If you will ask to the Members of the CaclubIndia, Whether MLM (Multi level marketing) Business is permissible under the Act????

You will get the different opinions, But you cant find anywhere, If Permissible, then Why?

And

Not Permissible, then Why not????

It is easy to say Yes or No, But It is very hard to give logic behind that Yes or no.

Originally posted by : Ankur Shah (PCS)
	@ Ashish It is not compulsory to have foreign hand for the Money Laundering.. It is also be to be considered as Money Laundering, If they are all Indians and transaction takes place in India.. Money Laundering simply means the Conversion of Black Money into white, And I am expert of that, That’s why I can say with the guarantee that Its Money Laundering.. The Reason behind this is very simple, All the four Companies are the NBFC Companies, Though everybody known that Set-Up cost for the one NBFC is almost about 3.75 Lacs… Why the Promoters are Incorporating 4 NBFC’s, though there is SAME OBJECTIVE and SAME SUBSCRIBERS.. Why they Choose NBFC only, and not any other types of Company??? Reason is simple that Only NBFC Can Purchase and sell the Securities without any Restriction… @ Ritu If you don’t want to get in trouble, then do not take this assignment.. Because ROC Person may approve, But when you go to the RBI, they will definitely catch you.. RBI People understand their responsibility… The Objective of promoters is nothing but Conversion of Black Money into white money.. That’s all --------------------------------------------------------------- Ankur Shah (Practicing Company Secretary) Ahmedabad, Gujarat - 380015 Mobile: +91-90330 03922, 94276 33901 E-Mail: ankur @ csankur.com Website: www.csankur.com Blog: www.csankur.blogspot.com

Dear Ankur ji,

Thanks for your guidance.  But one thing I want to let you know that the subcribers are different in all companies.  The structuring and directorship is something like this :-

Company name

A

B

C

D

Shareholders

A

30%

30%

30%

B

30%

30%

30%

C

30%

30%

30%

D

30%

30%

30%

OTHERS

10%

10%

10%

10%

TOTAL

100%

100%

100%

100%

Directorship on Companies

Company name

A

B

C

D

Directors

Mr.a

*

*

*

Mr b

*

*

Mr. c

*

Mr d

*

*

Mr.e

*

Mr.f

*

        Its not the case that all the director are same.

You have mentioned that "when you go to the RBI", I would like to know that  why we will go to RBI? Is there need to get an approval from RBI for such structuring. All the Cos. are already registered with RBI as NBFC. Kindly clarify me.

Regards,

Ritu.

Sorry Ankur ji, the table didnt came properly...i got your advice. Thanks a lot.

@ Ankur :

You have mentioned that "when you go to the RBI", I would like to know that  why we will go to RBI? Is there need to get an approval from RBI for such structuring. All the Cos. are already registered with RBI as NBFC. Kindly clarify me this point.

Regards,

Ritu.

For, these kind of structuring RBI approvals is not required

But once your company will be incorporated and You will apply to the RBI for NBFC Registration, they will also check the Shareholding pattern of your Companies and then they come to know, What is all going on in your 4 Companies..

Dear Ritu,

Mr. Ankur has mentioned correctly.... anyone can suggest anything based on his own experience and understanding..... No one is perfect in any domain and there is certain scope of errors....

Before taking any final step, it is advisable to a formal legal opinion.

Regards,

Ashish

Dear Ankur ji,

My Companies are already incorporated and even registered with RBI. This is actually not the case of converting black money into white. Its genuine fund in the hands of promoters which they want to invest. So in that case also is this wrong to do?

Regards,

Ritu.

Dear Ashish,

Thanks for your concern.

Regards,

Ritu.

Though It is regd, Still my Opinion remains the same, It is not permissible..

The reason is its only routing the money…

Let us understand this by way of example

90% in each company is held by another Body Corporate, So, In any case whateverbe the profit, Body corporate will not use that profit, as It is legal entity only and Its doesn’t have hunger, greed, etc. like Human characteristics.

So, Where does the all Profit goes, Obviously to those persons who holds the 10% shares in the Company..

Though they are holding only the 10% of shares, they are still holding 100% of the Company’s shares in the indirect manner…

Money Laundering has nothing to do with like relatives or different individuals as directors, etc…

In Money Laundering Different Combination of Relative and Different person or Combination of all different people comes together, incorporate the various entities, Purchase the share/advances the loans, give advance for the goods to companies and then never purchase the goods and write off their own amount as bed debts…

If your companies gets regd. With the RBI, then Its must be by way of the “UNDER TABLE DEAL”

If you want to know whether this structuring is the Money Laundering structure or not then go to the nearest Private Bank, tell him about the structure and tell also how the transaction is taking place in the Company

His answer will be that, You are laundering the Money and nothing else…

Thanks Ankur Sir.

Regards,

Ritu.