Online FDI application

Department of Economic Affairs, Ministry of Finance launched here today a new upgraded and secure user friendly web site for filing and processing of applications for Foreign Direct Investment (FD) requiring Government approval. Presently the applications are filed online at http://www.fipbindia.com which had limited features and processing capabilities.
The new website http://fipb.gov.in, which becomes operational from today, shall henceforth receive applications regarding FDI in approval route sectors. 
With the introduction of the new website, applicant will have to submit only SINGLE copy of the application for records with the FIPB Secretariat instead of 15-18 copies being  filed earlier.
The initiative is part of the Government’s ongoing efforts for Good Governance by enhancing transparency and accountability in its procedures and is a step towards Minimum Government and Maximum Governance. The innovative features of the website are:

(1) Global Reach -Apply from anywhere in the world! Access your status from anywhere in the world!
(2) E-communication – communication between the applicant, FIPB and other ministries/ departments is online.
(3) Quicker communication- All the correspondence including updates/ decisions are communicated through SMS/emails and thus eliminating physical delivery and loss of time due to postal delays.
(4) Less Paperwork – Single signed copy only needed (for record) instead of present multiple sets of the application.
(5) SMS/email alert- Regular alerts are sent to the applicants related to the queries raised by the administrative ministries, inclusion of the proposal in the scheduled FIPB meeting and decisions.
(6) Transparency and security- all transactions and correspondences are recorded online and are secure.
(7) Query module- Any doubts? A user can raise a query online which shall be replied by the relevant ministry

Import of Goods - liberalisation

RBI has vide its notification dated 12th February, 2015 done away with the requirement of filling and submitting form 1 to the RBI for payment for imports into India exceeding US$5000. The onus is now on the Authorised Dealers to satisfy themselves about the bonafides of the transaction before effecting the remittance.

Hitherto, form 1 was required to be submitted to the authorised dealers for all import payments above US$5,000/-. This is a major step towards liberalisation of the documentary procedures.

The salient features of the said RBI circular is given below:

Attention of Authorised Dealer Category – I (AD Category – I) banks is invited to the A.P.(DIR Series) Circular No. 82 dated February 21, 2012 in terms of which applications by persons, firms and companies for making payments, exceeding USD 5,000 or its equivalent towards imports into India must be made in Form A-1.

 

To further liberalise and simplify the procedure, it has been decided to dispense with the requirement of submitting request in Form A-1 to the AD Category –I Banks for making payments towards imports into India. AD Category –I may however, need to obtain all the requisite details from the importers and satisfy itself about the bonafides of the transactions before effecting the remittance.

Copy of the RBI circular can be found here i.e..http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=9567&Mode=0

 

small company definition

Ministry of Corporate Affairs has brought in an amended definition of small company under the Companies Act, 2013. 

Hitherto small company was a company which had a paid up share capital of upto Rs.50 lakhs or turnover of Rs.2 crores.

Now by the amendment, the "or" has been substituted with "and" so that a small company will now be a company which satisfies both clauses i.e. paid up share capital of upto Rs.50 lakhs and turnover of upto Rs.2 crores. Confusing!! 

I frankly do not understand why they have brought in a definition of small company because the benefits of small company are only the following - (1) sec 2(40) they need not include cash flow statement (2) sec 92 annual return to be signed by a company secretary and if there is no company secretary by a director, which is a confusing section because the threshold limits for appointment of full time company secretary are above the small company limits. and (3) sec 173 they can hold only one Board meeting in each half of a calendar year.

Now they have amended definition to mean a small company as one which has both the elements i.e. paid up share capital and also turnover. 

If there is no fundamentally huge difference between a small company and a normal company, then why complicate matters. 

Remittance of salary outside India - clarifications

RBI has clarified that remittance of salary outside India can be allowed even for an employee who is deputed to a group company in India, and also for foreign employees of Limited Liability Partnerships in India.  A copy of their notification clarifying this aspect can be found here i.e. http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=9509&Mode=0

The remittance is allowed to the extent of 100% of salary as per this notification i.e. http://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=5462&Mode=0.

This is in respect of a foreign citizen resident in India, employed with an Indian company, they are allowed to hold foreign currency account with a bank outside India and remit their salaries to this account 

FDI Reporting in E-Biz portal

RBI has rolled out online reporting of the foreign direct investment on an e-Biz platform linked to the NIC server. Presently, advance reporting and form FC-GPR is made online, but i guess latter more services will be pushed online. Also presently both manual and online will continue until further notice and it is for corporates to take advantage of the online facility. The relevant notification dated 12th Feb 2015 is available at this link

With a view to promoting the ease of reporting of transactions under foreign direct investment, the Reserve Bank of India, under the aegis of the e-Biz project of the Government of India has enabled the filing of the following returns with the Reserve Bank of India viz.

