Allotment of shares

This query is : Resolved

priyanka (Querist)
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21 July 2015 Hi,

i need clarification on this matter:

my company had received FDI of 100 crores.

Now as per Co act 2013 , i need to allot shares within 60 days,

however FEMA gives the time period of 180 Days.

now i need guidance at what is the time period applicable to me.

regards
Priyanka

Pratik Shah

Pratik Shah (Expert)
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21 July 2015 Being a company, you will have to comply provisions of both the regulation i.e. Companies Act as well as FEMA.

Since, Companies Act is asking you to allot it within 60 days, you shall allot it within 60 days to comply with the provision of Companies Act. Automatically, FEMA compliance will be taken care.

But suppose, if you allot it after 60 days but before 280 days, then the company will contravene provisions of Companies Act but not FEMA.

Conclusion:
You shall allot it within 60 days to comply every applicable act.

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priyanka

priyanka (Querist)
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21 July 2015 Thanks fr ur reply,

but if i gothrough your view point i can never avail the 180 days, which means RBI must amend the master circular but thats not the case.

rbi master circular is updated till july 2015 and still 180 days provision is there.

further, in most of the cases mca had said that where ever SEBI or RBI is concerned, there RBI or SEBI will prevail.

ur opinion is needed.

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Pratik Shah

Pratik Shah (Expert)
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21 July 2015 Both are very much different Act with respect to their purpose.

Companies Act 2013 is for all type issue of shares, whereas FEMA regulates issue of shares only to foreigners.
You can not contravene any provisions of both the Act.
As you said, in many cases, MCA had siad that wherever SEBI or RBI is concerned, there RBI or SEBI will prevail. But they have mentioned this for specific sections and not in general for every section section or set of sections.

If they would have written this sentence in case of issue of shares, then only FEMA provision would have been prevailed over that of Companies Act.

I am sure that you should issue shares within 60 days, else you will end up non-complying with provisions of Companies Act. (Atleast till the time, MCA/RBI issues clarification in this regard)