FEMA Regulations for Incorporation of WOS/JV/ Step-down Subsidiary outside IndiaDVSResearchFoundatio
Key Takeaways:
Acquisition of JV/WOS by Indian parties
Approvals required for investment in JV/WOS by Indian parties
Understanding step-down subsidiary
Setting up step-down subsidiary outside India and reporting procedures involved
Objectives & Agenda :
Companies can use either equity or debt form to raise capital. Equity can be raised by way of rights issue, bonus issue, private placement, public issue, etc. An offer of securities made to the existing shareholders of the Company is a rights issue. Bonus shares may be issued to the members of the Company out of its free reserves, or securities premium account or capital redemption account. The webinar covers the statutory / practical aspects of rights issue and bonus issue, including caveats relating to such issues.
Objectives & Agenda :
The Regulations under FEMA regulate the Export transactions of Goods, Services and Currencies. In this Webinar we shall understand the Definition of the term 'Export', 'Services' and 'Currencies'. We will also look at various procedures and compliances involved while Exporting goods or services or currencies.
OBJECTIVE
The place of supply in GST determines the taxable jurisdiction where the tax should reach and ascertains whether the supply is inter-state supply or intra-state supply. This webinar shall deal with the place of supply with regards to various types of goods and services. It shall also throw some light on the valuation criteria in certain cases.
Appointment & Remuneration of Managerial PersonnelJitender Ahlawat
This Presentation explains the detailed provisions of Companies Act, 2013 relating to the appointment and remuneration of Managing Director, Whole Time Director or Manager (Managerial Personnel) (Managerial Remuneration).
The document provides an overview of key aspects of the Integrated Goods and Services Tax (IGST) Act in India, including:
1. IGST will be levied on inter-state supplies of goods and services to maintain integrity of the input tax credit chain across states while keeping the regime simple.
2. Key features of IGST include it being levied and collected by the central government on inter-state supplies to effectively tax such transactions.
3. The IGST Act outlines provisions regarding registration, returns, payments, refunds, audits and dispute resolution that broadly mirror equivalent sections in the Central GST (CGST) Act.
OBJECTIVE
Goods and Services Tax (GST) is an Indirect Tax levied in India introduced in July, 2017 which was one of the most important reforms in the Indian Economy. GST is payable on the supply of goods or services. In this webinar, we will be able to understand and analyse the provisions related to time and value of supply under GST.
FEMA Regulations for Incorporation of WOS/JV/ Step-down Subsidiary outside IndiaDVSResearchFoundatio
Key Takeaways:
Acquisition of JV/WOS by Indian parties
Approvals required for investment in JV/WOS by Indian parties
Understanding step-down subsidiary
Setting up step-down subsidiary outside India and reporting procedures involved
Objectives & Agenda :
Companies can use either equity or debt form to raise capital. Equity can be raised by way of rights issue, bonus issue, private placement, public issue, etc. An offer of securities made to the existing shareholders of the Company is a rights issue. Bonus shares may be issued to the members of the Company out of its free reserves, or securities premium account or capital redemption account. The webinar covers the statutory / practical aspects of rights issue and bonus issue, including caveats relating to such issues.
Objectives & Agenda :
The Regulations under FEMA regulate the Export transactions of Goods, Services and Currencies. In this Webinar we shall understand the Definition of the term 'Export', 'Services' and 'Currencies'. We will also look at various procedures and compliances involved while Exporting goods or services or currencies.
OBJECTIVE
The place of supply in GST determines the taxable jurisdiction where the tax should reach and ascertains whether the supply is inter-state supply or intra-state supply. This webinar shall deal with the place of supply with regards to various types of goods and services. It shall also throw some light on the valuation criteria in certain cases.
Appointment & Remuneration of Managerial PersonnelJitender Ahlawat
This Presentation explains the detailed provisions of Companies Act, 2013 relating to the appointment and remuneration of Managing Director, Whole Time Director or Manager (Managerial Personnel) (Managerial Remuneration).
The document provides an overview of key aspects of the Integrated Goods and Services Tax (IGST) Act in India, including:
1. IGST will be levied on inter-state supplies of goods and services to maintain integrity of the input tax credit chain across states while keeping the regime simple.
2. Key features of IGST include it being levied and collected by the central government on inter-state supplies to effectively tax such transactions.
3. The IGST Act outlines provisions regarding registration, returns, payments, refunds, audits and dispute resolution that broadly mirror equivalent sections in the Central GST (CGST) Act.
OBJECTIVE
Goods and Services Tax (GST) is an Indirect Tax levied in India introduced in July, 2017 which was one of the most important reforms in the Indian Economy. GST is payable on the supply of goods or services. In this webinar, we will be able to understand and analyse the provisions related to time and value of supply under GST.
The document discusses requirements and procedures for obtaining dormant company status under the Companies Act of 2013 in India. A company can apply for dormant status by passing a special resolution or with consent of 3/4 of shareholders. It must file an application in Form MSC-1 along with fees. If approved, the Registrar of Companies will issue a certificate in Form MSC-2. A dormant company must have a minimum of one director and file an annual return in Form MSC-3 audited by a chartered accountant. It can apply to become an active company again in Form MSC-4, and the registrar can inquire into any dormant company suspected of operating.
AD Category I Banks may allow advance remittance for import payments without bank guarantees or standby LOCs up to certain limits:
- For goods imports: USD 5 million for reputed importers with good track record.
- For rough diamond imports: No limit for recognized mining companies.
- For aircraft/helicopter imports: USD 50 million for permitted entities, USD 5 million for others.
- For service imports: Require bank guarantee for amounts over USD 200,000 equivalent.
Advance payments must follow sale contract terms and be directly to supplier accounts. Imports must be physically made within specified timelines. AD banks must follow KYC norms, create ORMs in IDPMS, and
The Banking Ombudsman Scheme provides an inexpensive and transparent mechanism for resolving complaints relating to services provided by banks. The Banking Ombudsman is a senior official appointed by the RBI to impartially address customer complaints against their bank. Complaints that can be lodged include issues with loans, deposits, cheques, remittances, and other banking services. The procedure for filing a complaint is online or written and must be submitted within 30 days of responding to the bank. Compensation awarded is limited to a maximum of Rs. 20 lakhs for financial loss and Rs. 1 lakh for mental agony.
