Transfer of shares/convertible debentures from Resident to Non-Resident

Transfer of shares/convertible debentures from Resident to Non-Resident

 

Transfer of shares or convertible debentures by Resident to Non-Resident is allowed subject to various terms and conditions.

The ‘Person Resident outside India’ now includes incorporated non-resident entity, foreign national, NRI, FII other than erstwhile OCB.

The foreign national, NRI, FII were earlier excluded from the definition of the ‘Person Resident outside India’ for the purposes of transfer of shares/convertible debentures from resident to the non-residents.

Conversion of ECB/Lump sum Fee/Royalty etc. into Equity

 

Conversion 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.

The said condition has been dispensed with through introduction of the new Consolidated FDI Policy dated 5th April, 2013.

 

Ref - Consolidated FDI Policy - April 2013

NEW FC-GPR FORM FROM APRIL 2013 - CHANGES IN THE FC-GPR FORM FROM APRIL 2013

NEW FC-GPR FORM FROM APRIL 2013 - CHANGES IN THE FC-GPR FORM FROM APRIL 2013

Every company, making allotment to any foreign individual or company incorporated outside India, is required to report to Reserve Bank of India (RBI) in form FC GPR within 30 days from the date of allotment. Apart from the various declarations in Form FC GPR, following two declarations have been deleted from the Form FC GPR with the introduction of new Consolidated FDI Policy dated 5th April, 2013.

a.     Foreign entity/entities—(other than individuals), to whom we have issued shares have existing joint venture or technology transfer or trade mark agreement in India in the same field and Conditions stipulated at Para 4.2 of Consolidated FDI policy Circular of Government of India have been complied with.

OR

Foreign entity/entities—(other than individuals), to whom we have issued shares do not have any existing joint venture or technology transfer or trade mark agreement in India in the same field.

For the purpose of the 'same' field, 4 digit NIC 1987 code would be relevant.  

b.     We are not an Industrial Undertaking manufacturing items reserved for small sector.

OR

We are an Industrial Undertaking manufacturing items reserved for small sector and the investment limit of 24 % of paid-up capital has been observed/ requisite approvals have been obtained.

Source- Consolidated FDI Policy - April 2013

Foreign Direct Investment (FDI) in Limited Liability Partnership (LLP)

Foreign Direct Investment (FDI) in Limited Liability Partnership (LLP) by Conversion of existing Company into LLP.

The Consolidated FDI Policy permits an Indian Company having FDI to be converted into the LLP with prior approval of FIPB/Government but subject to various conditions.

One of the conditions, prior to introduction of FDI Policy dated 5th April, 2013 was that Foreign Capital participation in LLPs will be allowed only by way of cash consideration, received by inward remittance, through normal banking channels or by debit to NRE/FCNR account of the person concerned, maintained with an authorized dealer/authorized bank.

In case of Conversion of an Indian Company into LLP, the said condition has been dispensed with by introducing new Consolidated FDI Policy dated 5th April, 2013.

Ref- Consolidated FDI Policy April 2013

Formalities for Registration of Liaison , Renewal of Liaison office In India

Setting –up of Liaison office in India will be under Approval Route

As per the Notification No. 22/2000, dated 3-5-2000, no person resident outside India shall establish a office without prior approval of RBI. Therefore, before setting up of a branch/liaison office, approval of RBI should be taken. Application in Form FNC-1 is required to be made.

What are the documents to be filed along with Form FNC-1?

(1) Form FNC-1- Available in RBI website.

 (2) English version of the Certificate of incorporation/registration or memorandum of articles of association of the Foreign Company which wishes to set-up liaison office in India.

3) The above mentioned documents should be attested either by the Indian

Embassy or a notary public of that country should attest this document

4) Latest Audited Balance Sheet of the foreign company

5) Complete and exhaustive details of the activities that is going to be carried out in India by the foreign company

6) POA in favour of the Indian agent or consultant

7) Form FNC-1 should be signed by the foreign company authorised signatory ( a director ) and the Indian agent or consultant  is not authorised to sign the above.

Annual Filing Formalities

Every year , a certificate from Chartered Accountant  is to be filed to the regional office of the RBI.

However , the law does not require a liaison office to file audited statement of Indian operation but it is prudent practice to enclose the same.

Renewal of  Liaison Office

Renewal letter may be sent to the regional office of RBI well before the expiry of the renewal date. No need to send the renewal in Form FNC-1. Optionally , the LO can enclose the MOA and annual activity report and audited accounts with the renewal application.

Registration of All Liaison office with the Registrar of Companies (ROC) New Delhi.

All LO in India after getting the approval from RBI for establishing LO in India  shall have to register the same with ROC , New Delhi compulsorily .Renewal of Liaison Office is also to be reported to ROC , New Delhi

 

Foreign Companies carrying on business in India have to file prescribed documents to Registrar and file its annual accounts every year.

 

Form NO	Contents
44	Documents to be delivered by Foreign Company for registration
52	·         Change in the Particulars of the Authorized Person   ·         Change in the Principal Place of Registered Office   ·         Annual Accounts & List of Place of Business   ·         Cessation of Business

 

·         Further, Department of Company affairs has clarified that if the foreign company has only liaison office in India and has obtained RBI permission, it should only produce copy of letter of RBI and statement of receipts and payments made by Indian branches of the foreign company. Such statement should be certified by Chartered accountant and authorized representative of the company.