This document summarizes a presentation on doing business in India and managing global risks in entity management. The presentation covered topics such as entry options for foreign companies in India, foreign direct investment regulations, corporate registrations required, and annual compliance requirements. It also provided examples of practical challenges companies face operating in India and discussed how companies can implement tools to manage compliance risks and ensure ongoing maintenance of their legal entities.

1. Nitin Shingala
Regional Director, India
TMF Group
Jane Niven
Regional General Counsel, Asia Pacific
Jones Lang LaSalle
Joe DiLandro
Director of Sales, North America
Computershare Governance Services
May 15 & 22, 2013
Doing Business in India
Global Risks in Entity Management

2. Today’s Agenda
› Welcome to Doing Business in China, India & Brazil webinars
› Register at cgs.computershare.com
› India, at a Glance
› Entry Options in India
› FDI & Foreign Ownership
› Corporate Regulations & Compliance
› Client Examples
› Managing Compliance Concerns
› Questions & Comments
Doing Business in India: Global Risks in Entity Management2

3. Speaker Profiles
Nitin Shingala, Regional Director, India, TMF Group
› Leads a team specializing in providing tax, accounting, corporate compliance and
related outsourced business services to international companies operating in India
› Previously ran his own accountancy firm for 17 years before it merged with TMF Group
and also served as Finance Director for IDEX Corporation, which is listed on NYSE
› Has contributed several articles in various professional magazines and financial
newspapers on the subject of tax and compliance in India
Jane Niven, Regional General Counsel, Jones Lang LaSalle
› Head of Legal & Compliance in Asia Pacific; leads team of 16
› Managing legal issues for the 27,000-strong business across 13 countries
› Has lived and worked in Asia for over 20 years and regularly speaks at compliance and
anti-corruption conferences in the region
Joe DiLandro, Director of Sales, CGS, North America
› Leads team responsible for marketing of compliance suite of governance products:
global entity management, corporate board portals, and SEC filings software
› Governance engagements at hundreds of Fortune 1000 companies
Doing Business in India: Global Risks in Entity Management3

4. Fundamentals intact, Driving force in Asia
India, At A Glance
› GDP $1.848 trillion, growing at 6.86%
(2011 World Bank)
› 1.2 billion people, estimated 350 million
English speakers/users
› Attractive market – large and growing
› Stock market capitalization: $1.175 trillion
(BSE)
› Listed companies: 5,211 (The World
Federation of Exchanges March 2013)
› UNCTAD World Investment Report 2012:
› 3rd most favoured destination after China
and the US
Doing Business in India: Global Risks in Entity Management4

5. Foreign Direct Investment In India
Doing Business in India: Global Risks in Entity Management5

6. Entry Options In India
As a
Foreign
Company
Foreign
Direct
Investment
(FDI)
Liaison
Office
(LO)
Branch
Office
(BO)
Project
Office
(PO)
New/
Existing
Company
Limited
Liability
Partnership
(LLP)
Foreign Exchange Law &
Regulations require prior approval,
restrict activities
Subject to FDI Regulations
Foreign
Portfolio
Investment
FIIs
QFIs, NRIs,
PIO
Regulated by Foreign
Exchange Law & Regulations
and Securities Exchange
Board of India
Most common mistake: Hiring employees without legal presence
Doing Business in India: Global Risks in Entity Management6

7. Foreign Direct Investments Regulations
Permitted Sectors
Automatic Route
100% permitted in most sectors
74%, 49%, 26%, in certain key sectors
Post facto intimation in 30 days - receipt
of funds, issue of shares
Government Route
(With prior FIPB approval)
Sectors sensitive for FDI
Prior approval required
Key sector ceiling 74%, 49%, 26%, 20%
LLPs
Systematic transition ~ closed door to open economy
Doing Business in India: Global Risks in Entity Management7

8. Foreign Ownership
Doing Business in India: Global Risks in Entity Management8

9. Company Incorporated In India
Company incorporated in India
Private Limited Company
(Pvt. Ltd.)
- Shareholders: Minimum 2, Maximum 50
- Directors: Minimum 2
- Authorized capital: Minimum INR
100,000 (approx. Euro 1,500)
- No offer shares to public or outsiders
- Lesser disclosure and compliance
Public Limited Company
(Ltd.)
- Shareholders: Minimum 7
- Directors: Minimum 3
- Authorized capital: Minimum INR
500,000 (approx. Euro 7,700)
- Appropriate to raise equity from
investors in India
- Elaborate disclosure and compliance
Flexibility in operations, cumbersome exit procedure
Doing Business in India: Global Risks in Entity Management9

10. Business Registrations
Central Government:
› Income-tax:
› Permanent Account Number (PAN)
› Tax deduction Account Number (TAN) for withholding tax
› Import-Export Code
› Manufacturing: Excise duty, Factory, Environment
› Rendering services: Service-tax
› Social security: Provident Fund, ESIC
State Government:
› Central Sales Tax & State VAT
› Profession tax
› Shop & Establishment
Factor additional time to kick start local operations
Doing Business in India: Global Risks in Entity Management10

11. Foreign Exchange Regulations
› Reserve Bank of India (RBI) is the Regulatory Authority
› Convertibility of Indian Rupee
› Full on Current Account with few restrictions
› Partial on Capital Account
› Foreign Direct Investment (FDI) Reporting:
› 30 days from date of receipt
› Adherence to Pricing Guideline required
› Allotment of shares within 180 days
› Allotment to be reported in 30 days
› External Commercial Borrowings (ECB)
› Permitted only for specific end use
› Subject to minimum tenure and cap on interest rates
› Foreign Currency Accounts permitted only to Exporters
Cross border loans require special attention
Doing Business in India: Global Risks in Entity Management11