The document discusses capital gains tax under section 45(1) of the Income Tax Act. Some key points include:
1) Capital gains arising from the transfer of a capital asset are taxable as capital gains in the year the transfer takes place.
2) Certain assets like personal household items are not considered capital assets, while others like jewelry, paintings, and cars used for business are.
3) Transfer includes sale, exchange, relinquishment of an asset, or conversion to stock-in-trade. It is taxed in the year of transfer, except for compulsory acquisition or insurance claims, which are taxed in the year compensation is received.
4) Capital gains are classified as short
Bank guarantees and standby letters of credit can be used as alternatives to cash collateral when additional security is needed, especially when the financial strength of the counterparty is uncertain. They correlate with commercial events like contracts and deliveries. Common types include payment guarantees, transfer guarantees, and guarantees issued to governmental entities. The key parties are the principal, beneficiary, and bank or guarantor. Guarantees are either suretyship, where the guarantor can review the underlying contract, or demand, where the guarantor must pay on first demand. Rules like ISP98 and URDG458 govern guarantees and standbys.
The document discusses provisions around the time of supply under the GST law. It explains key sections related to time of supply of goods and services. For services, it classifies the situations to determine time of supply under forward charge, reverse charge, vouchers, and residual cases. It also discusses the time of supply in case of an addition in value by way of interest/penalty and in case of a change in tax rate. The key aspects covered are time of invoice issuance, date of payment receipt, date of provision of service, and date of entry in books of recipient.
This document summarizes key aspects of the Negotiable Instruments Act of 1881 in India. It defines negotiable instruments as written documents that are freely transferable and specify payment to a specific person or bearer. The three main types are promissory notes, bills of exchange, and cheques. It outlines essential requirements for each, such as being in writing and signed. It also discusses concepts like holders in due course, payment in due course, and maturity dates including days of grace. Presumptions around consideration, dates, and transfers are also summarized.
The negotiable instruments act, 1881 (2)RevaMittal
The document provides an overview of negotiable instruments under Indian law. It defines key terms like negotiable instrument, bill of exchange, promissory note, cheque, endorsement, and dishonour. It describes the essential characteristics and elements of different types of negotiable instruments. The Negotiable Instruments Act of 1881 governs negotiable instruments in India and helps facilitate valid contracts between parties.
The document discusses several articles from UCP 500 that were not carried over to UCP 600. It provides rationale for why certain articles like those covering revocable credits, unclear instructions, discrepant documents notices, freight payable/prepaid transport documents, other documents, and expiry dates were removed. The key points are that many of the old articles stated obvious points or were no longer necessary given advances in technology and practices. However, the absence of specific rules does not remove the duty of care of banks to properly create credits and amendments.
Merchant banking provides various financial services to corporations including corporate counseling, project counseling, loan syndication, managing securities offerings, and portfolio management. To become a merchant banker in India, an entity must register with the Securities and Exchange Board of India and meet certain net worth requirements that vary based on the category of registration. Some of the major merchant banking companies in India include ICICI Securities, SBI Capital Markets, Axis Bank, and Kotak Mahindra Capital Company. Merchant banking first began in India in 1967 and has grown to include both public and private sector banks and financial institutions that help companies raise capital and advise on mergers and acquisitions.
This document summarizes the rules for acquisition and transfer of securities by non-residents in India. It outlines various scenarios for the transfer of capital instruments of an Indian company between residents and non-residents, including transfers by NRIs, OCIs, overseas corporate bodies, and residents. It specifies the applicable entry routes, sectoral caps, pricing guidelines, and documentation requirements for such transfers. The document also provides definitions for key terms like non-resident Indian, overseas citizen of India, and capital instruments.
The document discusses endorsement of negotiable instruments. It defines endorsement as the signature of the holder made to transfer the document to another party. There are various types of endorsements including blank endorsement, endorsement in full, restrictive endorsement, partial endorsement, conditional endorsement, and facultative endorsement. The document outlines the essential elements and legal effects of each type of endorsement under Indian law.
This PPT explains all about the latest amendments in the GST regime. Under, valuation of supply, this topic covers the time of supply which is considered as as second aspect after place of supply.
Banking originated in India in the late 18th century with the Bank of Hindustan and General Bank of India. The State Bank of India, formed in 1955 from three banks merging in 1921, is the oldest and largest bank still in existence today. Banking in India went through several eras - under colonial rule from the 1820s-1940s, it was primarily private banks. In 1949, the Reserve Bank of India was established and 14 largest commercial banks were nationalized in 1969. Six more banks were nationalized in 1980. Liberalization in the 1990s allowed new private banks to open.
Accounting Standard 4 deals with contingencies and events occurring after the balance sheet date. It defines contingencies as uncertain future events whose outcomes are unknown at the balance sheet date. Estimates are required to account for contingencies in financial statements. Events after the balance sheet date refer to significant events between the balance sheet date and approval of financial statements. Adjusting events require adjustment to amounts in the financial statements, while non-adjusting events require disclosure in notes only.
Factoring is a financial transaction where a business sells its accounts receivable to a third party called a factor in exchange for immediate cash. This differs from a bank loan in that factoring emphasizes the receivable's value rather than the firm's creditworthiness, it is a purchase of assets rather than a loan, and involves three parties rather than two. The three parties are the seller of the receivable, the debtor, and the factor. Factoring transfers ownership of the receivables to the factor, giving them the right to collect payment from debtors and bear the risk of nonpayment.
This document provides an overview of securitization, including:
- Securitization involves pooling and repackaging illiquid financial assets like loans into marketable securities that can be sold to investors. This provides liquidity to originators and spreads risk.
- The process involves an originator transferring assets to a special purpose vehicle (SPV) that issues securities to investors. Cash flows from the underlying assets are used to make payments to investors.
