REPORTING OF CHANGE OF INFORMATION BY A BRANCH OFFICE OF A FOREING COMPANY TO MINISTRY OF CORPORATE AFFAIRS (MCA)

WHAT FORM IS TO BE SUBMITTED TO BRANCH OFFICE OF A FOREING COMPANY IN INDIA TO MINISTRY OF CORPORATE AFFAIRS (MCA).

A foreign company can change its information by filing Form 49 and Form 52.
Form 49 is required when there is -

• Alteration in the charter, statute or memorandum and articles of association,
• Alteration in Address of the registered or principal office
• Alteration in directors and secretary of a foreign company.

Similarly, Form 52 is required to give notice in case of -

(A) Alteration in names and addresses of persons resident in India authorized to accept service on behalf of a foreign company (B) Alteration in the address of principal place of business in India of a foreign company (C) Annual accounts and list of places of business established in India by a foreign company (D) Cessation to have a place of business in India.

Release of Foreign Exchange for Imports – Further Liberalisation- up to USD 5000 under Automatic Route without Form A-1

Release of Foreign Exchange for Imports – Further Liberalisationup to USD 5000 under Automatic Route without Form A-1

Attention of all the Authorised Dealers (ADs) in foreign exchange is invited to the A.P.(DIR Series) Circular No. 106 dated June 19, 2003 in terms of which applications by persons, firms and companies for making payments, exceeding USD 500 or its equivalent towards imports into India must be made in Form A-1.

2. Based on suggestions received from the various stake holders, the said limit has been reviewed and it has been decided as a measure of liberalization to raise the above limit for foreign exchange remittance towards imports without any documentation formalities, from USD 500 or its equivalent to USD 5000 or its equivalent, with immediate effect.

3. It is clarified that the ADs need not obtain any document, including Form A-1, except a simple letter from the applicant containing the basic information viz., the name and the address of the applicant, name and address of the beneficiary, amount to be remitted and the purpose of remittance, as long as the exchange being purchased is for a current account transaction (and is not included in the Schedules I and II of the Foreign Exchange Management (Current Account Transactions) Rules, 2000 framed by Government of India vide Notification No. G.S.R.381 (E) dated May 3, 2000, as amended from time to time, the amount does not exceed USD 5000 or its equivalent and the payment is made by a cheque drawn on the applicant's bank account or by a Demand Draft.

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

5. 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) and are without prejudice to permissions / approvals, if any, required under any other law.

Ref- RBI/2011-12/404--A.P. (DIR Series) Circular No. 82-----February 21, 2012

FURTHER LIBERALIZATION OF RECEIPT OF FURTHER ADVANCE AGAINST EXPORTS BEYOND ONE YEAR

Export of Goods and Services -
Receipt of advance payment for export of goods
Involving shipment (manufacture and ship) beyond one year

 The RBI has allowed banks to permit exporters to receive advance payment for shipment of goods which would take more than one year to manufacture, a step which will reduce transaction time.

"With a view to liberalising the procedure, it has been decided to permit AD Category-I banks to allow exporters to receive advance payment for export of goods which would take more than one year to manufacture and ship...," the Reserve Bank said in a notification.

As per the old rule under the Foreign Exchange Management (Export of Goods and Services) Regulations, prior approval of the apex bank was required to be obtained by an exporter for receipt of advance in case the agreement provided for shipment of goods extending beyond the period of one year from the date of receipt of advance payment.

In its notification, the RBI said that relaxation could be availed of subject to certain conditions like compliance with Know Your Customer (KYC) norms and other guidelines, besides due diligence by the concerned bank.

The following is the text of the RBI Circular:

Attention of Authorised Dealer Category – I (AD Category I) banks is invited to the sub-regulation (2) of Regulation 16 of the Foreign Exchange Management (Export of Goods and Services) Regulations, 2000, notified vide Notification No.FEMA.23/RB-2000, dated 3rd May 2000, as amended from time to time, in terms of which prior approval of the Reserve Bank is required to be obtained by an exporter for receipt of advance where the export agreement provides for shipment of goods extending beyond the period of one year from the date of receipt of advance payment.


2. With a view to liberalizing the procedure, it has been decided to permit AD Category- I banks to allow exporters to receive advance payment for export of goods which would take more than one year to manufacture and ship and where the ‘export agreement’ provides for shipment of goods extending beyond the period of one year from the date of receipt of advance payment subject to the following conditions:-


the KYC and due diligence exercise has been done by the AD Category –I bank for the overseas buyer;


compliance with the Anti Money Laundering standards has been ensured;


the AD Category-I bank should ensure that export advance received by the exporter should be utilized to execute export and not for any other purpose i.e., the transaction is a bona-fide transaction;


progress payment, if any, should be received directly from the overseas buyer strictly in terms of the contract;


the rate of interest, if any, payable on the advance payment shall not exceed London Inter-Bank Offered Rate (LIBOR) + 100 basis points;


there should be no instance of refund exceeding 10% of the advance payment received in the last three years;


the documents covering the shipment should be routed through the same authorised dealer bank; and


in the event of the exporter's inability to make the shipment, partly or fully, no remittance towards refund of unutilized portion of advance payment or towards payment of interest should be made without the prior approval of the Reserve Bank.


