Corporate law

This query is : Resolved

S.Jegadeesan (Querist)
Follow

06 May 2016
I need to clarify the following doubt
ROC asked to select the Para 14 (a) as Yes, in INC -1 while apply for a forex company. If we select as Yes then we need to attach the in-Principle approval from RBI at the time incorporation .
But Practically is it possible ? Whether RBI will give in-Principle approval after name approval from ROC but before the incorporation?

S.Jegadeesan

S.Jegadeesan (Querist)
Follow

26 July 2016 I need the Practically acceptable reply

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
Follow

20 July 2024 Obtaining in-principle approval from RBI for a forex company before incorporation is indeed a procedural requirement, and the process typically involves certain steps to be followed. Here’s a breakdown of the process and considerations:

### Process Overview:

1. **Name Approval from ROC (Registrar of Companies):**
- Before incorporating a company, you need to apply for name approval through Form INC-1 with the ROC. This is the initial step to reserve a name for your company.

2. **Selecting Para 14(a) as Yes in INC-1 Form:**
- Para 14(a) of Form INC-1 pertains to the nature of financial activities the company intends to undertake. Selecting "Yes" indicates that the company will engage in financial activities, including forex activities.

3. **In-Principle Approval from RBI:**
- For a forex company, approval from the Reserve Bank of India (RBI) is required. This approval is typically in the form of an in-principle approval, which acknowledges RBI’s consent for the company to undertake forex activities.

### Practical Considerations:

- **Sequential Process:** Normally, the process involves first obtaining name approval from ROC and then applying for in-principle approval from RBI. It's essential to select Para 14(a) as Yes in Form INC-1 to indicate the intention to engage in forex activities.

- **Documentation:** At the time of incorporation, you need to submit Form INC-1 with all required documents, including the in-principle approval letter from RBI. This means you must have initiated the application with RBI and received their confirmation prior to finalizing the incorporation process with ROC.

- **RBI’s Timelines:** RBI’s approval process may take time, depending on their internal procedures and workload. It’s advisable to contact RBI or check their website for specific guidelines on applying for in-principle approvals for forex activities.

### Steps to Follow:

1. **Apply for Name Approval:** Submit Form INC-1 to ROC along with the proposed name of the company and other necessary documents.

2. **Initiate RBI Approval Process:**
- Contact RBI through their designated channels (usually the regional office or a specified department) to initiate the application for in-principle approval.
- Provide RBI with all required documents and information regarding your proposed forex activities.

3. **Receive RBI’s In-Principle Approval:**
- Once RBI reviews your application and is satisfied with your proposed activities, they issue an in-principle approval letter.
- This letter should detail RBI’s consent for your company to engage in forex activities.

4. **Incorporate the Company:**
- With the in-principle approval letter in hand, proceed to complete the incorporation process with ROC.
- Submit Form INC-1 along with all necessary documents, including the in-principle approval letter from RBI.

### Conclusion:

While ROC requires you to select Para 14(a) as Yes in Form INC-1 at the time of applying for name approval, obtaining RBI’s in-principle approval before incorporation is crucial. It ensures compliance with regulatory requirements and facilitates a smoother incorporation process. It's recommended to engage with professionals or legal advisors who have experience in handling forex company incorporations to navigate these requirements effectively.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now