GIFT RECEIVED FROM NRI BROTHER CAN BE EXCLUDED FROM TAXATION AND NOT TAXABLE : INCOME TAX APPELLATE TRIBUNAL
COMMENTS ON FEMA (FOREIGN EXCHANGE AND MANAGEMENT ACT
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.
Saturday, August 24, 2024
#NFRA LEVIED A HEFTY RS 10-CR PENALTY ON BSR & ASSOCIATES AUDIT FIRM IN COFFEE DAY CASE AND DEBARS TWO OF ITS AUDITORS.
#NFRA LEVIED A HEFTY RS 10-CR PENALTY ON BSR
& ASSOCIATES AUDIT FIRM IN COFFEE DAY CASE AND DEBARS TWO OF ITS AUDITORS.
Saturday, August 17, 2024
#GOVT SIMPLIFIES FDI RULES TO HELP INDIAN COMPANIES EXPAND VIA MERGERS, ACQUISITIONS THROUGH SHARE SWAPS
#GOVT SIMPLIFIES FDI RULES TO HELP
INDIAN COMPANIES EXPAND VIA
MERGERS,ACQUISITIONS THROUGH
SHARE SWAPS
The Finance Ministry on Friday issued a
notification amending the Foreign Exchange Management (Non-debt Instruments)
Rules, 2019, to simplify FDI rules for enabling easier cross-border share swaps
between Indian and foreign companies.
In an important amendment to the FEMA (Non Debt
Instruments) Rules, 2019, which deal with foreign investment in Indian
entities, it is now permitted to issue shares by an Indian company against swap
of equity capital of an overseas company.
Earlier:
1. An Indian company could issue its own equity
shares to a non-resident/ foreign entity against acquisition of shares of an
“Indian company”; or
2. An Indian company could sell its equity
capital in an overseas entity to an overseas company against shares being
issued by such overseas acquirer to the Indian company.
ODI-FDI Share Swap not permitted earlier:
However, in a non-cash transaction involving
share swap, issuance of shares by an Indian company to a non-resident/ foreign
entity against acquisition of shares of an overseas company owned by such foreign
seller was not permitted.
Effective Share Swap:
While an effective swap could be effectuated
through acquisition of an overseas company from a foreign entity by the Indian
company for cash consideration, and thereafter issuance of shares by the Indian
company to the overseas seller against cash consideration, complications in
terms of conceptualising the construct of binding documents and foreign
exchange loss arose.
With this amendment, a direct swap is now
permissible, and logically so, the said complications could now be addressed.
It sounds like RBI wants to facilitate
acquisition offshore but not the capital flow? Effectively a company in India
wanting to set up a WoS could identify a target & share swap to own it -
with little or no cash considerations?
https://pib.gov.in/PressReleasePage.aspx?PRID=2046086
Saturday, June 29, 2019
NEW FLA FORM HAS BEEN INTRODUCED BY RBI UNDER FEMA. LATE DATE FOR FILING FLAIR FORM THROUGH WEB BASED SYSTEM TO RBI IS 15 JULY 2019.
Saturday, May 18, 2019
Process Of Raising Funds Through Non-Convertible Debentures by an Indian Company from NRIs
Process Of Raising Funds Through Non-Convertible Debentures by an Indian Company from NRIs
Tuesday, February 19, 2019
NOW INDIAN COMPANIES WHO ARE IN CIRP PROCESS CAN USE ECB TO REPAY THEIR RUPEE TERM LOAN.
NOW INDIAN COMPANIES WHO ARE IN CIRP PROCESS CAN USE ECB
TO REPAY THEIR RUPEE TERM LOAN.
Chief General Manager-in-Charge
Saturday, February 2, 2019
REPORTING FDI ( FOREIGN DIRECT INVESTMENTS) TO RBI UNDER SMF AND FIRMS
S.N0
|
Type of Form
|
Full Form
|
Applicability Form
|
01
|
Form- FC-GPR
|
Foreign Currency – Gross
Provisional Return
|
Issue of capital instruments
by an Indian company to a person resident outside India
|
02
|
Form- FC-TRS
|
Foreign Currency – Transfer
of Shares
|
Transfer of capital
instruments between a person resident outside India and a person resident in
India
|
03
|
Form LLP-I
|
Limited Liability
Partnerships-I
|
Foreign direct investment in
an LLP through capital contribution and profit shares;
|
04
|
Form LLP-II
|
Limited Liability
Partnerships-II
|
Disinvestment or transfer of
capital contribution and profit shares in an LLP
|
05
|
Form ESOP
|
Employees’ stock option
Scheme
|
Issue of employee stock
options, sweat equity shares or shares against the exercise of employee stock
options by an Indian company to an employee resident outside India
|
06
|
Form CN
|
Convertible Notes
|
Issue or transfer of
convertible notes;
|
07
|
Form DRR
|
Depository Receipts
|
Issue or transfer of
depository receipts;
|
08
|
Form DI
|
Downstream Investment
|
Reporting of downstream
investment or indirect foreign investment in a company or an LLP; and
|
09
|
Form InVi
|
Investment Vehicle
|
Reporting of investment by a
person resident outside India in an investment vehicle
|
DOCUMENTS
REQUIRED TO BE ATTACHED TO THE SMF
|
||||
S.NO
|
Type
of Form
|
When
to File
|
Attachments
|
Remarks
|
1
|
For
FCGPR
|
Within 30 days from the date
of allotment
|
a. FIRC
|
File Size Allowed 1 MB
|
b. KYC
|
File Size Allowed 1 MB
|
|||
c. Valuation Report
|
File Size Allowed 1 MB
|
|||
d. CS Certificate
|
Merge into one file &
File size shall not exceed 1 MB
|
|||
e. Board Resolution
|
||||
f. Terms of CCPS &
Shareholding Pattern
|
||||
g. Declaration Letter-By
authorized a representative of Indian Company
|
||||
h. Reason for the delay- If
any
|
||||
i. Debit advice note or Swift
Message- In case of Excess amount received
|
||||
In
case the inward remittance received from a different person [i.e from other
than Investor] following documents required to be attached
:
|
File Size Allowed 1 MB
|
|||
(a) KYC reports of both the
remitter and the beneficial owner.
