Consultant-Tax & FEMA/FDI
183 Points
Joined July 2009
| Originally posted by :NEHA JAIN |
| " |
Esteemed experts pls answer this:
A private co is incorporated in india having 3 foreign directors and 2 foreign co's as shareholder.
Company was incorporated in the month of april 2009.
Such indian co has not till date issued any share cert to those subscriber foreign co's till date.
Now in the month of august 2009 such foreign directors came in india.
My query is :
Can we now issue share certs to those subscribers after a gap of 4.5 months since incorporation of the company?
is there any contravention of issue of share cert rules because rules specifies issue of share cert within 90 days of allotment.
Moreeover we cant allot share cert outside india because we cant move common seal out of india and issue of share cert is not valid without common seal.
Also mention what will be the date coming on the share cert :
1. is that the date of allotment OR
2. is that the date of signing of share cert by director and autho signatory OR
3. is that the date of incorporation of the company OR
4. is that the date on which directors are authorised to sign the share cert vide board resolution.
Best Regards
NEHA JAIN |
" |
Hi Neha
Ref to your query I would like to tel u the complete conditions/compliance procedure of allotment of Share.
From FEMA point
(1)An Intimation to be made to RBI within 30days from the date of FIRC(that means the date whn u recved d money in foreignexchang)in form in Annex-6 www.rbi.org.in/Scripts/BSViewFemaForms.aspx.
(2) Shares must be alloted to foreign shareholders within 180days from the date of money receivd i.e the date of FIRC
(3)Form FCGPR (A) sould be filed to RBI within 30 Days from the date of allotment of shares.
(4)The foreign equity particpation must be within the sectorial limits as per FDI guidelines otherwise a specific prior aproval required from FIPB subject to compliance of other terms & condtions (Also read pressnote 2 with pressnote 4 of 2009 series if there is any indirect holding/investment through another Indian co)
So not fullfilling either of the condition is Contravention of FEMA.
Luking your case it seems that you have NOT intimated RBI regarding receipt of money within 30days of such receipt.So the sooner u intemate will be better.Usually there would be no compounding for this.But unless you allot share within 180days/6 month the non intemation of FIRC received may bring aditional burden for compounding.
So intimate RBI regarding the FIRC received as soon possible & allot the share within a period of 6 month that means 1.5 month left in your hand.But know that, unless you allot the share within 6month the money sud be imediately send back to investor.Otherwise it will be taken as a ECB (which always subject to prior aproval/prior taking of LRN) and the RBI will fine you handsomely.
The date of allotment will be date Share certificates are signed & get stamped in companys common seal common seal.
Frm Companies Act point of vew u may allot & file to ROC in late by giving nomianl fine which may not be a big issue.But clear the RBI matter first to avoid unwarranted compound procedure.
CAclubindia
