Compliances for FDI in India (RBI and Companies Act, 2013)

Compliance For Issuance Of Shares Under FDI In India:

A. Compliance under Master Directions issued by RBI:

1. On receipt of payment from outside India, an Advance Remittance Form (ARF) is required to be filed online (www.ebiz.gov.in) within 30 days intimating RBI about receipt of money for such purpose alongwith KYC and FIRC received from recipient’s bank.

2. Within 60 days from receipt of money, shares are required to be issued to such Non Resident.

3. FC-GPR form is required to be filed online (www.ebiz.gov.in) within 30 days from the date of allotment of shares to such Non-Resident.

Note:

i) Valuation Report shall be taken from CA/Merchant Banker who will fair value such shares as per any of Internationally Accepted Pricing Methodology.

ii) CS Certificate regarding complying with provisions of the Companies Act, 2013 shall also be taken.

B. Compliance under Companies Act, 2013

1. Conditions of Private Placement provisions as given in Section 42 of the Companies Act, 2013 is required to be complied with.

2. Section 42 of the Companies Act, 2013 also provides similar time limit:

> Within 60 days of receipt of money, shares are required to be allotted.

> Within 30 days from the date of allotment of share, Return of Private Placement is required to be filed with ROC in Form PAS-3.

3. Other Important Conditions under Companies Act, 2013

> BOD to identify such persons (not more than 200 in a FY) each of who will take not less than INR 25,000 of face value of shares under Section 42.

> For each such investment, shareholder approval is required to be taken.

> Offer letter is required to be issued in Form PAS-4.

> Money to be kept in separate bank account till the time of allotment.

> If shares are not issued within 60 days, then money is required to be refunded within 15 days otherwise 12% p.a. Interest is payable from 61th day of allotment.