Indians?

Will the Reserve Bank of India honour the Press Note No 7 (2015 series) dated 18.6.2015 issued by the Ministry of Commerce and Industry thereby treating the investments made by the NRIs will be considered at par with Investments made by Resident Indians?

There is always ambiguity when the NRIs invest in Indian companies from their NRO account or from their Indian bank accounts, whether there is a need to report such investments to RBI or not?



To obviate the ambiguity on the subject, the Ministry of Commerce and Industry of Government of India came out with a Press Note No 7 (2015 series) dated 18.6.2015 issued by the Ministry of Commerce and Industry treats investments by NRIs under schedule 4 of FEMA (Transfer or Issue of Security by Persons Residents Outside India) Regulations  and it will be deemed to be domestic investment at par with investment made by residents.



Press Note also says a copy forwarded to, among others, RBI for suitably incorporating the policy changes in FEMA (Transfer or Issue of Security by Persons Residents outside India) Regulations 2000 and relevant schedules thereof.

However, necessary modification in the Regulations is not yet issued by Reserve Bank of India  as on date as one can learn from by the latest Regulations down loaded from RBI web site.
RBI officials at various branches also say RBI has not accepted Press Note. This is really perplexing!!!

When Prime Minister of India, Mr. Modiji is more interested in NRIs investments in India as proclaimed by him in the recent NRIs Meet at Bengaluru , the attitude of Reserve Bank of India is not tune with the Prime Minister’s anticipations, aspirations and policies.



Will the Reserve Bank of India will come with the immediate notification in confirming the Press Note No 7 (2015 series) dated 18.6.2015 issued by the Ministry of Commerce and Industry  thereby treating the  investment by NRIs from their NROs accounts or from their Indian bank accounts as investment under non-repatriation basis and will be treated as similar to investments by Indian residents.

It is to be noted when NRIs have transferred the FDI amount from their NRE accounts and if specifically express that they are making the investments with the repatriation benefits , then , investee companies in India , has to report the same to RBI under FEMA.

This will remove doubts on the subject that such investments ( NRIs NRO account or from their Indian bank accounts)  will not require any reporting formalities such as ARF or FC-GPR by investee companies in India.

Will the RBI clarify on the subject on war footing basis?


Monday, January 2, 2017

ONE FULL DAY SEMINAR ON FEMA AT BENGALURE on JANUARY 21, 2017 SATURDAY

ONE FULL DAY SEMINAR ON FEMA AT BENGALURE   on 

 JANUARY 21, 2017 SATURDAY



By R V Seckar, F.C.S, ICSA (UK), LLB


DATE: JANUARY 21, 2017 SATURDAY

FEE: Rs 1000/= per participant including lavish Lunch ¸two tea-breaks and materials


HOTEL CHALUKYA ,


44, Racecourse Road , High Grounds , Sampangi Rama Nagar , 

Bengaluru – Phone 22256576

Payment to be sent to: Axis Bank - Koyambedu branch- Savings Bank Account Number  910010030395067 -IFSC Code : UTIB0001009- Beneficiary Name - R V Sekar

Or

You can pay through your mobile through

SBI BUDDY – 9848915177

Or


BHIM -9848915177@UPI


Morning Session

10 A.M to 11.30 A.M – Various Compliances under FEMAuseful to Compliance officers of Listed Companies , Public companies and private limited companies which has FDI , ECB , ODI , etc.

11.45 A.M To 12.15 NoonHow to Make Compounding Application to RBI? What are all to be included in the pleadings?

12.15 Noon to 1 P.M RECENT AMENDMENTS IN FEMA AND WHAT THE follow-up actions to be taken by the  PROFESSIONALS LIKE COMPANY SECRETARIES , CHARTERED ACCOUNTANTS , CMAS & ADVOCATES in compliance of the same

Afternoon Session

2 P.M to 2.30 PM   How to Upload FC-GPR, FC-TRS in the ebiz Portal and what are the practical issues faced by the professionals and how to over-come

2.3O-3.30 AVAILING ECB, MAKING ODI – PROCEDURES , COMPLIANCES

3.30 to 4.30 P.M  -Compliance for Investment by NRI & Foreign Entities and Transfers

4.30 P.M to 5.00 P.MQuestions and answers on the topic discussed in the seminar


Feedback of my full day seminar on FEMA at Chennai held on 17th September 2016- click here


Feedback on my FEMA seminar at Mysore ICSI chapter on 2nd December 2016, click here


Seminar will be handled by

R.V.Seckar, F.C.S, ICSA (UK), LLB, M.com

Director, Chandra Oil & Gas Project Services Private Limited, Kakinada

Interested can contact: 09848915177, rvsekar2007@gmail.com

Please rush your registration as limited seats only available