- Credit ratings and other credit enhancements make the securities more attractive to investors. Securitization provides benefits like capital relief and cheaper funding to originators.
This document defines and explains endorsement of negotiable instruments. It begins by defining endorsement as signing over the right to receive payment from a negotiable instrument to another person. It then discusses the key parties in an endorsement - the endorser who signs and the endorsee in whose favor it is made. The document outlines the essential requirements for a valid endorsement and various legal provisions and rules regarding endorsement. It concludes by defining and explaining the different types of endorsements including blank, special, conditional, restrictive, sans recourse, facultative, forged, and partial endorsements.
The document discusses various processes related to international trade transactions including:
1. Payment against documents (PAD) where documents are scrutinized and payment is made if documents comply with LC terms.
2. Lodgment and retirement of documents under sight and usance LCs involving roles of different bank departments.
3. Post-import financing facilities like FIM, FATR and related processes for clearing goods and adjusting payments.
This document discusses different types of endorsements of negotiable instruments:
- Blank endorsement transfers ownership without specifying the recipient and makes the instrument payable to the bearer.
- Special endorsement specifies the recipient by name and makes the instrument payable to that person's order.
- Restrictive endorsement limits further negotiation of the instrument.
- Partial endorsement transfers only part of the amount payable.
- Conditional endorsement subjects the transfer of title to fulfillment of certain conditions.
The document summarizes FEMA regulations regarding outbound investments from India. It outlines the types of permitted and prohibited investments overseas, the approval routes for direct investments in joint ventures and wholly-owned subsidiaries, limits on such investments, and obligations for investors. Portfolio investments up to certain limits are allowed under general permission for listed companies and individuals. Special provisions exist for investments in agricultural operations and a $25,000 scheme for personal remittances.
The document provides information on joint ventures and foreign collaborations in India. It defines a joint venture as an association between two or more business entities who combine resources for common goals. Benefits of joint ventures include spreading costs and risks, improving access to finance, technology, and new markets. Recent examples of joint ventures in India are provided. Major issues in structuring joint ventures like capital structure, governance, intellectual property rights are highlighted. India's liberal foreign direct investment policy allowing up to 100% foreign ownership in most sectors is summarized. The legal and regulatory framework governing joint ventures is outlined.
The document discusses requirements and procedures for obtaining dormant company status under the Companies Act of 2013 in India. A company can apply for dormant status by passing a special resolution or with consent of 3/4 of shareholders. It must file an application in Form MSC-1 along with fees. If approved, the Registrar of Companies will issue a certificate in Form MSC-2. A dormant company must have a minimum of one director and file an annual return in Form MSC-3 audited by a chartered accountant. It can apply to become an active company again in Form MSC-4, and the registrar can inquire into any dormant company suspected of operating.
AD Category I Banks may allow advance remittance for import payments without bank guarantees or standby LOCs up to certain limits:
- For goods imports: USD 5 million for reputed importers with good track record.
- For rough diamond imports: No limit for recognized mining companies.
- For aircraft/helicopter imports: USD 50 million for permitted entities, USD 5 million for others.
- For service imports: Require bank guarantee for amounts over USD 200,000 equivalent.
Advance payments must follow sale contract terms and be directly to supplier accounts. Imports must be physically made within specified timelines. AD banks must follow KYC norms, create ORMs in IDPMS, and
The Banking Ombudsman Scheme provides an inexpensive and transparent mechanism for resolving complaints relating to services provided by banks. The Banking Ombudsman is a senior official appointed by the RBI to impartially address customer complaints against their bank. Complaints that can be lodged include issues with loans, deposits, cheques, remittances, and other banking services. The procedure for filing a complaint is online or written and must be submitted within 30 days of responding to the bank. Compensation awarded is limited to a maximum of Rs. 20 lakhs for financial loss and Rs. 1 lakh for mental agony.
The document discusses capital gains tax under section 45(1) of the Income Tax Act. Some key points include:
1) Capital gains arising from the transfer of a capital asset are taxable as capital gains in the year the transfer takes place.
2) Certain assets like personal household items are not considered capital assets, while others like jewelry, paintings, and cars used for business are.
3) Transfer includes sale, exchange, relinquishment of an asset, or conversion to stock-in-trade. It is taxed in the year of transfer, except for compulsory acquisition or insurance claims, which are taxed in the year compensation is received.
4) Capital gains are classified as short
Bank guarantees and standby letters of credit can be used as alternatives to cash collateral when additional security is needed, especially when the financial strength of the counterparty is uncertain. They correlate with commercial events like contracts and deliveries. Common types include payment guarantees, transfer guarantees, and guarantees issued to governmental entities. The key parties are the principal, beneficiary, and bank or guarantor. Guarantees are either suretyship, where the guarantor can review the underlying contract, or demand, where the guarantor must pay on first demand. Rules like ISP98 and URDG458 govern guarantees and standbys.
The document discusses provisions around the time of supply under the GST law. It explains key sections related to time of supply of goods and services. For services, it classifies the situations to determine time of supply under forward charge, reverse charge, vouchers, and residual cases. It also discusses the time of supply in case of an addition in value by way of interest/penalty and in case of a change in tax rate. The key aspects covered are time of invoice issuance, date of payment receipt, date of provision of service, and date of entry in books of recipient.
This document summarizes key aspects of the Negotiable Instruments Act of 1881 in India. It defines negotiable instruments as written documents that are freely transferable and specify payment to a specific person or bearer. The three main types are promissory notes, bills of exchange, and cheques. It outlines essential requirements for each, such as being in writing and signed. It also discusses concepts like holders in due course, payment in due course, and maturity dates including days of grace. Presumptions around consideration, dates, and transfers are also summarized.
The negotiable instruments act, 1881 (2)RevaMittal
The document provides an overview of negotiable instruments under Indian law. It defines key terms like negotiable instrument, bill of exchange, promissory note, cheque, endorsement, and dishonour. It describes the essential characteristics and elements of different types of negotiable instruments. The Negotiable Instruments Act of 1881 governs negotiable instruments in India and helps facilitate valid contracts between parties.
