http://www.indiacorporateconsultants.com/ Articles And News en-en http://www.indiacorporateconsultants.com/images/rss-icon.gif http://www.indiacorporateconsultants.com/ http://www.indiacorporateconsultants.com/ http://www.indiacorporateconsultants.com/ Case Study on Consent Matter One of our client company and its promoter cumamp;nbsp; Managing Director were issued show cause notices for alleged violations of the provisions of Regulation 4(2)(r) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices related to Securities Market ) Regulations, 2003 , provisions of Regulation 3(d) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices related to Securities Market ) Regulations, 2003, Section 12A(d) and (e) of SEBI Act,1992 and Regulation 3(i) and 4 of SEBI (Prohibition of Insider Trading ) Regulations , 1992. The company was running into losses and it was declared a sick company by BIFR. BIFR had appointed IDBI to suggest measures for revival of the company. The company had given a notice to the stock exchange that a meeting of the Board of Directors is scheduled on 30th August to consider the stock split. On the scheduled day of meeting the board resolved not to proceed further with the stock split as the process needs a thorough thought process. It was alleged in the above show cause notices that immediately after the company gave notice to the stock exchange for the proposed stock split, there was upward movement in the price of the scrip of the company and the trading volumes went high . It was alleged that the promoter cum managing director of the company indulged into insider trading and sold his shares on such high prices and the promoter shareholding declined in theamp;nbsp;above said period. In the above said show cause notices SEBI wanted to initiate Disgorgement proceedings against the promoter cum Managing Director of the company. We filed detailed replies to the above show cause notices along with the consent applications for all the above show cause notices. In the High Powered Committee Meeting of SEBI held at Mumbai, advocates from our team (Corporate Consultants) appeared on behalf of the company. The HPC suggested that a consolidated sum of Rs. 11 lakhs be paid as consent terms in the matter. We, on behalf of the company sent a revised consent term letter proposing Rs. 5.21 lakhs as consent terms and voluntary debarment from the securities market for a period of 6 months. The HPC of SEBI accepted the terms and passed the consent orders quashing all the adjudication proceedings against the company and promoter cum Managing Director. First India Thu, 25 Jun 2009 00:00:00 +0530 http://www.indiacorporateconsultants.com/ http://www.indiacorporateconsultants.com/ Transfer Pricing Increasing participation of multi-national groups in economic activities in the country has given rise to new and complex issues emerging from transactions entered into between two or more enterprises belonging to the same multi-national group. As these multinational groups may avoid tax by manipulating the prices charged and paid in such intra-group transactions. To check the tax avoidance by multinational groups the provisions regulating transfer pricing have been introduced in the Income Tax Act.amp;nbsp; The Finance Act, 2001 substituted section 92 with a new section and introduced new sections 92A to 92F in the Income-tax Act, relating to computation of income from an international transaction in order to facilitate the computation of reasonable, fair and equitable profits and tax in India in the case of businesses carried on by multinational companies. The transfer pricing provisions are in line with those stipulated by OECD. However there is a difference that the Indian legislation does not permit the use of unspecified method to compute arms length price as permitted in OECD guidelines. When two unrelated companies trade with each other, the price at which they undertake their transactions is simply known as the price. But when supply of goods, services or finance is made to another related company, the negotiated price is called transfer price. Transfer pricing is the process of adjusting the prices of cross-border transactions between related associated parties. An international transaction means a transaction of i)amp;nbsp;purchase, sale or lease of tangible or intangible property or ii)amp;nbsp; provisional services of lending or borrowing of money or iii)amp;nbsp;any other transaction having a bearing on the profits, income, losses or assets of such enterprises or iv)amp;nbsp; a mutual agreement or arrangement between two or more associated enterprises for the allocation or apportionment of or any contribution to any cost or expense incurred or to be incurred in connection with the benefit, service or facility provided or to be provided to any one or more of such enterprises between two or more associated enterprises either or both of whom are non-residents. v)amp;nbsp;Or any other transaction having a bearing on the profits, income, losses or assets of such enterprises Associated Enterprise Associated enterprise, in relation to another enterprise, means an enterprise-- a.amp;nbsp;which participates, directly or indirectly, or through one or more intermediaries, in the management or control or capital of the other enterprise ; or b.amp;nbsp;in respect of which one or more persons who participate, directly or indirectly, or through one or more intermediaries, in its management or control or capital, are the same persons who participate, directly or indirectly, or through one or more intermediaries, in the management or control or capital of the other enterprise. Two enterprises shall be deemed to be associated enterprises if, at any time during the previous year,-- c.amp;nbsp;one enterprise holds, directly or indirectly, shares carrying not less than twenty-six per cent. of the voting power in the other enterprise ; or d.amp;nbsp;any person or enterprise holds, directly or indirectly, shares carrying not less than twenty-six per cent. of the voting power in each of such enterprises ; or e.amp;nbsp;a loan advanced by one enterprise to the other enterprise constitutes not less than fifty-one per cent. of the book value of the total assets of the other enterprise ; or f.amp;nbsp;one enterprise guarantees not less than ten per cent. of the total borrowings of the other enterprise ; or g.amp;nbsp;more than half of the board of directors or members of the governing board, or one or more executive directors or executive members of the governing board of one enterprise, are appointed by the other enterprise ; or h.amp;nbsp;more than half of the directors or members of the governing board, or one or more of the executive directors or members of the governing board, of each of the two enterprises are appointed by the same person or persons ; or i.amp;nbsp;the manufacture or processing of goods or articles or business carried out by one enterprise is wholly dependent on the use of know-how, patents, copyrights, trade-marks, licences, franchises or any other business or commercial rights of similar nature, or any data, documentation, drawing or specification relating to any patent, invention, model, design, secret formula or process, of which the other enterprise is the owner or in respect of which the other enterprise has exclusive rights ; or j.amp;nbsp;ninety per cent. or more of the raw materials and consumables required for the manufacture or processing of goods or articles carried out by one enterprise, are supplied by the other enterprise, or by persons specified by the other enterprise, and the prices and other conditions relating to the supply are influenced by such other enterprise ; or k.amp;nbsp;the goods or articles manufactured or processed by one enterprise, are sold to the other enterprise or to persons specified by the other enterprise, and the prices and other conditions relating thereto are influenced by such other enterprise ; or l.amp;nbsp;where one enterprise is controlled by an individual, the other enterprise is also controlled by such individual or his relative or jointly by such individual and relative of such individual ; or m.amp;nbsp;where one enterprise is controlled