Can an Indian Party have a JV/WOS through a Special Purpose Vehicle (SPV) under the Automatic Route? A. Yes. Direct investment through the medium of a SPV is permitted under the Automatic Route.
Rahul Bansal
(Finalist)
(35929 Points)
Replied 11 January 2010
Can an Indian Party have a JV/WOS through a Special Purpose Vehicle (SPV) under the Automatic Route? A. Yes. Direct investment through the medium of a SPV is permitted under the Automatic Route.
Rahul Bansal
(Finalist)
(35929 Points)
Replied 11 January 2010
Can an Indian Party directly fund such step-subsidiaries? A. Where the JV/WOS has been established through a SPV all funding to the operating subsidiary should be routed through the SPV only. However, in the case of guarantees to be given to the step down subsidiary these can be given directly by the Indian Party provided such exposures are within the permissible financial commitment of the Indian Party.
Rahul Bansal
(Finalist)
(35929 Points)
Replied 11 January 2010
Can the shares of a JV/WOS abroad be pledged for the purpose of financial assistance? A. The shares of a JV/WOS can be pledged as a security for availing fund based or non-fund based facility for the concerned entity or for the JV/WOS from an authorised dealer/ public financial institution in India.
Rahul Bansal
(Finalist)
(35929 Points)
Replied 11 January 2010
What are the obligations of the Indian party, which has made direct investment outside India? A. An Indian Party will have to comply with the following: - In case the promoter company is unable to submit APRs within the stipulated time, an application on the due date should be made to the Reserve Bank of India seeking extension, giving reasons for the same.
Rahul Bansal
(Finalist)
(35929 Points)
Replied 11 January 2010
What are the penalties for non-submission of APRs? A. Reserve Bank takes a serious view of delayed submission/non-submission of such reports and can take such measures against the delinquent Indian Party as it deems fit.
Rahul Bansal
(Finalist)
(35929 Points)
Replied 11 January 2010
39. Is prior permission of the Reserve Bank required for disinvestment of existing holding in a JV/WOS? A. No prior approval of the Reserve Bank is required for disinvestment, either by way of sale to another Indian Party (which is eligible to make such investments under the Automatic Route) or to a person resident outside India, provided , The above conditions are applicable even when an Indian Party wants to windup/close its existing JV/WOS.
Rahul Bansal
(Finalist)
(35929 Points)
Replied 11 January 2010
What is the procedure to be followed for such disinvestment and what are the documents to be submitted for disinvestment of existing holding in a JV/WOS? A. The Indian Party may apply for disinvestment to the designated Authorized Dealer/Reserve Bank (in case the proposal is not eligible to be considered by the Authorized Dealer) with the following documents/information :
Rahul Bansal
(Finalist)
(35929 Points)
Replied 11 January 2010
Can a resident individual in India acquire/sell foreign securities without prior approval of the Reserve Bank? A. Resident individuals can acquire/sell foreign securities without prior approval in the following cases: -
Rahul Bansal
(Finalist)
(35929 Points)
Replied 11 January 2010
Can Indian corporates invest overseas other than by way of direct investment? A. Yes. Listed Indian Companies can invest upto 25 % of the net worth in overseas companies, listed on a recognized stock exchange, that have at least 10% share in an Indian company listed on a recognized stock exchange in India as on 1st January of the year of investment or by way of rated debt securities issued by the same companies. However, this 10 % holding should be a direct holding and not through a subsidiary or a SPV.
Rahul Bansal
(Finalist)
(35929 Points)
Replied 11 January 2010
Are there any other provisions by which an individual can acquire shares of a foreign company? A Yes, resident individuals can make investments in foreign securities upto USD 25000/ per annum . Such investment could also be made in shares of JV/WOS set up abroad by Indian companies, provided there is a foreign exchange outgo; subject to reporting requirements.
Rahul Bansal
(Finalist)
(35929 Points)
Replied 11 January 2010
Can a resident individual acquire shares of a foreign company in his capacity as director?
A Yes, Reserve Bank has given general permission to a resident individual to acquire foreign securities to the extent of the minimum number of qualification shares required to be held for holding the post of Director provided such shares do not exceed 1% of the paid-up capital of the company and the amount to be remitted for such shares does not exceed USD 20,000/ in a calendar year.
Rahul Bansal
(Finalist)
(35929 Points)
Replied 11 January 2010
Can a resident individual subscribe to the rights issue of shares held by him? A. Yes, a resident individual may acquire foreign securities by way of rights shares issued by a company incorporated outside India provided the existing shares were held in accordance with the provisions of the law.
Rahul Bansal
(Finalist)
(35929 Points)
Replied 11 January 2010
Are there any relaxations for individual employees/directors of an Indian company engaged in the field of software for acquisition of shares in their JV/WOS abroad? A Yes, Reserve Bank on an application, will permit the individual employees/directors of an Indian promoter company engaged in the field of software for acquisition of shares of a JV/WOS abroad provided : Further, Reserve Bank may also on an application, made to it, by an Indian company engaged in the field of software allow its resident employees (including working directors) to purchase foreign securities under the ADR/GDR linked stock option scheme provided the consideration for purchase does not exceed USD 50,000/ or its equivalent in a block of five calendar years.
Rahul Bansal
(Finalist)
(35929 Points)
Replied 11 January 2010
DISCLAIMER:
LIVE Course on Foreign Exchange Management Act (FEMA)(with recording)
LIVE Form 10 B and Form 10BB: Handle Tax Audit Reports of Charitable Organizations(with recording)