The document discusses several articles from UCP 500 that were not carried over to UCP 600. It provides rationale for why certain articles like those covering revocable credits, unclear instructions, discrepant documents notices, freight payable/prepaid transport documents, other documents, and expiry dates were removed. The key points are that many of the old articles stated obvious points or were no longer necessary given advances in technology and practices. However, the absence of specific rules does not remove the duty of care of banks to properly create credits and amendments.
Merchant banking provides various financial services to corporations including corporate counseling, project counseling, loan syndication, managing securities offerings, and portfolio management. To become a merchant banker in India, an entity must register with the Securities and Exchange Board of India and meet certain net worth requirements that vary based on the category of registration. Some of the major merchant banking companies in India include ICICI Securities, SBI Capital Markets, Axis Bank, and Kotak Mahindra Capital Company. Merchant banking first began in India in 1967 and has grown to include both public and private sector banks and financial institutions that help companies raise capital and advise on mergers and acquisitions.
This document summarizes the rules for acquisition and transfer of securities by non-residents in India. It outlines various scenarios for the transfer of capital instruments of an Indian company between residents and non-residents, including transfers by NRIs, OCIs, overseas corporate bodies, and residents. It specifies the applicable entry routes, sectoral caps, pricing guidelines, and documentation requirements for such transfers. The document also provides definitions for key terms like non-resident Indian, overseas citizen of India, and capital instruments.
The document discusses endorsement of negotiable instruments. It defines endorsement as the signature of the holder made to transfer the document to another party. There are various types of endorsements including blank endorsement, endorsement in full, restrictive endorsement, partial endorsement, conditional endorsement, and facultative endorsement. The document outlines the essential elements and legal effects of each type of endorsement under Indian law.
This PPT explains all about the latest amendments in the GST regime. Under, valuation of supply, this topic covers the time of supply which is considered as as second aspect after place of supply.
Banking originated in India in the late 18th century with the Bank of Hindustan and General Bank of India. The State Bank of India, formed in 1955 from three banks merging in 1921, is the oldest and largest bank still in existence today. Banking in India went through several eras - under colonial rule from the 1820s-1940s, it was primarily private banks. In 1949, the Reserve Bank of India was established and 14 largest commercial banks were nationalized in 1969. Six more banks were nationalized in 1980. Liberalization in the 1990s allowed new private banks to open.
Accounting Standard 4 deals with contingencies and events occurring after the balance sheet date. It defines contingencies as uncertain future events whose outcomes are unknown at the balance sheet date. Estimates are required to account for contingencies in financial statements. Events after the balance sheet date refer to significant events between the balance sheet date and approval of financial statements. Adjusting events require adjustment to amounts in the financial statements, while non-adjusting events require disclosure in notes only.
Factoring is a financial transaction where a business sells its accounts receivable to a third party called a factor in exchange for immediate cash. This differs from a bank loan in that factoring emphasizes the receivable's value rather than the firm's creditworthiness, it is a purchase of assets rather than a loan, and involves three parties rather than two. The three parties are the seller of the receivable, the debtor, and the factor. Factoring transfers ownership of the receivables to the factor, giving them the right to collect payment from debtors and bear the risk of nonpayment.
This document provides an overview of securitization, including:
- Securitization involves pooling and repackaging illiquid financial assets like loans into marketable securities that can be sold to investors. This provides liquidity to originators and spreads risk.
- The process involves an originator transferring assets to a special purpose vehicle (SPV) that issues securities to investors. Cash flows from the underlying assets are used to make payments to investors.
- Credit ratings and other credit enhancements make the securities more attractive to investors. Securitization provides benefits like capital relief and cheaper funding to originators.
This document defines and explains endorsement of negotiable instruments. It begins by defining endorsement as signing over the right to receive payment from a negotiable instrument to another person. It then discusses the key parties in an endorsement - the endorser who signs and the endorsee in whose favor it is made. The document outlines the essential requirements for a valid endorsement and various legal provisions and rules regarding endorsement. It concludes by defining and explaining the different types of endorsements including blank, special, conditional, restrictive, sans recourse, facultative, forged, and partial endorsements.
The document discusses various processes related to international trade transactions including:
1. Payment against documents (PAD) where documents are scrutinized and payment is made if documents comply with LC terms.
2. Lodgment and retirement of documents under sight and usance LCs involving roles of different bank departments.
3. Post-import financing facilities like FIM, FATR and related processes for clearing goods and adjusting payments.
This document discusses different types of endorsements of negotiable instruments:
- Blank endorsement transfers ownership without specifying the recipient and makes the instrument payable to the bearer.
- Special endorsement specifies the recipient by name and makes the instrument payable to that person's order.
- Restrictive endorsement limits further negotiation of the instrument.
- Partial endorsement transfers only part of the amount payable.
- Conditional endorsement subjects the transfer of title to fulfillment of certain conditions.
The document summarizes FEMA regulations regarding outbound investments from India. It outlines the types of permitted and prohibited investments overseas, the approval routes for direct investments in joint ventures and wholly-owned subsidiaries, limits on such investments, and obligations for investors. Portfolio investments up to certain limits are allowed under general permission for listed companies and individuals. Special provisions exist for investments in agricultural operations and a $25,000 scheme for personal remittances.
The document provides information on joint ventures and foreign collaborations in India. It defines a joint venture as an association between two or more business entities who combine resources for common goals. Benefits of joint ventures include spreading costs and risks, improving access to finance, technology, and new markets. Recent examples of joint ventures in India are provided. Major issues in structuring joint ventures like capital structure, governance, intellectual property rights are highlighted. India's liberal foreign direct investment policy allowing up to 100% foreign ownership in most sectors is summarized. The legal and regulatory framework governing joint ventures is outlined.