by a Hindu undivided family, the other enterprise is controlled by a member of such Hindu undivided family, or by a relative of a member of such Hindu undivided family, or jointly by such member and his relative ; or n.amp;nbsp;where one enterprise is a firm, association of persons or body of individuals, the other enterprise holds not less than ten per cent. interest in such firm, association of persons or body of individuals ; or o.amp;nbsp;there exists between the two enterprises, any relationship of mutual interest, as may be prescribed. Armamp;rsquo;s Length Price Armamp;rsquo;s Length price means a price which is applied or proposed to be applied in a transaction between persons other than associated enterprises, in uncontrolled conditions. The main objective of Armamp;rsquo;s length principle is profit maximization. The armamp;rsquo;s length price shall be determined by any of the following methods, being the most appropriate method having regard to the nature of transactions or class of transactions or class of associated persons or functions performed by such persons or such other factors as the Board may prescribe in a given case: 1.amp;nbsp;comparable uncontrolled rice method 2.amp;nbsp;resale price method 3.amp;nbsp;cost plus method 4.amp;nbsp;profit split method 5.amp;nbsp;transactional net margin method Where more than one price is determined by the most appropriate method, the arms length price shall be the arithmetic mean of such prices or a price which may vary from the arithmetic mean by an amount not exceeding 5% of such arithmetic mean , at the option of the assessee. The most appropriate method shall be the one which is best suited to the facts and circumstances of each particular international transaction and which provides the most reliable measure of an arms length price. The factors to be considered include: 1.amp;nbsp;Nature and Class of International Transaction 2.amp;nbsp;Class or classes of associated enterprises entering into the transaction and the functions performed by them taking into account assets employed or to be employed and risks assumed by such enterprises. 3.amp;nbsp;the availability, coverage and reliability of data necessary for application of the method 4.amp;nbsp;degree of comparability existing between the international transaction and the uncontrolled transaction and between the enterprises entering into such transactions. 5.amp;nbsp;the extent to which reliable and accurate adjustments can be made to account for differences between the international transaction and the uncontrolled transaction and between the enterprises entering into such transactions. 6.amp;nbsp;nature,amp;nbsp; extent and reliability of assumptions required to be made in the application method Compliance Requirement a)amp;nbsp;Maintenance and keeping of information (92D) b)amp;nbsp;Obtaining Accountants Certificate (92E) a) Maintenance and keeping of information and document by persons entering into international transactionamp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; Every person who has entered into an international transaction shall keep and maintain such information and document in respect thereof, as may be prescribed The information and document shall be kept and maintained for a period of eight years from the end of the relevant assessment year. Information and documents to be kept and maintained under Section 92D as prescribed under Rule 10D are a)amp;nbsp;a description of the ownership structure of the assessee enterprise with details of the shares or other ownership interest held therein by other enterprises. b)amp;nbsp; a profile of the multinational group of which the assessee enterprise is a part along with the name, address, legal status and country of tax residence of each of the enterprises comprised in the group with whom international transactions have been entered into by the assessee, and ownership linkages among them. c)amp;nbsp;a broad description of the business of the assessee and the industry in which the assessee operates, and of the business of the associated enterprises with whom the assessee has transacted. d)amp;nbsp;the nature and terms (including prices) of international transactions entered into with each associated enterprise, details of the property transferred or services provided and the quantum and the value of each such transaction or class of such transaction. e)amp;nbsp;a description of the functions performed, risks assumed and assets employed or to be employed by the assessee and by the associated enterprises involved in the international transaction. f)amp;nbsp;a record of the economic and market analyses, forecasts, budgets or any other financial estimates prepared by the assessee for the business as a whole and for each division or product separately, which may have a bearing on the international transactions entered into by the assessee. g)amp;nbsp; a record of uncontrolled transactions taken into account for analysing their comparability with the international transactions entered into, including a record of the nature, terms and conditions relating to any uncontrolled transaction with third parties which may be of relevance to the pricing of the international transactions. h)amp;nbsp;a record of the analysis performed to evaluate comparability of uncontrolled transactions with the relevant international transactions. i)amp;nbsp;a description of the methods considered for determining the armamp;#39;s length price in relation to each international transaction or class of transaction, the method selected as the most appropriate method along with explanations as to why such method was so selected, and how such method was applied in each case j)amp;nbsp;a record of the actual working carried out for determining the armamp;#39;s length price, including details of the comparable data and financial information used in applying the most appropriate method, and adjustments, if any, which were made to account for differences between the international transaction and the comparable uncontrolled transactions, or between the enterprises entering into such transactions. k)amp;nbsp;the assumptions, policies and price negotiations, if any, which have critically affected the determination of the armamp;#39;s length price. l)amp;nbsp;details of the adjustments, if any, made to transfer prices to align them with armsamp;#39;s length prices determined under these rules and consequent adjustment made to the total income for fax purposes. m)amp;nbsp; any other information, data or document, including information or data relating to the associated enterprise, which may be relevant for determination of the armamp;#39;s length price. A person who has entered into an international transaction shall not be required to maintain the above mentioned documents if aggregate value of transaction entered into by the assessee does not exceed one crore rupees. The tax authorities may require the tax payer to furnish this information and documentation within a period of 30 days, which may be extended to further 30 days at the discretion of tax authorities. amp;nbsp;b) Obtaining Accountants Certificate Every person who has entered into an international transaction during a previous year has to obtain a report from an accountant and furnish such report on or before the due date of furnishing return in Form 3CEB duly signed and verified in the prescribed manner by such accountant and setting forth such particulars as may be prescribed.amp;nbsp;amp;nbsp;amp;nbsp; Penalty In order to ensure compliance of Arms Length principle following penalties have been imposed by Indian Legislation amp;nbsp;Defaultamp;nbsp;Nature of Penalty amp;nbsp;Nature of Penalty amp;nbsp;In case of a post inquiry- adjustment, there is deemed to be a concealment of income amp;nbsp;100-30% of tax of adjusted amount amp;nbsp;Failure to maintain documents amp;nbsp;2% of the value of each international transaction amp;nbsp;Failure to furnish documents amp;nbsp;2% of the value of each international transaction amp;nbsp;Failure to furnish Accountants Report amp;nbsp;Rs 1,00,000/- First India Thu, 25 Jun 2009 00:00:00 +0530 http://www.indiacorporateconsultants.com/ http://www.indiacorporateconsultants.com/ Advantages of Singapore Company Formation 1. A Singapore Company is not perceived as an offshore Company in a tax haven. Singapore is a reputable, highly regulated, international trading jurisdiction. 