|
||||
(b) A no-objection
certificate (NOC) from the remitter for issuing capital instruments to the
beneficial owner mentioning their relationship.
|
||||
(c) A letter from the
beneficial owner explaining the reason for the remitter making remittance on
its behalf.
|
||||
(d) A copy of agreement/board
resolution from the investee company for issuing capital instruments to a
person other than from who the remittance has been received.
|
||||
|
||||
2
|
For
FC-TRS
|
Within sixty days of the
transfer of capital instruments or receipt/ remittance of funds[ whichever is
earlier.]
|
a. FIRC
|
File Size Allowed 1 MB
|
b. KYC
|
File Size Allowed 1 MB
|
|||
c. Valuation Report
|
File Size Allowed 1 MB
|
|||
d. Buyer Consent Letter
|
Merge into one file &
File size shall not exceed 1 MB
|
|||
e. Seller Consent Letter
|
||||
f. FEMA Declaration &
Other attachments
|
||||
g. Declaration by Auth
Representative- i.e Director
|
||||
h. Debit Authorization Letter
if any
|
||||
i. Declaration by the
non-resident transferor or transferee
|
||||
j. Reason for Delay - If any
|
||||
|
||||
3
|
Form
LLP-1
|
within 30 days from the date
of receipt of the amount of consideration
|
a. FIRC
|
File Size Allowed 1 MB
|
b. KYC
|
File Size Allowed 1 MB
|
|||
c. Declaration Letter-By
authorized a representative of Indian Company
|
File Size Allowed 1 MB
|
|||
d. Other Relevant Attachments
if any
|
||||
|
||||
4
|
Form
LLP-2
|
within 60 days from the date
of receipt of funds
|
a. FIRC
|
File Size Allowed 1 MB
|
b. KYC
|
File Size Allowed 1 MB
|
|||
c. Valuation Certificate
|
File Size Allowed 1 MB
|
|||
d. Declaration Letter-By
authorized a representative of Indian Company
|
File Size Allowed 1 MB
|
|||
e. Other Relevant Attachments
if any
|
||||
|
||||
5
|
Form CN
|
within 30 days of issue/
transfer
|
a. FIRC
|
File Size Allowed 1 MB
|
b. KYC
|
File Size Allowed 1 MB
|
|||
c. Declaration Letter-By
authorized a representative of Indian Company
|
File Size Allowed 1 MB
|
|||
d. Other Relevant Attachments
if any
|
||||
|
||||
6
|
Form ESOP
|
within 30 days from the date
of issue
|
a. CS Certificate
|
File Size Allowed 1 MB
|
b. Declaration Letter-By
authorized a representative of Indian Company
|
File Size Allowed 1 MB
|
|||
c. Other Relevant Attachments
if any
|
||||
|
||||
7
|
Form DRR
|
Within 30 days of close of
the issue/ program.
|
a. Declaration Letter-By
authorized a representative of Indian Company
|
File Size Allowed 1 MB
|
b. Other Relevant Attachments
if any
|
||||
|
||||
8
|
Form DI
|
Within 30 days from the date
of allotment of capital instruments.
|
a. Declaration Letter-By
authorized a representative of Indian Company
|
File Size Allowed 1 MB
|
b. Other Relevant Attachments
if any
|
Amount involved in reporting
|
Late Submission
|
Maximum amount of LSF
|
(in Rs.)
|
Fee (LSF) as % of
|
Applicable
|
|
amount involved *
|
|
Up to 10 million
|
0.05 percent
|
Rs.1 million or 300% of the
|
|
|
amount involved, whichever
|
|
|
is lower
|
More than 10 million
|
0.15 percent
|
Rs.10 million or 300% of the
|
|
|
amount involved, whichever
|
|
|
is lower
|
* The % of LSF will be doubled every twelve months the floor (minimum applicable amount) for LSF will be Rs 100
The LSF may be paid by way of a demand draft drawn in favor of “Reserve Bank of India” and payable at the Regional Office concerned.