How to make outbound investment from india financing & complianceRamanuj Mukherjee
There are several options and procedures for Indian companies to make outbound investments. Under the automatic route, investments of up to 400% of net worth are permitted without approval. Companies can also use proceeds from ADR/GDR issuances. For investments outside these routes, approval must be obtained from authorities including the RBI. The document outlines financing options, compliance procedures, and regulations according to the Companies Act, FEMA, and SEBI.
The document summarizes key changes to foreign exchange laws in India related to overseas direct investments and foreign direct investment. Some of the key changes include:
- Restoring limits on overseas direct investments by Indian parties under the automatic route to pre-August 2013 levels, but requiring RBI approval for any single financial commitment exceeding $1 billion.
- Allowing issue of partly paid shares and warrants by Indian companies to foreign investors, subject to pricing guidelines where 25% of consideration is received upfront and the balance within 12-18 months.
- Revising pricing guidelines for issue/transfer of shares under foreign direct investment to provide greater flexibility, requiring listed companies to follow SEBI guidelines and allowing unlisted companies to issue
History of Outbound Investment & Rationale
Liberalization and the rationalization
Automatic Route of Overseas Investment
Approval Route
Eligible Entities for Investment
Other modes of Investment
Post Approval Compliance
Disinvestment / Pledge etc.
Factors Affecting Overseas Investment
Nangia Andersen HSBC Webinar on FEMA - Demystifying Business Challenges.pdfSandeep814482
The document provides an overview of key regulations and compliance requirements for corporates under FEMA including foreign direct investment, overseas direct investment, external commercial borrowings, liaison/branch/project offices, export/import of goods and services, and ESOPs issued by foreign companies. It discusses common issues that arise and regulatory guidelines. Non-compliance can result in penalties up to 3 times the amount involved or INR 2 lakhs if not quantifiable, and directors can be held liable if the contravention occurred with their consent or connivance.
The document summarizes the key aspects of investment in India by persons resident outside India from a tax and regulatory perspective. It discusses the different routes of investment including foreign direct investment, portfolio investment, and investment by non-resident Indians. It also outlines the various legal frameworks, policies, and documentation procedures governing these investments.
PPT on ODI and Compounding_29.06.2019.pdfRajesh Yadav
This document provides information on overseas direct investments (ODI) by Indian parties:
- It outlines the top 10 destination countries for ODI from India over the past 3 years, led by Mauritius and Singapore. Manufacturing is the largest sector for ODI.
- It defines key terms related to ODI such as joint ventures, wholly owned subsidiaries, and real estate business. ODI can be undertaken through the automatic or approval route from RBI.
- Under the automatic route, total financial commitment for a single overseas entity cannot exceed 400% of the Indian party's net worth. Various methods of funding investments like equity, debt, and guarantees are discussed along with related limits.
The document summarizes recent changes and clarifications related to corporate laws in India. It discusses:
1) Amendments to exclude independent directors and their relatives from the definition of related parties for related party transactions.
2) Clarification that restrictions on related party transactions do not apply to mergers, amalgamations, and schemes of arrangements.
3) No fresh approval needed for pre-existing related party contracts, unless terms are modified.
The document outlines Indian regulations regarding outbound investments under FEMA. It discusses the types of permitted, regulated and prohibited investments. Investments are allowed through joint ventures, wholly owned subsidiaries, and portfolio investments up to 200% of net worth. Automatic route approval is provided for certain investments, while others require RBI approval. The document also discusses investment funding, share swaps, guarantees, reporting requirements and other compliance aspects according to FEMA regulations.
CVO Association - Intensive Study Course - Presentation on Investments outsid...P P Shah & Associates
This document provides an overview and summary of a presentation on outbound investments and guarantees under FEMA regulations. The presentation covered:
- Types of investments allowed under the automatic route including direct investments, portfolio investments, and other investments.
- Eligible investors under the automatic route such as companies, registered partnership firms, and PSUs. Investments must be for a bona fide business activity.
- Limits on financial commitment which cannot exceed 400% of the investor's net worth, and what is included in financial commitment such as equity contributions, loans, and guarantees.
- Prohibited sectors which exclude portfolio investments, real estate, and banking. Exemptions are also provided.
The document summarizes key changes made by the Reserve Bank of India to foreign exchange regulations relating to overseas direct investments by Indian parties. The changes liberalize rules around the creation of charges on shares and assets of joint ventures, wholly owned subsidiaries, and step-down subsidiaries. Specifically, the changes allow for the automatic routing of creating charges in favor of domestic or overseas lenders on shares and assets at any level of subsidiaries, extend this to group companies, and allow charges on domestic assets in favor of overseas lenders and overseas assets in favor of domestic lenders. The changes aim to provide more flexibility to Indian parties in availing foreign funding.
The document discusses various methods for funding investments in joint ventures (JVs) and wholly owned subsidiaries (WOS) abroad by Indian companies. It outlines that investments can be funded through foreign exchange reserves, export proceeds, equity swaps, external commercial borrowings, depository receipts, and balances in exchange earners' foreign currency accounts. The capitalization of export proceeds and other dues to invest in overseas JVs/WOS within prescribed timelines is also permitted. Indian companies can invest in overseas equities and rated debt instruments up to a certain percentage of their net worth. The acquisition of a foreign company through a bidding process is also discussed.
The document discusses various types of depository receipts such as ADRs, GDRs, and IDRs. It provides an overview of the issuance process of depository receipts by foreign companies to raise capital globally and tap foreign markets. It explains key aspects like eligibility criteria for companies to issue depository receipts, the various regulations that govern such issuances, and the financial institutions and process involved in issuing different types of depository receipts.
This document provides an overview of a four day orientation course on overseas direct investment under FEMA. It discusses key topics like overseas direct investments under FEMA notification 120, branches outside India, eligible entities, limits under the automatic route and conditions for investments by resident individuals. The document also clarifies questions around eligible structures like trusts and defines important terms.
Foreign portfolio investment (FPI) refers to foreign investments in Indian stocks, bonds, and mutual funds. Since 1992, India has opened up to FPI inflows which have provided a large source of non-debt creating private capital. FPI can help fill capital needs in developing countries and influence domestic markets. However, irregularities and lack of protections have caused declines as FPI becomes less active and domestic investors withdraw from markets. Proper regulations aim to balance attracting investment while controlling volatility.