2. A properly-structured Singapore Company is tax-exempt on profits earned outside Singapore (see the Inland Revenue Authority of Singapore website). 3. The first S$100,000 (US$60,000) of local corporate profits earned in Singapore are tax exempt for the first three years of trading. 4. If corporate turnover/sales is less than S$5 million (US$3 million), there is no annual audit. 5. It is easy to open global corporate bank accounts to support Singapore Company formation. 6. Singapore has double taxation treaties with 54 countries including Japan, China, Germany, France, the UK and Canada to support Singapore Company formation. 7. Singapore has very strong client confidentiality laws and is refusing to exchange customer information with Organisation for Economic Cooperation and Development (OECD) members. 8. A Singapore Company must register for goods amp;amp; sales tax (GST) if annual sales exceed S$1 million (US$614,000) in a calendar year. GST registration allows you to claim tax refunds on GST paid. 9. Singapore is perceived as the 5th least corrupt country in the world, according to the 2006 Corruption Perceptions Index by Transparency International. Disadvantages of Singapore Company Formation 1. In accordance with Section 145 (1) of the Singapore Companies Act 1963, every Singapore Company must have at least one director who is ordinarily resident in Singapore. 2. Annual accounts must be submitted to the Inland Revenue Authority of Singapore (IRAS). Advantages of Dubai company formation 1. A Dubai company is not perceived as an offshore company in a tax haven. Dubai is a reputable, regulated, international trading jurisdiction. 2. Dubai has strong client confidentiality laws and refuses to exchange information with the Organisation for Economic Cooperation and Development (OECD). 3. If properly-structured, Dubai company formation is the perfect way to legitimately book international profits without paying local corporation tax. 4. Through a Dubai Offshore Company, it is possible to have a Dubai entity and business address, without the legal requirement to rent a physical office and employ staff. 5. Foreigners can own 100% of a Dubai company if it is located in one of the UAE Free Zones. 6. Through a Dubai branch company, one can wholly own the entity and not be subject to an annual audit. 7. To encourage Dubai company formation, the Dubai government offers a range of incentives to investors. 8. For investors considering Dubai company formation, the UAE is perceived as the 25th least corrupt country in the world, according to the 2006 World Democracy Audit. 9. According to the International Institute for Management Development, Dubai was the 17th most competitive economy in the world in 2005. 10. The United Arab Emirates (UAE) is perceived as the 31st least corrupt country in the world, according to the 2006 Corruption Perceptions Index by Transparency International. Disadvantages of Dubai company formation 1. Dubai company formation is both difficult and expensive because of high government fees ii) inconsistent and complex Dubai company law and iii) inefficient bureaucracy. 2. A Dubai limited liability company (LLC) requires a UAE national to hold a 51% share. 3. It is very difficult to incorporate a Dubai company unless your Firm enters an expensive lease to open a local office and employed local staff. 4. Following Dubai company formation, most entities are required to submit annual audited accounts to the Dubai authorities. 5. The majority of new business set ups in Dubai are required to place large cash deposits with the government, usually amounting to US$50,000. 6. There are no clear, consistent laws and rules governing Dubai company formation, including cash payments to the government. 7. A Dubai Branch company requires a UAE national sponsor. 8. Dubai corporate and personal banking products and customer service are of a poor standard. amp;nbsp; First India Tue, 15 May 2007 00:00:00 +0530 http://www.indiacorporateconsultants.com/ http://www.indiacorporateconsultants.com/ The imminent launch of rupee currency futures trading on the Dubai Gold and Commodities Exchange (DGCX) in the Gulf emirate symbolises the profound mistakes of Indian economic policy. Macro policy should have created a sound currency derivatives markets within India long before currency volatility could touch the levels seen in recent weeks. This was not done, so there was an outpouring of grief on the part of firms that were adversely affected by rupee appreciation/volatility. Instead, they should have been busy hedging their exposure. Of course, for this to happen on a scale wide enough to keep grief levels low, Indiaamp;rsquo;s exchanges need to be turned into a proper competitive industry. Instead, there is acute fragmentation. The biggest financial derivatives product is at the NSE. The Clearing Corporation of India is doing some clearing work for currency forwards. Financial Technologies, a software company, is running a commodity futures exchange in India, and has a stake in DGCX in Dubai, where the action is. The trading in Dubai is a welcome development, no doubt, because it gives Indian firms wider choice of risk management tools. Sound policies in India would allow similar instruments to operate here, too. Instead of tweaking the rules on the purposes for which Indian citizens can take their money outside the country (to keep money away from DGCX), or setting up a amp;lsquo;working groupamp;rsquo; on currency futures, the RBI should act to ensure the existence of a robust platform for currency futures trading in India. Such trades could take place on the NSE and BSE, both of which have sound institutional capabilities, are well regulated and are accessible from all across the country. Indiaamp;rsquo;s policy, however, seems too full of infirmities to let that happenamp;mdash;making it look more and more like an anachronism in a market that is so well exposed to the world and is evolving rapidly. Everyone in the thick of the action is fully aware that there exist thriving derivatives markets on Indian interest rates, currencies and credit risk that have sprung up in Hong Kong and Singapore, among a few other places, and Indian policymakers do not seem to care. If Mumbai is to be turned into an international financial centre, this kind of lethargy will not do. India cannot keep its financial sector behind bars like this. first India Fri, 19 Dec 2008 00:00:00 +0530 http://www.indiacorporateconsultants.com/ http://www.indiacorporateconsultants.com/ Note on FDI in Real Estate Sector 4th August, 2007 Note on FDI in Real Estate Sector Foreign Exchange Management Act (FEMA), 1999 came into effect from June 1, 2000. Foreign Exchange Management Act, 1999 has to be read with Foreign Exchange Management Rules, 2000 . As per the said Act and rules earlier, only the Non-Resident Indians (NRIs) were permitted to invest in Housing and Real Estate sectors. As Per rules only NRIs were permitted to invest in particular areas as detailed Below :- Housing and Real Estateamp;nbsp;100%amp;nbsp;Only NRIs are allowed to invest in the areas listed below: amp;nbsp;amp;nbsp;a)amp;nbsp;Development of services plots and construction of built-up residential premises amp;nbsp;amp;nbsp;b)amp;nbsp;Investment in real estate covering construction of resident and commercial premises including business centers and offices amp;nbsp;amp;nbsp;c)amp;nbsp;Development of townships amp;nbsp;amp;nbsp;d)amp;nbsp;City and regional level urban infrastructure facilities, including both rods and bridges amp;nbsp;amp;nbsp;e)amp;nbsp;Investment in manufacture of building materials amp;nbsp;amp;nbsp;f)amp;nbsp;Investment in manufacture of building materials amp;nbsp;amp;nbsp;g)amp;nbsp;Investment in housing finance institutions which is also opened to FDI as an NBFC. However thereafter Reserve Bank of Indiaamp;#39;s Circular known as Press Note 2 of 2005 dated March 3, 2005 and Press Note 4 of 2006 dated February 10, 2006 have