3. Necessary amendments to the Foreign Exchange Management (Export of Goods and Services) Regulations, 2000, wherever necessary, are being issued separately.


4. AD Category - I banks may bring the contents of this circular to the notice of their constituents and customers concerned.
5. 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) and are without prejudice to permissions / approvals, if any, required under any law.


Reference -RBI/2011-12/403-A.P. (DIR Series) Circular No.81-February 21, 2012

Export of Goods and Services-Simplification and Revision of Softex Procedure

Export of Goods and Services-

Simplification and Revision of Softex Procedure

Attention of the Authorised Dealers is invited to Regulation 6 of the Notification No.FEMA 23/2000-RB dated May 3, 2000 viz. Foreign Exchange Management (Export of Goods and Services) Regulations, 2000, as amended by the Notification No.FEMA 36/2001-RB dated February 2, 2001, in terms of which designated officials of the Ministry of Information Technology, Government of India at the Software Technology Parks of India (STPIs) or at Free Trade Zones (FTZs) or Export Processing Zones (EPZs) or Special Economic Zones(SEZs), had been authorised to certify exports declared through SOFTEX Forms.

2. Considering the spurt in the volume of software exports from India in recent times, the complexity of work contracts involved, the voluminous nature of contract agreements and the duration involved in execution of each contract as well as the time-consuming process involved in the certification of SOFTEX forms, the matter was revisited and a revised procedure, given herein below, has now been finalised in consultation with the stakeholders involved.

3. As per the revised procedure, a software exporter, whose annual turnover is at least Rs. 1000 crore or who files at least 600 SOFTEX forms annually, will be eligible to submit a

quadruplicate set of SOFTEX form to the nearest STPI. STPI will then verify the details and decide on a percentage sample check of the documents in details. Software companies will submit all the documents on demand to STPI within 30 days of their advice or any reasonable/extended time at the discretion of the Director, STPI, at the request from the exporter. STPI will thus certify the statement and SOFTEX forms in bulk on the "Top Sheet" regarding the values etc. and will thereafter forward the first copy of the revised SOFTEX format to the concerned Regional Office of RBI, the duplicate copy alongwith bulk statement in excel format to Authorised Dealers for negotiation / collection / settlement, the third copy to the exporter and the last copy will be retained by STPI for its own record. Under the revised procedure, the exporters, however, will have to provide information about all the invoices including the ones lesser than US$25000, in the bulk statement in excel format. [The revised procedure for submission of the Softex form and other relevant documents are detailed in the Annex.]

4. The new procedure will be effective initially in STPI Bangalore, Hyderabad, Chennai, Pune and Mumbai with effect from April 01, 2012. Based on the success in these centers, it would be adopted by all the STPIs and SEZ/ EPZ/ 100% EOU/ EHTP/ DTA units by June 2012.

REF: RBI/2011/12/400 A.P. (DIR Series) Circular No. 80 -February 15, 2012 

As per this circular, a software exporter having turn over of at least Rs. 1000 Crores or the Companies who are filing 600 SOFTEX forms annually are required to file the SOFTEX Forms within 30 days from the close of the month in which the invoice was raised are required to file a statement in EXCEL Format as per the details given in the Annexure to the above circular.

Branch office in India Required to inform RBI if they buy properties in India in Form IPI

Purchase of Immovable Property in India –NO Reporting requirement by NRI /PIOs

Attention of Authorised Dealer Category-I banks is invited to Regulation 5 of Notification No. FEMA 21/2000-RB viz. Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India), Regulations, 2000 dated May 3, 2000, as amended from time to time. In terms of the above Regulation, when a person resident outside India, who has established in India in accordance with the Foreign Exchange Management (Establishment in India of Branch or Office or other Place of Business) Regulations, 2000, a branch, office or other place of business, excluding a liaison office, acquires any immovable property in India in accordance with the provision of said regulation, the said person has to file with the Reserve Bank a declaration in the form IPI annexed to those regulations, not later than ninety days from the date of such acquisition. As the form is required to be submitted by such persons only, the form is suitably amended to reflect the position.

2. It is clarified that the extant regulations do not prescribe any reporting requirements for transactions where a person resident outside India who is a citizen of India or a Person of Indian Origin (PIO) as defined in Regulation 2(c) of Notification No. FEMA 21/2000-RB, ibid, acquire/s immovable property in India in accordance with the said provisions of the aforesaid Notification. Form IPI has been, accordingly, amended for greater clarity.