Similar to Writeoff,Pledge,Transfer of Investment in Joint Venture/Wholly Owned Subsidiary/Step Down Subsidiary (20)
SCRAPPING OF RETRO TAX PROVISIONS : A REVIVAL OF OVERSEAS INTEREST IN INDIADVSResearchFoundatio
The document summarizes the scrapping of retroactive tax provisions in India. It provides background on retroactive taxation laws introduced in 2012 in response to court rulings. It analyzes prominent cases like Vodafone and Cairn Energy that challenged the retroactive taxes under bilateral investment treaties. The Taxation Laws Amendment Act of 2021 was passed to scrap these retroactive provisions and provide tax refunds to affected companies like Cairn Energy. The act aims to improve India's reputation as an investment destination and revive interest from foreign investors.
Key Takeaways: - Analysis of section 45(4), section 9B of the Income Tax Act...DVSResearchFoundatio
Key Takeaways:
- Analysis of section 45(4), section 9B of the Income Tax Act and Rule 8AA and Rule 8AB of Income Tax Rules
- Illustrations to understand the relevant impact
- Critical Issues concerned with the provisions
Key Takeaways:
- Facts of the case
- Issues and Orders of the case
- Contention of the parties
- Observations by Honourable Supreme Court
- Conclusions
Key Takeaways:
- Facts of the case
- Issues and Orders of the case
- Contention of the parties
- Observations by Honourable Supreme Court
- Conclusions
FALLACIOUS DISREGARDING OF TRANSACTIONS THAT RESULT IN A TAX BENEFIT TO THE A...DVSResearchFoundatio
Key Takeaways:
- Facts of the case
- AO's contention
- Ruling of CIT(A) and issues for consideration of the ITAT
- Observations of ITAT
- Final Ruling
- Way Forward
ALLOWABILITY OF OUTSTANDING INTEREST CONVERTED INTO DEBENTURES AS AN EXPENSE ...DVSResearchFoundatio
The Supreme Court ruled that the conversion of outstanding interest into debentures by the assessee company qualified for deduction under Section 43B of the Income Tax Act. The conversion was done under a rehabilitation plan agreed with institutional creditors to extinguish the interest liability. The Court observed that Section 43B was not meant to affect bona fide transactions, and debentures were different than loans/borrowings under Explanation 3C. It set aside the High Court's decision and allowed the assessee's claim for deduction, noting the conversion was an actual payment of interest rather than postponing the liability.
Key Takeaways:
- Facts of the case
- Issues and Orders
- Contention of the parties
- Observations of Honourable Supreme Court
- Conclusion and way forward
This document outlines the process and documentation required for an SME to obtain an in-principle approval for an initial public offering (IPO) listing on the National Stock Exchange of India (NSE). It details the documents required to be submitted on T+2, T+3, T+4, and T+5 days from the date of in-principle approval to finalize the listing. These include annual reports, board resolutions, shareholding details, basis of allotment, post-issue shareholding pattern, and confirmation from issuers, merchant bankers, and statutory auditors. It also provides information on NEAPS platform registration and payment of processing and annual listing fees.
What are the post listing compliance norms for SME entities?DVSResearchFoundatio
The document summarizes post-listing compliance norms for small and medium enterprises (SMEs) listed on SME exchanges in India. It discusses requirements for further capital issues, green shoe options, migration to the main board, further public offerings, and mandatory and voluntary disclosures. Key requirements include making full disclosures for further issues, obtaining shareholder approval for green shoe options, complying with eligibility criteria for migration, and submitting regular financial disclosures and statements on the use of IPO proceeds.
1) Prior to listing on an SME exchange, a company must file an offer document with SEBI and the relevant stock exchange and appoint qualified intermediaries like lead managers, registrars, and syndicate members.
2) The company must make required disclosures in the offer document and the lead manager must conduct due diligence on these disclosures.
3) After filing the offer document, the company must price the issue, keep the issue open for subscription for at least 3 days, and ensure the issue is underwritten and market making arrangements are in place.
This document outlines the criteria for Small and Medium Enterprises (SMEs) to list on the SME platforms of the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) in India. The key eligibility criteria are a positive net worth, a track record of at least 3 years of operations, and operating profits over the last 2-3 years. Additional disclosure requirements include details on directors, regulatory actions, litigation status, and defaults. SMEs listed can later migrate to the main board of the exchanges if they meet certain criteria like company size and track record. As of now, over 220 companies are listed on NSE's SME platform and over 100 have migrated from BSE's SME platform
Key Takeaways:
- Background and Overview of Legal Provision
- Facts of the Case
- Contentions of the Assessee and Revenue
- Supreme Court’s Verdict
- Key Learnings and Way Forward
An Indian individual seeks to incorporate a company in Singapore. The process involves obtaining name approval, determining the company structure as a private or public company, appointing directors and other key personnel, selecting a registered office address, and drafting a company constitution. Once incorporated, the new company can open a Singapore bank account and obtain a tax residency certificate. Indian regulations allow for foreign direct investment through the automatic route or approval route depending on the amount and financial commitment. The entire incorporation process can be completed quickly online but setting up documents may take a few days.
AUTOMATIC VACATION OF STAY GRANTED BY TRIBUNALDCIT v. PEPSI FOODS LTD. [2021]...DVSResearchFoundatio
Key Takeaways:
- Background and Overview of Legal Provision
- Facts of the Case
- Contentions of the Assessee and Revenue
- Supreme Court’s Verdict
- Key Learnings and Way Forward
Commissioner of income tax-iv.reliance energy ltd.[2021] 127 taxmann.com 69(sc)DVSResearchFoundatio
The Supreme Court ruled that deductions under Section 80-IA of the Income Tax Act can be adjusted against income from other sources, not just business income.
The Revenue Department had argued that Section 80-IA(1) limits deductions to only business income based on the phrase "derived from". However, the Supreme Court observed that Section 80-IA(5) deals only with computing the deduction amount, not limiting it.