vastly widened the field and opened the floodgates for Foreign Direct Investment (FDI) in amp;quot;townships, housing, infrastructure and construction/ development projects. Vide the saidamp;nbsp; Press Notes the Government has decided to allow FDI up to 100% under the automatic route in townships, housing, built-up infrastructure and constructionamp;nbsp; development projects ( which would include, but not be restricted to, housing, commercial premises, hotels, resorts, hospitals, educational institutions, recreational facilities, city and regional level infrastructure), subject to the following guidelines:amp;nbsp; Townships, housing, built-up infrastructure and construction- development projects The sector would include, but not be restricted to, housing, commercial premises, hotels, resorts, hospitals, educational institutions, recreational facilities, city and regional level infrastructure.amp;nbsp;100%amp;nbsp;The investment shall be subject to the following guidelines: amp;nbsp;amp;nbsp;(a)amp;nbsp;Minimum area to be developed under each project shall be as under: amp;nbsp;amp;nbsp;amp;nbsp;(i)amp;nbsp;In case of development of serviced housing plots amp;ndash; 10 hectares. amp;nbsp;amp;nbsp;amp;nbsp;(ii)amp;nbsp;In case of construction amp;ndash; development project amp;ndash; 50,000 sq.mtrs. amp;nbsp;amp;nbsp;amp;nbsp;(iii)amp;nbsp;In case of combination project, any one of the above two conditions. amp;nbsp;amp;nbsp;(b)amp;nbsp;The investment shall be subject to the following conditions: amp;nbsp;amp;nbsp;amp;nbsp;(i)amp;nbsp;Minimum capitalization of US $ 10 Million for wholly owned subsidiaries and US $ 5 Million for joint ventures with Indian partners. The funds would have to be brought in within six months of commencement of business of the Company. amp;nbsp;amp;nbsp;amp;nbsp;(ii)amp;nbsp;Original investment cannot be repatriated before a period of three years from completion of minimum capitalization. However, the investor may be permitted to exit earlier with prior approval of the Government through the FIPB. amp;nbsp;amp;nbsp;(c)amp;nbsp;At least 50% of the project must be developed within a period of five years from the date of obtaining all statutory clearance. The investor shall not be permitted to sell undeveloped plots. amp;nbsp;amp;nbsp;(d)amp;nbsp;The period shall conform to be the norm and standards, as laid down in the applicable building control regulation, bye-laws, rules, and other regulations of the State Government / Municipal / Local Body concerned. amp;nbsp;amp;nbsp;(e)amp;nbsp;The investor shall be responsible all necessary approvals, including those of the building / layout plans, developing internal and peripheral areas and other infrastructure facilities, payment of development, external development and other charges and complying with all other requirements as prescribed under applicable rules / bye-laws / regulations of the State Government / Municipal / Local Body concerned amp;nbsp;amp;nbsp;(f)amp;nbsp;The State Government / Municipal / Local Body concerned, which approves the building / development plans, shall monitor compliance of the above conditions by the developer. Vide Press Note 2 of 2006, the govt. issued some clarifications regarding applicability of these guidelines to some other sectors such as SEZs, Hotels and Hospitals and it was clarified that FDI upto 100% is allowed in the hotel and tourism industry and that the FDI in these sectors shall be governed by other press notes.(Press Note 4, 2001 series for hotel and tourism sector and Press Note 2, 2000series for Hospital sector.) Vide Press Note 4 of 2006 dated 10.2.2006, provisions regarding Foreign Direct Investment in a number of sectors were further liberalized.. The said Press Note dated 10.2.2006 also stated that for investment by Non Resident Indians, conditions mentioned above were not applicable. Thus, NRIs have been given a special and preferential treatment in this regard. Another key change has been the removal of real estate from the negative list for investments by Venture Capital Funds (VCFs) and Foreign Venture Capital Investors (FVCIs) - which enables VCFs and FVIamp;#39;s registered with SEBI to invest in the real estate segment; Policy for Automatic Route: (a) New Ventures amp;ndash; All items/activities for FDI/NRI investment upto 100% fall under the Automatic route: For inward remittance and issue of shares to NRI/Foreign entities upto 100 per cent equity also, prior permission of RBI is not required. These companies have to file the required documents with the concerned Regional offices of RBI within 30 days after the issue of shares to NRI. (b) Existing Companies amp;ndash; Besides new companies, automatic route for FDI/NRI investment is also available to the existing companies proposing to induct foreign equity. For existing companies with an expansion programme the additional requirements are that: 1.amp;nbsp;The increase in equity level must result from the expansion of the equity base of the existing Company without the acquisition of existing shares by NRI/foreign investors. 2.amp;nbsp;The money to be remitted should be in foreign currency and 3. amp;nbsp;Proposed expansion programme should be in the sector(s) under automatic route. Otherwise, the proposal would need Government approval through the FIPB. The aforementioned press notes 2 of 2005, 2 of 2006 and 4 of 2006 are attached herewith amp;nbsp; * * * * * amp;nbsp; First India Thu, 01 Jan 1970 05:30:00 +0530 http://www.indiacorporateconsultants.com/ http://www.indiacorporateconsultants.com/ amp;nbsp; Investment in Foreign Company There are two ways in which investment can be made by a listed Indian company in foreign company:- a)amp;nbsp;Portfolio Investment by listed Indian Company b)amp;nbsp;Investment in overseas Joint Venture or wholly owned subsidiary The investments can be made under automatic route if the conditions prescribed (described in paragraphs below) are satisfied. a) Portfolio Investment by listed Indian Company Listed Indian companies are permitted to invest abroad in the equity of listed foreign companies, which are listed on a recognized stock exchange. Listed Indian companies are permitted to invest upto 50 percent of the net worth of the Indian companyamp;rsquo;s net worth as on the date of the latest audited balance sheet, inamp;nbsp; (i) shares, (ii) rated bonds / fixed income securities rated not below investment grade by accredited/registered credit rating agencies, issued by listed overseas companies abroad in companies listed on a recognized stock exchange, under the portfolio investment scheme. They are also permitted to invest in rated bonds / fixed income securities of such companies. Such investments shall not exceed 50 per cent of the Indian companyamp;rsquo;s net worth as on the date of the latest audited balance sheet. The limit of 35% of networth earlier has been raised to 50% and the requirement of reciprocal 10% shareholding has been dispensed with vide Circular No 11 dated 26.09.2007. b) Investment in overseas Joint Venture and wholly owned subsidiary In terms of Regulation 6 of the Notification No 120 of 07.07.2004 (as amended from time to time), an Indian party has been permitted to make investment in overseas Joint Ventures (JV) / Wholly Owned Subsidiaries (WOS), as under: -not exceeding 400 per cent of the net worth of the Indian party (corporates) as on the date of the last audited balance sheet. The above ceiling will include contribution to the capital of the overseas JV / WOS, loan granted to the JV / WOS, and 100 percent of guarantees issued to or on behalf of the JV/WOS. Such investments are subject to the following conditions: a) The Indian entity may extend loan / guarantee to an overseas concern only in which it has equity participation.Indian entities may offer any form of guarantee - corporate or personal / primary or collateral / guarantee by the promoter company / guarantee by group company, sister concern or associate company in India; provided that i) All financial commitments including all forms of guarantees are within the overall ceiling prescribed for overseas investment by the Indian party i.e. currently within 400 percent of the net worth