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Subscription of shares by NRI-plz suggest

Priya Sharma (Company Secretary & Student.MBA) (998 Points)

07 January 2010

A Private Company got subscripttion from a NRI for Rs. 65000/-.at the time of incorporation, So now is it necessary under FEMA to intimate RBI ,within 30 days of the receipt of the subscripttion amount and then filing of FCGPR Part A.???

Plzz suggest its urgent.

Regards

Priya Sharma

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9 Replies

Aman Jain (Company Secretary in Practice) (165 Points)
Replied 09 January 2010

Dear Priyanka,

yes you are right but first of all plz check that This investment not come under prohibited sector.

Then inform to RBI with in precsribed limit and within 6 month u have to allot the shares and after allotment within 30 days file form FC-GPR with AD Bank.

Priya Sharma (Company Secretary & Student.MBA) (998 Points)
Replied 09 January 2010

The main business of the Company is advertising abroad,wireless transfers.....

Priya

Aman Jain (Company Secretary in Practice) (165 Points)
Replied 09 January 2010

yes,

its not prohibited.

CS Gaurav Jain (Consultant) (63 Points)
Replied 12 January 2010

Dear Memeber

A note on FDI compliances is as under :

Foreign Exchange Management Act

Foreign Investments in India is governed by Sub Section (3) of Section 6 of the Foreign Exchange Management Act, 1999 read with Notification No. FEMA 20/2000-RB dated May 3, 2000, as amended from time to time. Company would be required to adhere to following compliances regarding FDI:

1. ALLOTMENT/REFUND

As per FEMA Notification no. FEMA 170/2007-RB dated November 13, 2007, Company receiving FDI in India should allot equity shares or refund the money within 6 (Six) months from the date of receipt of investment from outside India.

2. REPORTING OF FDI

A. Reporting of inflow:

Company would be required to report the details of the inflow to the Authorised Dealer Banker within 30 days from the date of receiving investment from outside India for issuing shares under the FDI Scheme. Details to be reported are stated hereunder:

(i) Covering letter;

(ii) FIRC Reporting Form;

(iii) KYC signed by AD Bank; and

(iv) Foreign Inward Remittance Certificate (FIRC).

B. Reporting of Allotment

After allotment of shares, the company should file Form FC-GPR – Part A within 30 days from the date of allotment of shares. Equity instruments must be issued within 180 days from receipt of funds.

Part A of Form FC-GPR has to be duly filled up and signed by the Authorised Signatory and submitted to the Authorised Dealer of the company, who will forward it to the Reserve Bank.

While forwarding the Form, , the following documents has to be attached by the company:

(i) A certificate from the Company Secretary of the company certifying that

(a) all the requirements of the Companies Act, 1956 have been complied with;

(b) terms and conditions of the Government approval, if any, have been complied with;

(d) the company has all original certificates issued by authorised dealers in India evidencing receipt of amount of consideration;

(ii) A certificate from Statutory Auditors or Chartered Accountant indicating the manner of arriving at the price of the shares issued to the persons resident outside India. This certificate should be obtained before making allotment of shares in Board Meeting to ensure that allotment price adheres to pricing guidelines under FDI policy.

(iii) Certified True Copy of Board Resolution.

(iv) Foreign Inward Remittance Certificate (FIRC).

C. Yearly Reporting

Company should file Part-B of FC-GPR on an annual basis with the Director, Balance of Payment Statistical Division, Department of Statistical Analysis & Computer Services, Reserve Bank of India, C9, 8th Floor, Bandra-Kurla Complex, Bandra (E), Mumbai – 400051.

This is an annual report to be submitted by 31^st of July every year, pertaining to all investments by way of direct investments/retained earnings in the company made during the preceding financial year (April to March).

3. ISSUE PRICE

Price of shares issued to Foreign Investor under the FDI Scheme should be done by a Chartered Accountant in accordance with the guidelines issued by the erstwhile Controller of Capital Issues. Board of Directors should ensure that allotment price adheres to pricing guidelines under FDI Scheme.

Hope it serves your purpose.

regards

Gaurav Jain

gaurav @ rsj.co.in

Priya Sharma (Company Secretary & Student.MBA) (998 Points)
Replied 12 January 2010

Thanks a lot to al.....But I have a little doubt.I remember that MOA subscripttion by NRI was exempted from the intimation to RBI.

Is it correct??

Regards

Priya Sharma

CS MD Osman Akthar (Company Secretary & CA(Final)) (78 Points)
Replied 12 January 2010

Dear Sharma,

Exemption of reporting to RBI if NRI subscribe to MoA is there if he subscribe the shares with Indian Currency Available with him during his present in India.

If NRI brings any Foreign Exchange specifically as FDI and subscribes MoA then there is no exemption in reporting toRBI is available.