The ruling allows eligible businesses to set off Section 80-IA and similar deductions against any head of income, not just profits and gains from business, subject to the overall gross total income limit. This provides tax relief to companies with other sources of income.
Implicitly or explicitly all competing businesses employ a strategy to select a mix
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Part 2 Deep Dive: Navigating the 2024 Slowdownjeffkluth1
Introduction
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3. Legends Used in the Presentation
APR Annual Performance Report
AD Authorised Dealer
JV Joint Venture
RBI Reserve Bank of India
SDS Step Down Subsidiary
WOS Wholly Owned Subsidiary
4. Presentation Schema
Relevant Definitions
Post Investment
Changes/Additional
Investment
Criteria for Writing
off Capital &
Receivables
Reporting
Requirements
relating to Write-off
Conditions for
transfer by way of
Sale of Shares of
JV/WOS
Transfer by way of
Sale of Shares of
JV/WOS involving
Write-off
General conditions
for creation of
charge
Specific conditions
relating to charge
on assets
Invocation of
charge
Other provisions
relating to charge
5. Relevant Definitions
Wholly Owned Subsidiary
A foreign entity formed, registered or incorporated in accordance with the laws and regulations of the host country,
whose entire CAPITAL is held by the Indian party. [reg 2(q)]
Joint Venture
A foreign entity formed, registered or incorporated in accordance with the laws and regulations of the host country in
which the Indian party makes a direct investment; [reg 2(m)]
Joint Venture as per Accounting Standard 27 “Financial Reporting of Interests in Joint Ventures”
A joint venture is a contractual arrangement whereby two or more parties undertake an economic activity that is
subject to joint control
Direct Investment
"Direct investment outside India" means investment by way of contribution to the CAPITAL or subscription to the
Memorandum of Association of a foreign entity or by way of purchase of existing shares of a foreign entity either by
market purchase or private placement or through stock exchange, but does not include portfolio investment. [reg 2(e)]
7. Post Investment Changes/Additional Investment
(Regulation 13)
A JV/WOS set up by the Indian Party as per Regulation 6 may
diversify its activities/set up SDS/alter shareholding pattern in
the overseas entity.
Additional compliance under Regulation 7 shall apply in case
of financial services sector companies.
The Indian Party should do the following:
Report the details of such decisions to the RBI through AD
category-I bank
within 30 days of approval of those decisions by the
competent authority of JV/WOS concerned in terms of local
laws of the host country.
Include the same in the APR required to be forwarded to the
AD category-I bank.
9. Criteria for writing off Capital & Receivables
(Regulation 16A)
The Indian promoters (Companies) who have set up WOS or holding at least 51% stake in an
overseas JV, may write-off capital or other receivables upto an amount equivalent as
mentioned in the below criteria.
Capital includes both Equity and Preference share capital. Other receivables include loans,
royalty, technical knowhow fees & management fees in respect of the JV/WOS.
Listed
Indian Co.
Write-off amount
<=25% of Equity
Investment
Unlisted
Co.
Write-off
criteria
Write-off amount
<=25% of Equity
Investment
Automatic
Route
Approval
Route
In the above criteria, the term ‘Equity’ includes Compulsorily Convertible Preference Shares (CCPS).
10. Illustration
A BHolds
51% stake in
Rs. 120 Crore
Equity & receivable
Investment Amount (Rs. Crore)
Equity Shares 50
Preference Shares (CCPS) 50
Other receivables 20
Total 120
Eligible write-off amount
= 25% of Equity Investment
= 25% of investment in Equity
shares & CCPS
= 25*(50+50)
= Rs. 25 Crore
A can, on satisfying the stipulated conditions, write-off an amount up to Rs. 25 Crore
out of Rs. 120 Crore invested in its JV, B
11. Reporting Requirements relating to Write-Off
The write-off / restructuring have to be reported to the Reserve Bank through the
designated AD Category-I bank within 30 days of write-off/ restructuring.
The following documents have to be submitted for scrutiny along with the application to
the designated AD category-I bank under Automatic as well as Approval Routes, for
initiating write-off/restructuring.
• A certified copy of the balance sheet showing the loss in the overseas WOS/JV set up
by the Indian Party; and
• Projections for the next five years indicating benefit accruing to the Indian company
consequent to such write off / restructuring.
It is imperative to note that the regulation deals only with Indian Companies & aims to
provide more operational flexibility to the Indian corporates.
13. Conditions for transfer by way of sale of shares of
JV/WOS [Regulation 16(1)]
The Indian Party is required to submit details of such disinvestment through its designated AD category-I bank within
30 days from the date of disinvestment.
An Indian Party, without prior approval of the RBI, may transfer by way of sale of any share or security held by it in a
JV or WOS outside India to another Indian Party which complies with the provisions of Regulation 6, or to a person
resident outside India, subject to the following conditions:
the sale does not result in any write off of the investment (or financial commitment) made [covered by
Regulation 16 (1A) to be discussed later].
the sale is effected through a stock exchange where the shares of the overseas JV/ WOS are listed;
if the unlisted shares are disinvested by a private arrangement, the share price is not less than the value
certified by a CA/CPA as the fair value of the shares based on the latest audited financial statements of
the JV / WOS;
the Indian Party does not have any outstanding dues by way of dividend, technical know-how fees, royalty,
consultancy, commission or other entitlements and / or export proceeds from the JV or WOS;
the overseas concern has been in operation for at least one full year and the APR together with the audited
accounts for that year has been submitted to the RBI;
the Indian Party is not under investigation by CBI / DoE/ SEBI / IRDA or any other regulatory authority in India.
14. Additional Conditions for Transfer involving Write-Off
[Regulation 16(1A)]
in case where the JV / WOS is listed in the overseas stock exchange;
in cases where the Indian Party is listed on a stock exchange in India and has a net worth
of not less than Rs.100 crore;
where the Indian Party is an unlisted company and the investment (or financial
commitment) in the overseas venture does not exceed USD 10 million, and
where the Indian Party is a listed company with net worth of less than Rs.100 crore but
investment (or financial commitment) in an overseas JV/WOS does not exceed USD 10
million.