of the Indian party, as the case may be. ii) No guarantee is amp;#39;open endedamp;#39; i.e. the amount of the guarantee should be specified upfront, and iii) As in the case of corporate guarantees, all guarantees are required to be reported to Reserve Bank, in Form ODI Part II. Guarantees issued by banks in India in favour of WOSs /JVs outside India, would be outside this ceiling and would be subject to prudential norms issued by Reserve Bank from time to time. b) The Indian party should not be on the Reserve Bankamp;rsquo;s Exporters caution list / list of defaulters to the banking system circulated by the Reserve Bank / The Credit Information Bureau (India) Ltd (CIBIL) or under investigation by any investigation / enforcement agency or regulatory body. c) All transactions relating to a JV / WOS should be routed through one branch of an authorised dealer bank to be designated by the Indian party. d) In case of partial / full acquisition of an existing foreign company, where the investment is more than USD 5.00 million, valuation of the shares of the company shall be made by a Category I Merchant Banker registered with SEBI or an Investment Banker / Merchant Banker outside India registered with the appropriate regulatory authority in the host country; and, in all other cases by a Chartered Accountant or a Certified Public Accountant. However, in cases of investment by way of swap of shares, in all cases irrespective of the amount, valuation of the shares will have to be by a Category I Merchant Banker registered with SEBI or an Investment Banker outside India registered with the appropriate regulatory authority in the host country. Approval of the Foreign Investment Promotion Board (FIPB) will also be a precondition. amp;nbsp; Meaning of Joint Venture : In terms of Regulation 2(m) of the above mentioned Notification, amp;nbsp;amp;ldquo;Joint Ventureamp;rdquo; means 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. It is further explained in the Introduction to the Master Circular on this subject, Joint Ventures are a medium of economic co-operationamp;nbsp; between India and other countries. Transfer of technology and skill, sharing of results of research amp;amp; development, creation of access to wider global market, promotion of brand image, generation of employment and utilization of raw materials available in India and in the host country are some significant benefits arising out such overseas investments. Method of Funding Investment in an overseas JV / WOS may be funded out of one or more of the following sources: - i) drawal of foreign exchange from an AD Bank in India; ii) capitalisation of exports; iii) swap of shares; iv) utilisation of proceeds of External Commercial Borrowings (ECBs) / Foreign Currency Convertible Bonds (FCCBs); v) in exchange of ADRs/GDRs issued in accordance with the scheme for issue of Foreign CurrencyConvertible Bonds and Ordinary Shares (through Depository Receipt Mechanism) Scheme, 1993, and the guidelines issued there under from time to time by the Central Government vi) balances held in EEFC account of the Indian party; and vii) utilisation of proceeds of foreign currency funds raised through ADR / GDR issues In respect of (vi) and (vii) above, the ceiling of 400 per cent (as applicable), of net worth will not apply. However, in respect of investments in the financial sector, they will be subject to compliance of Regulation 7 of the Notification ibid, irrespective of the method of funding. Capitalisation of exports and other dues a) Indian parties are also permitted to capitalise the payments due from the foreign entity towards exports, fees, royalties or any other entitlements due from the foreign entity for supplying technical know-how, consultancy, managerial and other services within the ceilings applicable. Export proceeds remaining unrealised beyond a period of six months from the date of export will require the prior approval of the Reserve Bank before capitalisation. b) Indian software exporters are permitted to receive 25 per cent of the value of their exports to an overseas software startup company in the form of shares without entering into Joint Venture Agreements, with prior approval of the Reserve Bank. amp;nbsp;Investments in Financial Services Sector In terms of Regulation 7 of the Notification, an Indian party seeking to make investment in an entity engaged in the financial sector should also fulfill the following additional conditions: (i) be registered with the appropriate regulatory authority in India for conducting the financial sector activities; (ii) have earned net profit during the preceding three financial years from the financial services activities; (iii) have obtained approval for investment in financial sector activities abroad from regulatory authorities concerned in India and abroad; and (iv) have fulfilled the prudential norms relating to capital adequacy as prescribed by the regulatory authority concerned in India. A step down subsidiary of JV / WOS investing in a financial services sector is also required to comply with the above conditions. Regulated entities in the financial sector making investments in any activity overseas are required to comply with the above guidelines. It is clarified that unregulated entities in the financial services sector in India may invest in non financial sector activities subject to compliance with the provisions of Regulation 6 of the Notification. It is further clarified that trading in Commodities Exchanges overseas and setting up JV/WOS for trading in overseas exchanges will be reckoned as financial services activity and require clearance from the Forward Markets Commission. amp;nbsp; amp;nbsp; Reporting requirements: The Indian Party is required to report such acquisition in form ODI to the AD Bank for report to the Reserve Bank within a period of 30 days from the date of the transaction. Form ODI comprises of four parts : Part I- which includes the following: Section A amp;ndash; Details of the Indian Party Section B amp;ndash; Details of Investment in New Project Section C amp;ndash; Details of Investment in Existing Project Section D amp;ndash; Funding for JV/WOS Section E amp;ndash; Declaration by the Indian Party Section F amp;ndash;Certificate by the Statutory Auditors of the Indian Party Part II amp;ndash; Reporting of remittances. Part III amp;ndash; Annual Performance Report (APR) Part IV amp;ndash; Report of Closure/ disinvestment/ voluntary liquidation/ winding up of JV/WOS amp;nbsp; Special provisions in respect of overseas investment in Energy and Natural Resources sector : In terms of A.P(DirSeries) Circular no. 11 dated September 26,2007 , an Indian party is allowed to make direct investment in joint ventures and / or wholly owned subsidiaries outside upto 400 percent of the net worth as on the date of the last audited balance sheet, under the Automatic Route. With a view to provide greater flexibility to Indian parties for investment abroad, it has been decided, in consultation with the government of India, to allow Indian companies to invest in excess ofamp;nbsp; 400 percent of their net worth , as on the date of the last audited balance sheet , in the energy and natural resources sectors such as oil, gas, coal and mineral ores. The investments in excess of 400 percent of the net worth shall be made only with the approval of the Reserve Bank . AD category amp;ndash;Iamp;nbsp; Banks may , Therefore , refer such cases to the Reserve Bank in terms of the procedures laid down in A.P. (Dir Series) Circular No. 68 dated June 1 , 2007. Approval of the Reserve Bank Prior approval of the Reserve Bank would be required in all other cases of direct investment abroad. For this purpose, application together with necessary documents should be made in Form ODI submitted through their Authorised Dealer. Reserve Bank, would inter alia, take into account the following factors while considering such applications: a) Prima facie viability of the JV / WOS outside India; b) Contribution to external trade and other benefits which will accrue to India through such investment; c) Financial position and business track record of the Indian party and the foreign entity; d) Expertise