Ref:  RBI/2011/12/399--A.P. (DIR Series) Circular No. 79 dated February 15, 2012

Procedure for Winding Up or Disinvestmnet of existing holdings in JV/WOS

. Note on Disinvestment of existing holding in JV/ WOS

Procedure:

Disinvestment of holding in a JV/WOS abroad requires prior approval of the Reserve Bank of India for which the parent company will have to submit 

Ø  an application furnishing the reasons /justifications for such disinvestment along with

Ø  a Chartered Accountant’s valuation certificate,

Ø  latest audited financial statements of the JV/WOS,

Ø  Board Resolution approving the disinvestment and

Ø  Chartered Accountant’s certificate regarding position of dues of the WOS and

Ø  total amount to be received by parent company on disinvestment.

Mode of Disinvestment by

A. Transfer by way of sale of shares of a JV / WOS

1. An Indian Party without prior approval of the Reserve Bank may transfer by way of sale to another Indian Party which complies with the provisions of FEMA notified Regulations or to a person resident outside India, any share or security held by it in a JV or WOS outside India subject to the following conditions:

            i.         the sale does not result in any write off of the investment made.

          ii.          the sale is effected through a stock exchange where the shares of the overseas JV/ WOS are listed;

         iii.          if the shares are not listed on the stock exchange and the shares are disinvested by a private     arrangement, the share price is not less than the value certified by a Chartered Accountant / Certified Public Accountant as the fair value of the shares based on the latest audited financial statements of the JV / WOS;

        iv.         the Indian party does not have any outstanding dues by way of dividend, technical know-how fees, royalty, consultancy, commission or other entitlements and / or export proceeds from the JV or WOS;

          v.          the overseas concern has been in operation for at least one full year and the Annual Performance Report together with the audited accounts for that year has been submitted to the Reserve Bank;

        vi.          the Indian party is not under investigation by CBI / DoE/ SEBI / IRDA or any other regulatory authority in India.

       vii.         The Indian entity is required to submit details of such disinvestment through its designated AD category-I bank within 30 days from the date of disinvestment.

B.Transfer by way of sale of shares of a JV / WOS involving Write off of the investment

(1) Indian Parties may disinvest, without prior approval of the Reserve Bank, in any of the under noted cases where the amount repatriated after disinvestment is less than the original amount invested:

         i.            in case where the JV / WOS is listed in the overseas stock exchange;

       ii.            in cases where the Indian Party is listed on a stock exchange in India and has a net worth of not less than Rs.100 crore;

      iii.            where the Indian Party is an unlisted company and the investment in the overseas venture does not exceed USD 10 million. and

     iv.            where the Indian Party is a listed company with net worth of less than Rs.100 crore but investment in an overseas JV/WOS does not exceed USD 10 million.

(2) Such disinvestments shall be subject to the conditions listed at A items (ii) to (vi) and A.2.above.

(3) An Indian Party, which does not satisfy the conditions laid down above for undertaking any disinvestment in its JV/WOS abroad, shall have to apply to the Reserve Bank for prior permission.

C. Restructuring of the balance sheet of the overseas entity involving write- off of capital and receivables

In order to provide more operational flexibility to the Indian corporates, the Indian promoters who have set up WOS abroad or have at least 51 per cent stake in an overseas JV, may write off capital (equity / preference shares) or other receivables, such as, loans, royalty, technical knowhow fees and management fees in respect of the JV /WOS, even while such JV /WOS continues to function as under:

(i)         Listed Indian companies are permitted to write off capital and other receivables up to 25 per cent of the equity investment in the JV /WOS under the Automatic Route; and

(ii)     Unlisted companies are permitted to write off capital and other receivables up to 25 per cent of the equity investment in the JV /WOS under the Approval Route.

Obligation by Indian Party in case

I.Transfer by way of sale of shares of a JV / WOS involving Write off of the investment &

Restructuring of the balance sheet of the overseas entity involving write- off of capital and receivables

The write-off / restructuring have to be reported to the Reserve Bank through the designated AD Category-I bank within 30 days of write-off/ restructuring. The write-off / restructuring is subject to the condition that the Indian Party should submit the following documents for scrutiny along with the applications to the designated AD Category –I bank under the Automatic as well as the Approval Routes:

a) A certified copy of the balance sheet showing the loss in the overseas WOS/JV set up by the Indian Party &

b) Projections for the next five years indicating benefit accruing to the Indian company consequent to such write off / restructuring.