12. Annual Corporate Compliance
Board Meetings
› One in each quarter i.e. 4 in a year
› No restriction on place of meeting
› Video conferencing permitted subject to rules, minimum one meeting in
person is required in a year
Annual General
Meeting (AGM)
› Within six months from end of financial year or within 15 months from the
date of last AGM
› Physical meeting to be held in the same city where Registered office is located
Registrar of
Companies
› Audited financials within 30 days from AGM
› Compliance certificate within 30 days from AGM (If paid up capital is more
than 1 million and up to 50 million)
› Annual return within 60 days from AGM
Reserve Bank of
India
› Annual Return on foreign liabilities and assets by July 15
Directors
› General notice of disclosure of interest
› Declaration of continued non-disqualified
Compliance made easy with online e-filing
Doing Business in India: Global Risks in Entity Management12

13. Companies Bill, 2012: Key Changes
› Compulsory appointment of one Resident Director
› Financial Year to compulsorily end as on the 31st day of March every year, a different
financial year only with approval of the National Company Law Tribunal
› One Person Company permitted
› Outbound mergers now permitted
› Mandatory rotation of auditors for listed companies and other prescribed classes of
companies after 5 years
› Compulsory CSR obligations for companies with specified size
› at least 2% of its average net profits during three immediately preceding
financial years
› Secretarial Standards given statutory recognition, mandatory Secretarial Audit for
companies having specified size
› Class Action in case of misleading prospectus, Disgorgement provisions
Corporate law reforms in process
Doing Business in India: Global Risks in Entity Management13

14. Some Practical Realities…
› Major acquisition took 6 months from signing MOU to completion; but the task
of merging the two companies which required High Court approval, took
another 18 months
› Tax authorities in each state have different requirements depending on the
services you are supplying. A company may find itself issuing multiple versions
of invoices especially if it is supplying or buying services across states
› Licensing is complex and multi-layered. Some services may require federal and
state licenses while others, only need local city-issued licenses. Keeping all the
licenses up to date is a full time job. Allowing a single licence to lapse can be
very expensive and time consuming to rectify
› Employment related issues are myriad especially where significant staff is
required. Do not underestimate the impact of employee friendly legislation and
courts
14 Doing Business in India: Global Risks in Entity Management

15. Subsidiary Governance & Compliance
How do you manage the Compliance Risks?
› Is there professional firm assigned?
› Are local rules being followed?
› Entity setup in accordance with founding documents?
› Are filings being managed?
› When have entities been reviewed?
Doing Business in India: Global Risks in Entity Management15

16. Risks & Concerns: How Are They Managed?
Compliance Risk Concerns
Formation Is there a formal workflow approval process?
Organizational Notification Who else needs to know?
Board Details/Formation Who needs to understand this?
Jurisdictional Rules Does the organization understand what is required?
Necessary Filings Are there penalties, requirements to consider?
Registered Capital How is this managed?
Intellectual Property Protection How do you confirm these are protected?
Ongoing Maintenance Can you verify entity information is accurate?
Doing Business in India: Global Risks in Entity Management16

17. Approval Process In India
Catherine
A GEMS
approver for
all legal
entities
Reviews the
Formation Request
Approves
or Rejects
the
Request
for the
legal
entity
Adam
A GEMS updater of
data held for
Indian legal
entities
Forms the
legal entity
and
submits
the
Request
How does the organization Approve Formations?
Doing Business in India: Global Risks in Entity Management17

18. Verifying Data Accuracy: Ongoing Maintenance
How do you ensure Ongoing Compliance?
Doing Business in India: Global Risks in Entity Management18

19. Compliance Module
Do you know the entity
is in Good Standing?
› Is the entity in compliance
with international
jurisdictional rules?
› Have you completed
necessary filings?
› Is the entity in compliance
with the by-laws?
› Does it have a complete
data record?
Doing Business in India: Global Risks in Entity Management19

20. Benefits of a Compliance Dashboard
› Continious audits using self-defined parameters
› Conduct validity checks
› Compliance monitoring
› Detect and resolve issues in time
› Integrated Notification Manager & Task-Manager
› Enforce compliance standards
› Flexible user screens, report-wizards,
integration of business processes
Audit
Detect
& Edit
Implement
Security
(Risk
Management)
Govern
(Corporate
Governance)
Transparency
Doing Business in India: Global Risks in Entity Management20

21. What Other Information Needs to Be Shared?
GEMS
Global Entity
Management System
Legal
Department
Finance
Department
Compliance
Management
Banking
Department
Auditors
Tax
Department
Investors
Relations
Entity
Management
Trade Marks
Department
Who needs current information within a company?
Doing Business in India: Global Risks in Entity Management21

22. Webinar Series: China, India & Brazil
› Doing Business in India, May 15 @ 1 pm EDT
› Doing Business in India, May 22 @ 1 pm GMT
› Doing Business in Brazil, June 19 @ 1 pm EDT
› Doing Business in Brazil, June 26 @ 1 pm GMT
› Register at cgs.computershare.com
› Doing Business in China webinar now on Computershare YouTube
Doing Business in India: Global Risks in Entity Management22

23. Questions & Comments
Thank you for joining us. What questions do you have?
› Joe DiLandro
Computershare Governance Services
joe.dilandro1@computershare.com
› Nitin Shingala
TMF Group
nitin.shingala@tmf-group.com
› Jane Niven
Jones Lang LaSalle
jane.niven@ap.jll.com
Register for upcoming webinars at cgs.computershare.com.
Doing Business in India: Global Risks in Entity Management