and experience of the Indian party in the same or related line of activity of the JV / WOS outside India. Obligations of Indian Entity An Indian party which has made direct investment abroad is under obligation to (a) receive share certificate or any other document as an evidence of investment, (b) repatriate to India the dues receivable from foreign entity and (c) submit the documents / Annual Performance Report to the Reserve Bank, in accordance with the provisions specified in Regulation 15 of the Notification. The Indian party should approach an Authorised Dealer Category - I bank with an application in Form ODI and prescribed enclosures / documents for effecting remittances towards such investments. Tax planning : The receipts of dividends and/or proceeds on sale of shares held by the Indian Company shall be subjected to tax as per Indian Tax Laws. The investment in shares in the Singapore company can be done through a overseas company to avail of the tax benefits provided by many countries on dividends and capital gains. amp;nbsp; First India Thu, 01 Jan 1970 05:30:00 +0530 http://www.indiacorporateconsultants.com/ http://www.indiacorporateconsultants.com/ The world is a global village. Businesses are increasingly feeling the need to expand globally to cater to the needs of their customers and in the process the Mamp;amp;A transactions are rapidly growing bringing along with them the need to appreciate the complex web of laws that get triggered in a cross border merger. We are giving below some of the salient features of the laws in India that should be kept in mind while deliberating the merger of an international company into an India company, meaning the transferee company in such a case would essentially be an Indian company. This note briefly outlines the laws, however, it does not lay down any guideline for a company to follow as each transaction would have unique characteristics and legal advise should be taken before going forward. Similarly, a detailed Due Diligence would need to be done before finalizing the scheme of merger. IMPLICATIONS UNDER INDIAN COMPANY LAW The Companies Act 1956 allows a foreign company to be merged with an Indian Company. The provisions of the relevant sections are reproduced hereunder: Section 394(4) (b) explains the meaning of the transferor and transferee company for the purpose of amalgamation under Section 394. amp;nbsp;amp;quot;transferee companyamp;quot; does not include any company other than a company within the meaning of this Act; but amp;quot;transferor companyamp;quot; includes any body corporate, whether a company within the meaning of this Act or not. Section 2(7) amp;quot;body corporateamp;quot; or amp;quot;corporationamp;quot; includes a company incorporated outside India but [does not include- (a) a corporation sole; (b) a co-operative society registered under any law relating to co-operative societies; and (c) any other body corporate (not being a company as defined in this Act) which the Central Government may, by notification in the Official Gazette, specify in this behalf;] A combined reading of the transferor company definition along with the definition of a Body Corporate shows that there is no legal bar for a Foreign Company to Merge with an Indian Company. However, the transferee Company should be an Indian Company. A Scheme would have to be formulated for giving effect to the Merger which would define the terms and conditions for the Merger including the Swap Ratio/cash payment in lieu of the assets taken over determined on the basis of valuation report submitted by the Chartered Accountant. An application needs to be filed with the High Court for convening meeting of shareholders and creditors to approve the said scheme. The said scheme needs to be filed with the High having appropriate jurisdiction for its approval. Notices and advertisements need to be published in newspapers and approval of Regional Director and Official Liquidator needs to be taken. Thereafter the court approves the merger. It may be noted that in case of a Private Limited company, the scheme of amalgamation generally provides for the cancellation of cross holdings between the transferor and transferee companies. In case the transferee company is a listed company in India and the transferor company is a foreign company and it holds shares in the transferee company prior to its merger into the transferee company then it would be advantageous to create a Trust and transfer the said pre merger holding of the transferor company in the transferee company to the said Trust, thus creating Treasury shares which could be offloaded into the market at a future date to raise cash for the company. IMPLICATIONS UNDER SEBI TAKEOVER REGULATIONS In case of a listed Indian Company, the Takeover regulations are not triggered as Regulation 3(1)(j)(ii) specifically excludes applicability of Regulations 10, 11 amp;amp; 12 pursuant to a scheme of arrangement or reconstruction including amalgamation or merger or demerger under any law or regulation, Indian or Foreign. IMPLICATIONS UNDER FEMA However, Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations 2000 are attracted. As per Regulation 7, pursuant to a scheme of amalgamation an Indian Company can issue shares to a person resident outside India subject to the following provisions: 1.amp;nbsp;The percentage of shareholding of persons resident outside India in the transferee or new company does not exceed the Sectoral Cap. 2.amp;nbsp;The transferor or transferee company is not engaged in the activities which are prohibited under FDI. 3.amp;nbsp;The transferee company files a report within 30 days in the revised Form FC-GPR with the Reserve Bank of India giving full details of the shares held by the person resident outside India in the transferor and the transferee company before and after the merger and also furnishes a confirmation that all terms and conditions have been adhered to in the scheme approved by the Court have been complied with. IMPLICATIONS UNDER COMPETITION LAW Although the sections wrt Combinations (Mergers, Amalgamations, Acquisitions amp;amp; Takeovers amp;ndash; MAAT) are yet to be notified, however, we feel they need to be kept in mind in case projects are being planned for the future. Under the Competition Act 2002, no person or enterprise shall enter into a combination which causes or is likely to cause an adverse effect on competition within the relevant market in India and such a combination shall be void. amp;nbsp;Different combinations are defined in section 5 of the Competition Act, 2002 like an enterprise whose value of assets pursuant to the amalgamation are more than the prescribed limit or turnover of more than a specified amount or having assets outside India of the value of more than the specified amount in US Dollars etc or turnover more than the specified amount in US dollars. Section 6 provides that any person or enterprise, who or which proposes to enter into a combination, may, at his or its option, give notice to the Commission, in the form as may be specified, and the fee which may be determined, by regulations, disclosing the details of the proposed combination, within seven days ofamp;mdash; (a)amp;nbsp;approval of the proposal relating to merger or amalgamation, referred to in clause (c) of section 5, by the board of directors of the enterprises concerned with such merger or amalgamation, as the case may be; (b)amp;nbsp;execution of any agreement or other document for acquisition referred to in clause (a) of section 5 or acquiring of control referred to in clause (h) of that section. amp;nbsp; First India Tue, 17 Nov 2009 00:00:00 +0530 http://www.indiacorporateconsultants.com/ http://www.indiacorporateconsultants.com/ amp;nbsp; LLP - Excellent hybrid of partnership firm and company 1. Introduction You mix Companies Act and Indian Partnership Act, remove all defects of traditional partnership firm, remove all procedural hassles and rigidity in Companies Act, keep good points of both Indian Partnership Act and Companies Act and what you have is Limited Liability Partnership! This, in brief, is the description of proposed LLP Bill. LLP is excellent hybrid of Partnership Act