Article contains Checklist For Allotment of Shares With Respect To Companies Act,2013 and Checklist for Post Allotment Compliance With Respect To Reserve Bank Of India Act, 1934.

This is a checklist of documents and procedure required to allot foreign shares to an Indian company after receiving FDI in India.

Checklist For Allotment of Shares With Respect To Companies Act,2013

S.NO  PROCEDURE
1. Convene a Board Meeting to Consider the following matters:

  • To issue and approve the issue of shares.
  • To approve the draft letter of offer in Form PAS-4

To fix day, date, time and venue for Extraordinary General Meeting of the shareholders of the company and to approve the notice convening said meeting.

2. Convene General Meeting of the company for following purposes:

  • Approval for offer of security  by passing special resolution
  • Approval for the terms of the offer letter
3. File mgt-14 to roc within 30 days from the date of passing of the resolution.
4. Dispatch offer letter in pas-4 to foreign investors stating the following details:

1. Basic details of the Investee Company

2. Description of the main business activity: This basically covers the description and the activities of the business that is given at the time of obtaining the registration from the RBI

3. Location of the project for which the investment has been made

4. Percentage(%) of FDI allowed as per FDI Policy

5. State whether it is allowed under Automatic or Approval Route

6.Type of Security Issues:

    • Whether the nature of the security is Equity, Debentures, Others (Specify)
    • Number
    • Face Value
    • Premium
    • Issue Price/Share
    • Amount of Inflow

7.Nature and date of Issue

8.Details of AD Bank: The name of the Bank in which the money has been received, the branch name also has to be mentioned

9.Address & Contact Details of the AD Bank

the company has to keep the share application money in a separate bank account and cannot utilize the money before the allotment of the shares to the investors. If the Company contravenes the provisions of the Companies Act, 2013 the its promoters and directors will be liable for a penalty which may extend to the amount involved or 2 crores rupees, whichever is higher and the company shall also refund all monies to the subscribers within a period of 30 days from the date of penalty along with the interest of 12% p.a.

5. Offer period shall be for 15 days

The proposed time within the allotment shall be completed =12 months

6. Upon receipt of the funds, company, to convene a Second board meeting to approve the following:

(i) allotment of the Subscription Shares to NR;

(ii) authorizing representatives of company to file all required forms with the ROC and the Reserve Bank of India(“RBI”)

7. The Company has to allot/issue the shares within the time frame given by RBI and MCA accordingly. The time limits are:

  • RBI – The shares must be allotted within 180 days from the date of receipt of funds
  • MCA – The shares must be allotted within 60 days from the date of receipt of funds

So, in a nutshell, the time limit to issue/allot the shares comes down to 60 days as per the MCA.

8. Filing of Form PAS-3 with MCA: This form needs to be filed with the MCA within 30 days from the date of allotment of shares

The details covered in the form are:

1. CIN of the Company  – Once you fill this, click on Pre Fill and the basic details of the company will be automatically filled in the form

2. Number of Allotment

3. Date of Allotment

4. Details of Shares issued

5. Details of the Consideration Received

6. Whether an agreement or contract is executed in writing for allotting securities for consideration other than cash

7. Whether Valuation report of the evaluated person has been obtained

  • Debt structure of the Company after taking into consideration the above allotment shares

8. Attachments:

  • List of Allottees of shares
  • Board Resolution

This form also needs to be signed by a practicing Company Secretary

Checklist for Post Allotment Compliance With Respect To Reserve Bank Of India Act, 1934

S. NO. DETAIL
1. A report in Form FCGPR (Foreign Currency – General Purchase Register): This form needs to be filed with the RBI within 30 days from the date of allotment of shares.
2. The details covered in the form are:

1. PAN of the Investee Company

2. Date of issue of shares

3. Basic details of the Investee Company

4. Description of the main business activity: This basically covers the description and the activities of the business that is given at the time of obtaining the registration from the RBI

5. Location of the project for which the investment has been made ,if any

6.  Percentage(%) of FDI allowed as per FDI Policy

7.  State whether it is allowed under Automatic or Approval Route

8. Details of Foreign Investor

9. Type of Security Issues:

  • Whether the nature of the security is Equity, Debentures, Others (Specify)
  • Number
  • Face Value
  • Premium
  • Issue Price/Share
  • Amount of Inflow

10.  Nature and date of Issue

11.  This is further divided into Cash and Non-Cash Transaction

12.  The nature of the issue i.e IPO/FPO, preferential allotment/private placement, Rights, ESOP, other(specify)

  • Break up of premium
  • Total Inflow in rupees on account of shares/convertible debentures/others to non-residents

13.  It asks for further 3 options – Remittance through AD, debit to NRE/FCNR/Escrow A/c with bank, Others (Specify)

14.  Date of Advance Reporting to the RBI regarding the above-mentioned transaction

15.  Disclosure of the Fair Value of the shares issues

  • Post issue pattern of shareholding
  • Declaration by the Investee Company (Select tick whichever applicable)

16.  Attachments:

  • Company Secretary Certificate
  • Share Valuation Certificate by Chartered Accountant
  • Board Resolution for share allotment
  • List of allottees
  • FIRC (foreign investment remittance certificate)
  • Debit clearance note
  • KYC
  • Other applicable declaration

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