Application money pending

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

16 July 2013 sir/madam,

what are the consequences if application money received form NRI which has not alloted within six months?

for related parties have any provisions regarding above subject?

Ajay Mishra

Ajay Mishra (Expert)

16 July 2013 REPORTING OF FDI:

(a) An Indian Company receiving invest from outside India for issuing shares/ convertible debentures/preference shares under the FDI scheme, should report the details of the amount of consideration, to the Regional office concerned of the Reserve Bank not later than 30days from the date of receipt in the Advance Reporting Form.
(b) Indian company are required to report the details of the receipt of the amount of consideration for issue of shares/ convertible debentures through an AD Category-I bank, together with the copy of the FIRC evidencing the receipt of the remittance along with the KYC report on the non-resident investor from the overseas bank remitting the amount. The report would be acknowledged by the Regional Office concerned, which will allot a Unique Identification Number (UIN) for the amount reported.

Ajay Mishra

Ajay Mishra (Expert)

16 July 2013
Time frame within which shares have to be issued:

The capital instruments should be issued within 180 days from the date of receipt of inward remittance received through normal banking channels including escrow account opened and maintained for the purpose or by debit to the NER/FCNR (B) account of the non-resident investor. In case the equity instruments are not issued within 180 days from the date of receipt of the inward remittance or the date of debit to the NER/FCNR (B) account, the amount of consideration so received should be refunded immediately to the non-resident investor by onward remittance through normal banking channels or by credit to the NER/FCNR(B) account, as the case may be. Non-compliance with the above provision would be reckoned as a contravention under FEMA and could attract penal provisions. In exceptional cases, refund of the amount of consideration outstanding beyond a period of 180 days from the date of receipt may be considered by the Reserve Bank, on the merits of the case.

Ajay Mishra

Ajay Mishra (Expert)

16 July 2013
Reporting of Issue of Shares:

(a) After issue of capital the Indian company has to file Form FC-GPR not later than 30 days from the date of issue of capital.
(b) Form FC-GPR has to be dully filled up and signed by MD/Director/Secretary of the Company and submitted to the Authorised Dealer(AD) of the company, who will forward it to the RBI.
(c) The report of the receipt of consideration as well as Form FC-GPR have to be submitted by the AD bank to the Regional office concerned of the RBI under whose jurisdiction the Registered office of the company is situated.
(d) Annual Return on Foreign Liabilities and Assets should be filed on an annual basis by the Indian Company, directly with the “Advisor, Balance of Payment Statistical Division, Department of Statistics and Information Management, RBI, C9, 8th Floor, Bandra-Kurla Complex, Bandra (E), Mumbai-400051”. This is an annual return to be submitted by 31st July every year, pertaining to all investments by way of direct/portfolio investments/re-invested earning/ other capital in the Indian company made during the previous years.

Ajay Mishra

Ajay Mishra (Expert)

16 July 2013
PENALTIES:

FDI is a capital account transaction and thus any violation of FDI regulations are covered by the penal provisions of the FEMA.
(1) If any person violates/contravens any FDI Regulations, by way of breach/non-adherence/non-compliance/contravention of any rule, regulation, notification, press note, press release, circular, direction or order issued by Government of India/FIPB/RBI in exercise of the power under FEMA, he shall, upon adjudication, be liable to a penalty up to trice the sum involved in such contraventions where such amount is quantifiable, or up to two lakh rupees where the amount is not quantifiable and where such contravention is continuing one, further penalty which may extend to five thousand rupees for every day after the first day during ehich contravention continues.
(2) Where a person committing a contravention of any provisions of this Act or of any rules, direction or order made there under is a company, shall be deemed to be guilty of the contravention and shall be liable to be proceeding against and punished accordingly.
(3) No contravention under Foreign Exchange (Compounding Proceeding) Rules 2000, shall be compoundable unless the amount involve in such contravention is quantifiable.

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