and Companies Act. LLP is a very good substitute to formation of a private limited company. LLP may not be a good substitute for small family owned partnerships, but will be excellent tool for professional partnerships or partnerships where some of the partners do not want to be saddled with unlimited liability. Limited Liability Partnership Bill was first introduced in Rajya Sabha in December, 2006.amp;nbsp; The Bill was referred to Parliamentary Standing Committee. On the basis of the report of Committee was presented to Lok Sabha and Rajya Sabha in November, 2007. On basis of the recommendations, changes were made in LLP Bill, 2006 and revised LLP Bill, 2008 has been introduced in Rajya Sabha on 21st October, 2008. The Bill has been passed by Rajya Sabha on 24th October, 2008. It is hoped that Lok Sabha will clear the Bill when it is reconvened on 10th December, 2008. No major changes between 2006 bill and 2008 Bill - There is no change in basic structure of the two Bills. Since 2006 Bill is now not relevant, the changes are not discussed here. amp;nbsp;1.1 Constitutional background Article 246 of Constitution indicates bifurcation of powers to make laws, between Union Government and State Governments. Parliament has exclusive powers to make laws in respect of matters given in list I of the Seventh Schedule to the Constitution (called amp;ldquo;Union Listamp;rsquo;amp;rsquo;). List II (State List) contains items under jurisdiction of States. List III (concurrent list) contains items where both Union and State Governments can exercise power. Relevant entries are as follows - Union List - List I Entry 43 - Incorporation, regulation and winding up of trading corporations, including banking, insurance and financial corporations but not including cooperative societies Entry 44 - Incorporation, regulation and winding up of corporations, whether trading or not, with objects not confined to one State, but not including Universities Entry 97 - Any other matter not included in List II, list III and any tax not mentioned in list II or list III. (These are called amp;lsquo;Residual Powersamp;rsquo;.) State list - List II Entry 32 amp;ndash; Incorporation, regulation and winding up of corporations, other than those specified in List I, and universities; unincorporated trading, literary, scientific, religious and other societies and associations; cooperative societies Concurrent list - List III Entry 7 amp;ndash; Contracts including partnership, agency, contracts of carriage, and other special forms of contracts, but not including contracts relating to agricultural land. LLP can come under entry 44 of List I or in entry 7 of List III. 2 Overview of provisions of LLP Basic provisions relating to LLP can be summarised as follows. 2.1 Basic features of LLP Limited liability and perpetual succession - LLP is a body corporate having perpetual succession [clause 3(1) of LLP Bill, 2008]. It is a legal entity separate from its partners [clause 3(2) of LLP Bill, 2008]. Any change in the partners of a limited liability partnership shall not affect the existence, rights or liabilities of the limited liability partnership [clause 3(3) of LLP Bill, 2008]. No partner is personally liable to liabilities of LLP except in case of fraud [clauses 27 and 28 of LLP Bill, 2008]. Liability of LLP is not liability of individual partners. Partner is agent of LLP but not of other partners - Every partner of LLP is agent of LLP but not of other partners. Thus, he can bind LLP by his acts but not other partners. Ministry of Corporate Affairs is administrating ministry - Ministry of Corporate Affairs, Government of India is the administrating ministry. Registrar of Companies of respective State is the administrative authority where all documents are to be filed. Provisions of Companies Act can be made applicable - Central Government can make applicable any provision of Companies Act to LLP with suitable modifications by issuing a notification [clause 67 of LLP Bill, 2008] However, provisions of Indian Partnership Act will not apply to LLP [clause 4 of LLP Bill, 2008]. 2.2 Incorporation of LLP Incorporation document - Two or more persons can associate for carrying out any lawful business with a view to profit. They have to file amp;lsquo;incorporation documentamp;rsquo; [similar to Memorandum of Association of a company] containing prescribed details like name, proposed business, address of registered office, name and address of partners, name and address of designated partners and other information as may be prescribed by rules [clause 11 of LLP Bill, 2008]. Certificate of Incorporation will be given by Registrar of Companies which is conclusive evidence [clause 12 of LLP Bill, 2008] No provision to amend Incorporation document - There is no provision to amend Incorporation document. However, provisions are made to make changes in name, nature of business or registered office and name of partners. Meaning of business - amp;quot;Businessamp;quot; includes every trade, profession, service and occupation [clause 2(1)(e) of LLP Bill]. The definition is inclusive. Thus, any commercial activity like manufacturing, trading, export, consultancy, professional services, education etc. are covered. However, profit motive is essential. Thus, LLP for non-profit activities like philanthropy or trust is not permissible. Change of business or registered office - If LLP intends to alter or expand scope of its business, it can be done with consent of all partners [clause 8 of First Schedule to LLP Act]. LLP Agreement can provide to contrary e.g. Agreement may provide that change is business can be with consent of 51%/66%/75% of partners. Change of registered Name of LLP - LLP should have name which has to be approved and should not be similar to name of other entity [clause 15 of LLP Bill, 2008]. Name can be changed by following prescribed procedure [clause 19 of LLP Bill, 2008]. In specified cases, Central Government can order compulsory change of name. Change of registered office - Registered office can be changed anywhere in India (subject to prescribed conditions) just by informing Registrar [clause 13 of LLP Bill, 2008]. 2.3 LLP Agreement amp;lsquo;Limited liability partnership agreementamp;rsquo; means any written agreement between the partners of the limited liability partnership or between the limited liability partnership and its partners which determines the mutual rights and duties of the partners and their rights and duties in relation to that limited liability partnership [clause 2(1)(o) of LLP Bill]. After incorporation, LLP may have Limited Liability Partnership Agreement. This agreement will govern mutual rights and duties of partners of LLP and mutual rights and duties of LLP and its partners. The agreement can be changed and details should be filed with ROC [clause 23 of LLP Bill, 2008]. The LLP Agreement is similar to Articles of Association of company. Such LLP Agreement is optional. If such agreement is not there, mutual rights and duties will be as specified in first schedule to LLP Act. Many of the standard clauses in first schedule to LLP Act will not be acceptable in majority of the cases. Hence, practically, each LLP will be required to have LLP Agreement. The agreement and any change in the agreement shall be filed with ROC [clause 23(2) of LLP Bill]. 