• Advance Remittance Form (ARF) - used by the companies to report the foreign direct investment (FDI) inflow to RBI; and
• FCGPR Form - which a company submits to RBI for reporting the issue of eligible instruments to the overseas investor against the above mentioned FDI inflow.

3. The design of the reporting platform enables the customer to login into the e-Biz portal, download the reporting forms (ARF and FCGPR), complete and then upload the same onto the portal using their digitally signed certificates. The Authorised Dealer Banks (ADs) will be required to download the completed forms, verify the contents from the available documents, if necessary by calling for additional information from the customer and then upload the same for RBI to process and allot the Unique Identification Number (UIN). It has been decided that the ARF and FCGPR services of RBI will be operational on the e-Biz platform from February 19, 2015. The user manual for the two services is Annexedto this Circular.

4. It may be noted that for the present, the online reporting on the e-Biz platform is an additional facility to the Indian companies to undertake their ARF and FCGPR reporting and the manual system of reporting as prescribed in terms of A.P. (DIR Series) Circular No. 102 dated February 11, 2014 would continue till further notice.

5. The ADs will be required to access the e-Biz portal (which is hosted on the National Informatics Centre (NIC) servers) using a Virtual Private Network (VPN) Account obtained from NIC. The financial aspects for obtaining/using the VPN accounts is being finalised in consultation with Government of India, DIPP and NIC. The same will be informed in due course.

ODI by proprietorship/ unregistered partnerships

RBI has issued a notification dated 22nd January 2015 clarifying certain aspect of the Overseas Direct Investment regime facility available for proprietorship and unregistered partnerships in India. According to the said clarification,

Keeping in view the changes in the definition / classification of the exporters as per the Foreign Trade Policy of the Ministry of Commerce and Industry issued from time to time, it has been decided to review the policy framework for Overseas Direct Investments (ODI) by a proprietorship concern / unregistered partnership firm in India. Accordingly, henceforth, the following revised terms and conditions are required to be complied with for considering the proposal of ODI, by a proprietorship concern / unregistered partnership firm in India, by the Reserve Bank under the approval route:

1. The proprietorship concern / unregistered partnership firm in India is classified as ‘Status Holder’ as per the Foreign Trade Policy issued by the Ministry of Commerce and Industry, Govt. of India from time to time;
2. The proprietorship concern / unregistered partnership firm in India has a proven track record, i.e., the export outstanding does not exceed 10% of the average export realisation of the preceding three years and a consistently high export performance;
3. The Authorised Dealer bank is satisfied that the proprietorship concern / unregistered partnership firm in India is KYC (Know Your Customer) compliant, engaged in the proposed business and has turnover as indicated;
4. The proprietorship concern / unregistered partnership firm in India has not come under the adverse notice of any Government agency like the Directorate of Enforcement, Central Bureau of Investigation, Income Tax Department, etc. and does not appear in the exporters' caution list of the Reserve Bank or in the list of defaulters to the banking system in India; and
5. The amount of proposed investment outside India does not exceed 10 per cent of the average of last three years’ export realisation or 200 per cent of the net owned funds of the proprietorship concern / unregistered partnership firm in India, whichever is lower.

Form ADT-1

Under the Companies Act, 2013 appointment or re-appointment of auditors at a general meeting is required to be intimated to the Government within 15 days of their appointment as such. Until recently, this was required to be done in a form ADT-1 but this form was available only in PDF format, not as a form. So the PDF filled form was required to be attached to form GNL-1 and thereafter filed at the portal of the ministry of corporate affairs.

With effect from 20th October, 2014, the ministry has made the form ADT-1 applicable as a form to be filed and uploaded at the portal. The form requires as an attachment, the appointment letter given to the auditors, their consent letter for appointment and the resolution appointing them as auditors.

All this is required to be attached to the form ADT-1 and filed within 15 days from the date of appointment. Also to be noted that hitherto under the Companies Act, 1956 the compliance regarding filing the erstwhile form 23B was required to be done by the Auditors themselves, now it is the company's responsibility to file the same within the said period of 15 days.

The form ADT-1 is available at the MCA portal.