Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: due date for vat payment :: articles on VAT and GST in India :: Central Excise rule to resale the machines to a new company :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: list of goods taxed at 4% :: VAT Audit :: empanelment :: TAX RATES - GOODS TAXABLE @ 4% :: ACCOUNTING STANDARD :: VAT RATES :: cpt :: TDS :: ACCOUNTING STANDARDS :: form 3cd :: ARTICLES ON INPUT TAX CREDIT IN VAT
 
 
Latest Circulars »
 Payment Systems - Next Orbit (Shri R. Gandhi, Deputy Governor - February 20, 2017 - at the launch of Bharat QR Code at Hotel Trident, Mumbai)
 Financing MSMEs: Banks & FinTechs – Competition, Collaboration or Competitive Collaboration? (Shri S. S. Mundra, Deputy Governor – February 20, 2017 – at the NAMCABS Seminar organized by College of Agricultural Banking in Mumbai)
 Issuance of Rupee denominated bonds overseas – Multilateral and Regional Financial Institutions as Investors
 RBI-Formation of twenty one new districts in the State of Telangana - Assignment of Lead Bank Responsibility
 RBI imposes penalty on Janata Urban Co-operative Bank Ltd., Wai, District Satara
 Monitoring of Foreign Investment under PIS in Indian Companies- Incorporation in Ban List–M/s HDFC Bank Ltd.
 Reserve Bank of India seeks Comments on Draft Circular on Rationalisation of Merchant Discount Rate (MDR) for Debit Card Transactions
 Forward Rate Agreement (FRA) and Interest Rate Swap (IRS) - Withdrawal of Fortnightly return
 RBI-Foreign Investments in India
  RBI cancels the Licence of the Shri Chhatrapati Urban Co-operative Bank Ltd., Pimple Nilakh, Pune, Maharashtra
  Finance Minister meets the Directors of the RBI Central Board

RBI proposes Changes in Timeframe for Issue of Shares and Reporting of FDI; Invites Comments from Stakeholders
February, 05th 2016

The Reserve Bank of India has proposed certain changes in respect of the time frame for issue of shares to align the provisions of Foreign Exchange Management Act, 1999 which requires an investee company receiving Foreign Direct Investments to issue shares within 180 days of receipt of foreign investment with the provisions of the Companies Act, 2013 and in respect of filing of report with the Reserve Bank regarding receipt of foreign investment and issue of shares and to further streamline the compliance process, as below:

S. No. Paragraph of Schedule 1 Proposed Amendments
1 8 Time frame for issue of shares: At the time of filing FC-GPR the investee company shall be required to submit a certificate from a practising Company Secretary/Chartered Accountant to the effect that provisions of section 42 of Companies Act, 2013 have been complied with.
2 9(1) (A) and 9(1) (B) Time frame for reporting: Delay in reporting beyond the prescribed period (30 days from receipt of funds in case of report ARF and 30 days from issue of shares in case of report FC-GPR) shall attract a penalty of one percent of the total amount of investment subject to a minimum of Rupees Five thousand and maximum of Rupees Five lakh per month or part thereof for the first six month of delay and twice that rate thereafter, to be paid online into a designated account in Reserve Bank of India.

Any company receiving foreign investment and submitting the required reports with delay but without paying the penalty as mentioned above shall be liable to penal provisions mentioned in FEMA, 1999 and the rules/regulations framed thereunder including compounding.

It is also proposed to introduce similar penalty structure for other mandatory reporting requirements under FEMA, 1999.

Members of public, including the stakeholders and experts in the area, are requested to offer their views and comments on the proposed changes. The comments may be sent latest by February 22, 2016 to email.

Background

Schedule 1 to Foreign Exchange Management (Transfer or issue of security by a person resident outside India) Regulations, 2000 (FEMA 20), stipulates timelines for an investee company receiving FDI for issue of shares within 180 days of receipt of foreign investment and requires filing of a report with the Reserve Bank regarding receipt of foreign investment and issuance of shares.

As per Section 42 of Companies Act, 2013, an Indian company is required to issue shares within 60 days from the date of receipt of share application money. This provision is applicable to a company receiving share application money from foreign investors as well. In view of the specific and express provisions under Companies Act, 2013 it was felt that there is no need to have a separate and different time frame for these purposes in FEMA provisions.

Further, FEMA 20 also provides for reporting of inflow of funds/issue of shares, the descriptive guidelines for which are stated in paragraphs 9 (1) (A) and 9(1) (B) of Schedule 1 to FEMA 20. It was observed that many companies fail to comply with these provisions and it becomes a contravention of FEMA, 1999 which requires compounding. Since compounding is an elaborate process imposing a burden on the contravener as well as the Reserve Bank, it was felt that with a view to improving the ease of compliance, a summary framework may be put in place for dealing with reporting delays without compromising with the reporting discipline.

Alpana Killawala
Principal Adviser

Press Release : 2015-2016/1841

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
System Testing Solution Manual Software Testing Solutions Automation Software Testing Solutions System Workflow Testing System Manual Testing

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions