1. Investment Outside India –
International Laws, Compliances and Regulatory
Presentation by Hemant Shah
@
HEDGE-SQUARE

2. Introduction
It is not the strongest of the species that survive, nor the most intelligent, but the one
most responsive to change……………Charles Darwin

3. Introduction
I. Indian Economic Liberalization 1991
• Balance of Payment of Crisis
• Bailout Deal with International Monetary Fund (IMF)
• Demand of Structural Economic Reforms
• Economic Policy 1991
II. Gross Domestic Product
• It represents the total dollar value of all goods and services produced over a specific
time period
• Indian economy has made significant progress over the last few years, with the gross
domestic product (GDP) growing at an average rate of 5.3 per cent
• Raising power of and co-ordination between BRICS Economies

4. Overseas Investment

5. Particulars Volume Value ($ Mn.)
Year to date 2011 2012 2013 2011 2012 2013
Inbound 8 9 7 7,459 270 1,988
Outbound 11 5 4 206 441 66
Total 19 14 11 7,665 711 2,054
I. Outbound Investment:
• India ups trade target with Africa to US$ 100 billion by 2015
• Indian Companies raising capital overseas more cheaply
• The total value of outbound deals in February, 2013 was US$ 0.07 billion (4 deals) as
compared to US$ 0.44 billion (5 deals) during February, 2012.
II. Deal Tracker – Cross Border – February 2013 (Source: Grant Thornton)
Overseas Investment

6. III. Recent Crossborder Deals
• ONGC eyes $2 billion deal for Nigeria field to expand its international portfolio
• Infosys BPO has opened a call centre in Costa Rica, which is considered as the fourth
best outsourcing destination in Latin America.
• Tata Steel has acquired half the interest in Labrador Iron Mines’ (LIM) House deposit for
Canadian dollars 30 million (Rs 160 Crore), through its subsidiary Tata Steel Minerals
Canada (TSMC)
• JSPL to set up 1,500 MW plants in 5 African countries
• Tata Consultancy Services, the country’s largest software exporter, has set up a new
delivery centre in Liverpool, expanding its operations in the UK.
• Bangalore-based Wipro had signed a definitive agreement to acquire 100 per cent
ownership in LD Waxsons, a Singapore-based FMCG company.
• Tata Communication plans cable link to Bangladesh in collaboration with BD Link
Communications Ltd.
Overseas Investment

7. Structuring

8. Structuring
I. Structuring
• Business Model
• Birth of various laws on domestic as well as international platform
• It is a best planning for both business as well as regulations
II. Factors:
• Present and Future Plans of the Company
• Laws, Rules & Regulations of the jurisdictions where Company wants to operate
• Agreements, Conventions, Treaties between home country and that country
• Laws, Rules & Regulations of the home country
• Synergies of operations
• Requirement of Joint Venture partner
• Project specifics

9. Structuring
III. Examples:
• Transfer of funds from one entity to other
• IHC – Intermediate Holding Company
• FC – Foreign Company
Indian Company
IHC Registered Outside India
FC1 FC2 FC3 FC4

10. Structuring
IV. TATA Motors:
Equity Funding
-------------------------------------------------------------------------------------------------------------------------------------
Corporate Guarantee
--------------------------------------------------------------------------------------------------------------------------------------
Equity Funding
Sale of Jaguar assets
Acquisition of debt of $3bn.
2.3 bn
TATA Motors
IHC (Singapore)
SPV (UK)FORD Motors

11. Structuring
V. Misc.
Germany Royalty
--------------------------------------------------------------------------------------------------------------------------------
India
Tech. Support
---------------------------------------------------------------------------------------------------------------------------------
100% 50%
Mauritious
26%
24%
ABC
JV (Overseas
Trading Activities)
HSQ
(Manufacturing Unit
Local Sales
IHC

12. Hurdles

13. Hurdles
I. Laws, Rules and Regulations of the home country and respective jurisdictions
II. Compliance and regulatory Issues
III. Cultural Integration Issues
IV. Environmental issues
V. Political Issues
VI. Expectation of Consumers
VII. Examples of Legal Hurdles:
• Bharti – MTN Deal:
• Dual listing requirement as a hurdle to $24 billion deal

14. Hurdles
• Wall-Mart – Massmart Holdings Ltd.
• Procurement condition by South African Competition Commission
• US FDA and Pharma Companies
• Despite improving infrastructure, impressive technological development, and a fairly
stable economic and political landscape, Brazil has challenging compliance issues and
lengthy process for registering business operations.
• Many Private Companies in Telecom sector got stuck in compliance issues in countries
such as Nepal and Bangladesh
• Capital Costs and Registration Costs involved in the global compliances
• Law specific requirements varies from country to country

15. Indian Regulatory

16. Indian Regulatory Issues
I. Companies Act
• Provisions of section viz. Section 125, 293, 212 etc.
II. Foreign Exchange Management Act and Rules & Regulations
• FEMA (Transfer or Issue of any Foreign Security) Regulations, 2004
• FEMA (Issue of Security in India by a Branch, Office or Agency of a Person Resident
outside India)
• Liberalized Remittance Scheme - $ 2,00,000
• FEMA (Export of Goods and Services) Regulations, 2000 &
• Such other Rules & Regulations and directions issued there under.
III. SEBI Rules & Regulations
IV. Listing Agreements
V. Competition Act

17. Some International Jurisdictions

18. International Jurisdictions
I. South Africa:
• Hybrid and Mixed Legal System
• Companies Act, 2008 (Recently amended)
• Security Service Act, 2004
• Currency and Banking Act, 1920 and other foreign exchange controls
• Trade Mark Registry and Companies House got merged to establish Companies and
Intellectual Property Commission (CIPC)
• No name Companies
• No audit if Shareholders and Directors are same
II. Bangladesh:
• English Legal System
• Companies Act, 1994
• The Security & Exchange Ordinance, 1969
• Foreign Exchange Regulation Act, 1947
• Approval from Bangladesh Bank and BOI
• Employment of domestic personnel are mandatory in the ratio of 10:2
• Qualification shares mandatory for Directors

19. International Jurisdictions
III. Nepal:
• English Legal System
• Companies Act, 1994
• Securities Act, 2007
• Foreign Investment and Technology Transfer Act, 1992
• FDI approval for Foreign Companies
• Time taking process and concept of translations
• Indian FEMA states restrictions on Investing in Nepal.
• Foreign Exchange Controls in Nepal don’t allow business without Office.
IV. Singapore:
• English Legal System
• Companies Act, 1994
• Securities and Future Act, 2002
• Tax Heaven
• Easy process and laws
• CMS License requirement for some categories
• No foreign exchange controls
• Favorite Destination for Outbound Investment

20. International Jurisdictions
V. Mauritius:
• English Legal System
• The Companies Act, 2001
• The Securities Act, 2005
• Tax Heaven but no remittance under LRS is permissiable.
• Easy process and laws
• Concept of GBC 1 and GBC 2 and protected cell companies
• No foreign exchange controls
VI. Dubai:
a) Free Trade Zones:
• Jabel Ali
• Dubai Internet City
• Dubai Airport Free Trade Zone
• Tax Heavens
• No Local Partner requirement
• Only specific kind of business can be carried
• Regulation varies from each free trade zone
• Different labour laws prevails

21. International Private laws
&
International Organisations

22. International Private Law
I. History & Development
• Started after the fall of the Roman Empire
• Entry of various state Rules, Regulations, Treaties, Conventions etc.
II. Three Principal Questions
• Choice of Jurisdiction
• Choice of Law
• Recognition of Foreign Judgment
III. Factors or Components
• Domicile
• Jurisdiction

23. International Organizations
I. Organization for Economic Co-operation and Development (OECD)
II. World Trade Organisation (WTO)
III. International Chamber of Commerce (ICC)
IV. International Monetary Fund (IMF)
V. World Bank
VI. United Nation (UN)
VII. South Asian Association for Regional Cooperation (SAARC)

24. Contact Us
HEDGE-SQUARE CONSULTANCYSERVICES PRIVATE LIMITED
Reach @:
Hemant Shah – Founder & CEO
C.S, L.L.B, B.Com
121/123, Nafees Chambers,
Block – 27/ 28, Modi Street, Fort,
Mumbai – 400 001
Web @:
www.hedge-square.com
Speak @:
(+91) 98705 51611 / 97699 51611
(+91) 0226182380/ 81/ 82/ 83/ 84
Write @:
hemant@hedge-square.com
hedge.square@gmail.com
Skype @: hedge.square

25. Thank you
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