The situation of transfer by way of sale of shares involving write-off arises when the amount repatriated
after disinvestment is less than the original amount invested.
The Indian Party may, without prior approval of the RBI, disinvest and write-off in the following cases:
An Indian Party, which does not satisfy the conditions laid down above for undertaking any disinvestment
involving write-off in its JV/WOS abroad, shall have to apply to the RBI for prior permission.
15. Illustration
A B
WOS
In the above case, though the repatriated proceeds is greater than the carrying amount, the sale can
be done under automatic route only if the conditions specified in regulation 16(1A) are satisfied.
In the above example even if the sale proceeds are greater than Rs.50 Crores but if the amount
repatriated is less than Rs.50 Crores, the disinvestment would be allowed under automatic route only
if the conditions under Regulation 16 (1A) are satisfied.
Particulars Amount (Rs. Crore)
Original investment 50
Carrying value 35
Sale proceeds 40
Gain on sale of investment
= 40-35
= Rs. 5 Crore
Repatriated proceeds < Original investment
16. Operational Instructions to AD Banks
The Indian Party should report details of disinvestment to the Overseas Investment
Division (OID) of RBI in the online OID application through AD Category – I bank
within 30 days of disinvestment in Part III of the Form ODI.
Sale proceeds of shares / securities shall be repatriated to India immediately on
receipt thereof and in any case not later than 90 days from the date of sale of the
shares / securities.
18. Creation of Charge
The designated AD bank may permit creation of charge on shares or assets under the following
circumstances and subject to certain conditions.
Particulars Shares Domestic Assets Overseas Assets
Lender Domestic/Overseas Overseas Lender Domestic Lender
Facility type Funded or non-funded Funded or non-funded Funded or non-funded
Borrower
Indian Party /its sister concerns
/group concerns /associate concerns
/ JV/WOS/SDS
Sister concerns /group concerns /associate
concerns / JV/WOS/SDS of an Indian Party
Indian Party /its sister concerns
/group concerns /associate
concerns/ JV /WOS /SDS
Security
Shares of JV/ WOS /SDS of Indian
Party
Domestic assets (movable /immovable /financial
/other) of an Indian Party or its group / sister /
associate concern including the individual
promoter / director
Overseas assets (excluding shares)
of Indian party or its JV/WOS/SDS
Charge type Pledge Pledge /Mortgage /Hypothecation or otherwise
Mortgage /Hypothecation or
otherwise
The SDS mentioned above can be any SDS of an Indian Party irrespective of its level.
19. Associate Company definition
Sec 2(6) of the Companies act, 2013 - "associate company", in relation to another company,
means a company in which that other company has a significant influence, but which is not a
subsidiary company of the company having such influence and includes a joint venture
company.
the expression "significant influence" means control of at least 21% of total voting power, or
control of or participation in business decisions under an agreement;
the expression "joint venture" means a joint arrangement whereby the parties that have joint
control of the arrangement have rights to the net assets of the arrangement;
As per Accounting Standards, An associate is an enterprise in which the investor has
significant influence and which is neither a subsidiary nor a joint venture of the investor.
Significant influence is the power to participate in the financial and/ or operating policy
decisions of the investee but not control over those policies.
20. General Conditions for creation of Charge under Automatic
Route [A.P. (DIR series) Circular no.54]
The Indian party is complying with the provisions under Regulation 6 (and Regulation 7 for financial
services sector) for undertaking financial commitment;
The value of the fund based or non-fund based facility is reckoned as financial commitment for the
Indian party;
The period of charge, if not specified upfront, may be co-terminus with the period of respective loan or
other facility;
The loan / facility availed by the JV / WOS / SDS from the domestic / overseas lender shall be utilized
only for its core business activities overseas and not for investing back in India in any manner
whatsoever;
A certificate from the Statutory Auditors’ of the Indian party, to the effect that the loan / facility availed
by the JV / WOS / SDS has not been utilized for direct or indirect investments in India, is to be obtained
and kept by the designated AD;
In case of the facility from an overseas lender, it should be regulated and supervised as a bank;
the total financial commitment of the Indian party remains within the limit stipulated by the RBI for
overseas direct investments in the JV/WOS from time to time;
21. Specific conditions relating to charge on assets
(Regulation 18A)
• The assets, on which charge is being created, are not securitized.
• A 'No Objection' is obtained from the domestic lender in whose favour if charge is already
created on the domestic assets.
• The overseas undertakes that, in the event of enforcement of charge on domestic assets,
the assets shall be transferred by way of sale to a resident only.
22. Invocation of Charge
• The invocation of charge resulting into the domestic lender acquiring the shares of the
overseas JV / WOS / step down subsidiary shall be governed by the extant FEMA
provisions / regulations issued by the RBI from time to time.
• In case of invocation of charge on domestic assets, the resultant remittance of the
proceeds exceeding the prescribed limit of the financial commitment of the Indian party
(prevailed at the time of creation of charge) shall require prior approval of the RBI
• The invocation of charge resulting into the domestic lender acquiring the overseas assets
shall require prior approval of the RBI.
Wherever creation of charge involves pledge of shares of an Indian company, it shall also
be governed by the extant FEMA provisions / regulations issued by the RBI and the
consolidated FDI policy issued by the Government of India from time to time.
23. Other provisions relating to charge creation
The matter relating to the setting up / acquiring the multi-layered structure of
overseas entities by the Indian party, wherever applicable, is under the
examination of the Reserve Bank and the decision taken in this regard shall be
conveyed in due course for necessary compliance at AD / Indian party level.
The facilities extended by the domestic lender to the Indian party or to its
group / sister / associate concern or to any of its overseas JV / WOS / SDS shall
also be governed by the prudential norms and other guidelines issued by the
Department of Banking Regulation (DBR, the erstwhile DBOD), RBI from time
to time.