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Incorporation - Foreign Fund

Neeta (Finance) (345 Points)

07 April 2010

Hello members

Plz advice : A company incorporated in 2005 with foreign fund and shares allotted to NRI. The shares subscribed by NRI at the time of incorporation was alloted to NRI against the foreign inward remittance . and hence no Form 2 is being filed .

However the remittance being intimated to the RBI.

Please tell me is it required to intimate the inward remittance and share issue at the time of incorporation to RBI thru FIRC and FC-GPR respt at the time of incorporation also.

I thnk in 2005 , ders was no FC-GPR to intimate the RBI about the issue.Am i right on the issue ?

Regards

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13 Replies

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 07 April 2010

Dear Neeta,

Am not really sure about the situation in 2005. But one thing is sure that FC-GPR was not there in 2005. However just keep quite if no query raised by RBI in the last 5 years.

But please find attached herewith a very important file (at least for me) regarding Reporting of F.D.I.

Please go through it very carefully. This file is extracted from Master circular of 2009. If you need full master circular than let me know.

Views of other members solicited.

Regards

Attached File : 47 reporting of fdi.pdf downloaded: 209 times

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Neeta (Finance) (345 Points)
Replied 07 April 2010

Thank u sir , the file is imp indeed.

actually RBI has raised the query on the shares issued in 2005 but these were the shares subscribed on incorporation itself.

I think after the coming up reporting thru FCGPR , even the shares taken up on incorporation also need be reported in the same way. please confirm.

Regards

Neeta.

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 07 April 2010

Yes Neeta you are right. Similar kind of case happened with me also.

In 2008 we have made a preferential allotment to a Mauritius based F.I.I.

At that time there were no KYC norms. But later on the same were demanded by RBI and we had to submit the same in prescribed format.

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Kumar (Legal Consultant) (358 Points)
Replied 08 April 2010

Dear Neeta,

Yes you have to report the allotment made through the Form FCGPR but there is non compliance on your part therefore you have to go for compounding for such non-compliance .It is advisible that you once visit the RBI and speak with them on this matter.

Thanks & Regards

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Neeta (Finance) (345 Points)
Replied 08 April 2010

thanks for all replies.

Mr.Kumar why shud we go for compounding wen der isn't any non-compliance.

FC-GPR came in May 2008 ( if m right ) and 2005 wen the allotment was made der wasn't any FC-GPR norms ... However i m not sure about the procedurals in 2005 in this regard.

But yes if later on RBI ask for then we have to..

Thanks again to both of u.

Regards

Neeta

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Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 08 April 2010

Dear Neeta according to me also there is no non-compliance on your part.

But correct way out would be to visit RBI to figure out the exact solution. Also prepare FC-GPR and submit the same with RBI on same visit and take acknowledge.

Remember now do not delay regarding submission of FC-GPR otherwise it would be considered as a non-compliance.

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Neeta (Finance) (345 Points)
Replied 08 April 2010

thanks for the reply sir. dey ven't asked for FC-GPR yet but simply the reason of not reporting the issue.

So , i need confirm whether the procedurals in 2005 wen the issue was made ve been complied or not ,,,,,,,,,, and I ain't sure about the procedure in 2005 of reporting the issue.

And one of my query was : According to the current norms if we incorporate a company der isn't any form 2 for first allotment of subscribed shares in MOA .However, i think, remittance and allotment to NRI ( even if it is the subscriptttion on incorporation ) need be informed to RBI as per the norms. Am i right ? plz confirm.

Regards

Neeta

Kumar (Legal Consultant) (358 Points)
Replied 08 April 2010

Dear Neeta,

There is small correction in your understanding about reporting arrangement through Form FC-GPR regarding allotment of shares to non-residents.This reporting Form i.e FC-GPR is there from the year when FEMA came into effect .So you are requested to not to say that this concept of Form FC-GPR is new one .I will once again repeat that you should approach RBI and suitably take next action.Further i would like to say that regarding your apprehension about not filing the Form becuase the first subscriber being deemed allottee is not coorect from the FEMA prospective.In so far the Companies Laws is concerned you are not required to file the respective Form 2 for such allotment as made.

Kindly get back incase you need further help.

Regards

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 08 April 2010

Dear Neeta,

I also agree with Mr. Kumar. We can not say that there were no reporting requirements in 2005. However it may be through submission of form FC-GPR or by any other mode/form. Am not sure about this.

As per my suggestion first draft a humble reply to RBI query as timely reply is very imp for such kind of queries. Visit RBI with reply and prepared form FC-GPR. After discussion with RBI officials decide next course of action. I have visited RBI office, New Delhi many times and they are really co-operative people.

Kumar (Legal Consultant) (358 Points)
Replied 08 April 2010

Dear Neeta,

I do also agreed with Mr.Ankur's veiws.Please do share your valuable expreinces with us.Mr.Ankur do you have any idea as what all registration shall be applicable on the STPI registered unit in Noida.

Thanks & Regards

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Neeta (Finance) (345 Points)
Replied 08 April 2010

yes , i agree with Mr.Kumar . FC-GPR was der from 2000.Notification No. FEMA 20/2000-RB dated May 3, 2000,

The replies are appreciable and i wud confirm on the precodings with RBI.

Thanks again for the replies.

Regards

Neeta.

Kumar (Legal Consultant) (358 Points)
Replied 08 April 2010

Dear Ankur,

I am a great admire of your reply and i usually follow your reply on this site.

Please help if you can.Do you have any idea what all registration does STPI unit has to take as for example such as VAT,TAN PAN etc.

Thanks & Regards

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 08 April 2010

Originally posted by : Kumar
	Dear Ankur, I am a great admire of your reply and i usually follow your reply on this site. Please help if you can.Do you have any idea what all registration does STPI unit has to take as for example such as VAT,TAN PAN etc. Thanks & Regards

Dear Kumar,

Thanks for the kind words. To be honest i have no idea/confidence about any kind of tax matters and can't mislead anyone with my foolish reply regarding tax matters. I'd request you to make a separate post for the same.

Thanks