II.Transfer by way of sale of shares of a JV / WOS outside India

The Indian party should report details of the disinvestment through the AD Category – I bank within 30 days of disinvestment in Part IV of the Form ODI. In case of disinvestment, sale proceeds of shares/securities shall be repatriated to India immediately on receipt thereof and in any case not later than 90 days from the date of sale of the shares /securities and documentary evidence to this effect shall be submitted to the Reserve Bank through the designated Authorised Dealer

If you need further info or clarification on the subject, please revert to me at rvsekar2007@gmail.com

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DELEGATION OF POWERS TO AUTHORISED DEALERS TO REDUCTION IN AMOUNT OF ECB,CHANGES IN DRAW-DOWN ,ALL-IN-ALL-COSTS

External Commercial Borrowings – Simplification of procedure

Attention of Authorized Dealer Category-I (AD Category-I) banks is invited to the Foreign Exchange Management (Borrowing or Lending in Foreign Exchange) Regulations, 2000, notified vide Notification No. FEMA 3/2000-RB dated May 3, 2000, A.P. (DIR Series) Circular No. 5 dated August 1, 2005 relating to the External Commercial Borrowings (ECB), as amended from time to time and A. P. (DIR Series) Circular No.33 dated February 09, 2010

2. As per the extant ECB procedures, requests for reduction in the amount of ECB, changes in the drawdown schedule where the original average maturity period is not maintained and reduction in the all-in-cost of the ECB after obtaining the Loan Registration Number (LRN) is required to be referred by the AD Category-I bank to the Foreign Exchange Department, Central Office, Reserve Bank of India for necessary approval.

3. As a measure of simplification of the existing procedures, it has been decided to delegate powers to the designated AD category-I banks to approve the following requests from the ECB borrowers, subject to specified conditions:

a) Reduction in amount of ECB

The designated AD Category-I bank may approve requests from ECB borrowers for reduction in loan amount in respect of ECBs availed under the

automatic route, subject to ensuring the following conditions:-

(i) the consent of the lender for reduction in loan amount has been obtained;

(ii) the average maturity period of the ECB is maintained;

(iii) the monthly ECB-2 returns in respect of the LRN have been submitted to the Department of Statistics and Information Management (DSIM); and

(iv) there is no change in the other terms and conditions of the ECB.

b) Changes/modifications in the drawdown schedule when original average maturity period is not maintained

As per the extant procedures, Designated AD Category – I banks have been delegated powers to approve changes / modifications in the drawdown / repayment schedule of the ECBs already availed, both under the approval and the automatic routes, subject to the condition that the average maturity period, as declared while obtaining the LRN, is maintained.

It has now been decided that the designated AD Category-I bank may approve requests from ECB borrowers for changes/modifications in the

drawdown schedule resulting in the original average maturity period undergoing change in respect of ECBs availed both under the automatic and approval routes, subject to ensuring the following conditions:-

(i) there are no changes/modifications in the repayment schedule of the ECB;

(ii) the average maturity period of the ECB is

reduced as against the original average maturity period stated in the Form 83 at the time of obtaining the LRN;

(iii) such reduced average maturity period

complies with the stipulated minimum average maturity period as per the extant ECB guidelines;

(iv) the change in all-in-cost is only due to the change in the average maturity period and the ECB complies with the extant guidelines; and

(v) the monthly ECB-2 returns in respect of the LRN have been submitted to DSIM.

Any elongation / rollover in the repayment, on expiry of the original maturity, of the ECB, would however, continue to require the prior approval of the Reserve Bank.

c) Reduction in the all-in-cost of ECB

The designated AD Category-I bank may approve requests from ECB borrowers for reduction in all-in-cost, in respect of ECBs availed both under the

automatic and approval routes, subject to ensuring the following conditions:-

(i) the consent of the lender has been obtained and there are no other changes in the terms and conditions of the ECB; and

(ii) the monthly ECB-2 returns in respect of the LRN have been submitted to DSIM.

4. The designated AD Category-I bank should ensure that the ECBs continue to comply with the extant guidelines while exercising their delegated powers and changes are promptly reported to the Department of Statistics and Information Management (DSIM), Reserve Bank of India in Form 83.

5. The above modifications to the ECB guidelines will come into force with immediate effect. All other aspects of the ECB policy, such as, USD 750 million limit per company per financial year under the automatic route, eligible borrower, recognized lender, end-use, all-in-cost ceiling, average maturity period, prepayment, refinancing of existing ECB and reporting arrangements shall remain unchanged.

6. AD Category –I banks may bring the contents of this circular to the notice of their constituents and customers concerned.

7. 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) and are without prejudice to permissions / approvals, if any, required under any other law.

  REFERENCE -RBI/2011-12/390 -A.P. (DIR Series) Circular No. 75 February 07, 2012


If you need further info or clarification on the subject, please revert to me at rvsekar2007@gmail.com

Regards

R.V.Seckar