2.4 Partnership in LLP Individual or body corporate can be partner - Any individual (who is of sound mind and is solvent) and any body corporate can be partner of LLP. There should be minimum two partners. Personal liability if number falls below two. No upper limit on number of partners [clause 5 and 6amp;nbsp; LLP Bill, 2008]. Meaning of body corporate - amp;lsquo;Body corporateamp;rsquo; means company under Companies Act. It also includes LLP incorporated in India, LLP incorporated outside India and even a company incorporated outside India. However, it does not include a corporation sole or a cooperative society [clause 2(1)(d) of LLP Bill, 2008]. A amp;lsquo;body corporateamp;rsquo; can become member of LLP. Thus, a foreign LLP or foreign company can be a partner in LLP incorporated in India. Admission of minor to benefit of partnership - There is no specific provision about admission of minor to benefit of partnership. A partner has to sign LLP Agreement. He is bound by any change in agreement and each partner has a vote. Thus, a minor cannot be aamp;nbsp; partner. However, there is no provision in LLP Act abut admission of minor to benefit of partnership. In absence of such specific provision, it is doubtful if a minor can be admitted to benefit of LLP. Change in partner - A partner can resign. He ceases to be partner on his death or if he is declared as of unsound mind or adjudged as insolvent [clause 24 of LLP Bill, 2008]. A partner can be admitted only with consent of all existing partners. However, LLP Agreement can provide otherwise, e.g. LLP Agreement may provide that partner can be admitted with consent of designated partners or by consent of 51%/66%/75% partners [clause 7 of First Schedule to LLP Act]. Notice of change of partner or even change of his address should be filed with ROC. The partner who has resigned can himself file notice to Registrar of Companies [clause 25 of LLP Bill, 2008] No provision for restriction on partner after he retires amp;ndash; There is no provision in LLP Act for restrictions on activities of the outgoing partner [Partnership Act does make provision for reasonable restrictions under section 36(2) of Partnership Act]. In my view, any restriction in LLP Agreementamp;nbsp; on retiring partner will be restraint of trade and may be void under section 27 of Contract Act. Expulsion of partner - A partner can be expelled from LLP unless there is specific provision in LLP agreement [clause 13 of First Schedule to LLP Act] 2.5 Management of LLP Day to day management of LLP - Every partner may take part in management of LLP. However, LLP agreement may provide to contrary [clause 5 of First Schedule to LLP Act]. If LLP has large number of partners, LLP Agreement may provide for delegation of powers of management of LLP. It is not essential that power to conduct business should be given to designated partner/s. The LLP Agreement can provide for delegating such powers to another partner/s who may be termed as amp;lsquo;Managing Partneramp;rsquo; or amp;lsquo;Executive Partneramp;rsquo; or by any other name as specified in LLP Agreement. Decisions of LLP by majority - All decisions relating to LLP (except decision relating to change of business) shall be decided by resolution passed by majority of partners. Each partner will have one vote. However, LLP Agreement can make different provisions on this issue e.g. differential voting or veto power to some partner/s. The decisions have to be written in minute book kept at registered office of LLP [clauses 8 and 9 of First Schedule to LLP Act]. Of course it is not possible to take each and every decision by majority of partners. Hence, LLP Agreement can and indeed should provide for delegation of powers to some partner/s. Minute book by LLP - Each LLP is required to maintain minute book containing minutes of decisions taken. Minutes should be written within 30 days. Rights and duties of partner - Rights and liabilities of LLP will be as per LLP agreement. In absence of any provision, the provisions as specified in First Schedule to LLP Act will apply [clause 23(4) of LLP Bill, 2008]. Remuneration to partner - Remuneration to partner can be only as specified in LLP agreement. Otherwise, partner of LLP is not entitled to any remuneration [clause 6 of First Schedule to LLP Act] Partner can bind LLP but not other partners - Every partner of LLP is agent of LLP but not of other partners. Thus, he can bind LLP by his acts but not other partners. Partner can take part in management of LLP but LLP Agreement can curtail his authority. Partner of LLP is entitled to remuneration only if LLP Agreement so provides. No partner is personally liable to liabilities of LLP except in case of fraud [clauses 27 and 28 of LLP Bill, 2008] Business transaction between partner and LLP - Partner can give loans to LLP and transact any business with LLP as if he is an independent person and not partner of LLP [clause 66 of LLP Bill, 2008]. Even in absence of such provision, it is obvious that partner and LLP are independent legal entities and can have business transactions with each other. 2.6 Contribution and loans by each partner A partner can contribute to capital of LLP either in terms of money, tangible movable or immovable property, intangible property, or by contracts for services performed or to be performed. Monetary value will be accounted for in accounts of LLP. Obligation of each partner to contribute will be as per LLP agreement [clauses 32 and 33 of LLP Bill, 2008] In absence of any provision to contrary in LLP Agreement, all partners of LLP are entitled to share equally in capital, profits and losses of LLP [clause 2 of First Schedule to LLP Act]. Thus, LLP agreement must provide for share of each partner in capital, profit and loss, if the intention is not to share equally. 2.7 Designated partners and their role LLP must have two amp;lsquo;designated partnersamp;rsquo; who must be individuals. If a body corporate is partner of LLP, it can nominate a person as amp;lsquo;designated partneramp;rsquo;. He has to give consent to act as designated partner. He has to obtain DPIN [Designated Partner Identification Number] from Central Government [clause 7 of LLP Bill, 2008]. The designated partner is liable for all compliances as required under the Act and is liable to penalty for contravention of those provisions [clause 8 of LLP Bill, 2008]. If no person is appointed as amp;lsquo;designated partneramp;rsquo; or only one partner is so appointed, all partners will be amp;lsquo;designated partnersamp;rsquo; [clause 9 of LLP Bill, 2008] The amp;lsquo;designated partneramp;rsquo; has no implied authority to conduct day to day business of LLP. Such authority can be given through LLP Agreement. It is not essential that power to conduct business should be with designated partner. The LLP Agreement can provide for delegating such powers to another partner/s who may be termed as amp;lsquo;Managing Partneramp;rsquo;, amp;lsquo;Executive Partneramp;rsquo;amp;nbsp; or by any other name as specified in LLP Agreement [see First Schedule to LLP Act]. 2.8 Accounts and returns Books of account, statement of insolvency, annual return - Each LLP is required to maintain books of accounts. Every year within six months from close of financial year, it is required to file Statement of Account and Solvency. Accounts should be audited. However, Central Government can exempt any class of LLP from requirements of audit [clause 34 of LLP Bill, 2008]. Each LLP is required to file Annual Return with ROC within 60 days from close of financial year [clause 35 of LLP Bill, 2008]. Fee for late filing of document is Rs 100 per day. Late filing upto 300 days is permissible [clause 69 of LLP Bill, 2008]. Meaning of amp;lsquo;financial yearamp;rsquo; - Financial year means the period from the 1st day of April of a year to the 31st day of March of the following year. However, in the case of a limited liability partnership incorporated after theamp;nbsp; 30th day of September of a year, the financial year may end on the 31st day of March of the year next following that year [clause 2(1)(l) f LLP Bill]. Inspection of documents filed with ROC - Incorporation document, details of partners, accounts, statement of solvency and annual return filed by LLP with ROC will be available for public inspection [clause 36 of LLP Bill, 2008]. Registrar of Companies can call for and obtain information from any LLP [clause 38 of LLP Bill, 2008] Very heavy fines for delays in filing returns - LLP Act provides very heavy fines, e.g. fine for not filing annual accounts and statement of solvency is minimum Rs 25,000 and maximum Rs five lakhs [clause 34 of LLP Bill, 2008]. Fine for not filing Annual Return is minimum Rs 25,000 and maximum Rs five lakhs [clause 35 of LLP Bill, 2008]. The fine can be imposed only by competent Court. Offenses compoundable - Though fine can be imposed only by competent Court, offenses are compoundable by Central Government [clause 39 of LLP Bill, 2008]. Hopefully, only reasonable compounding fees will be asked. Heavy fees for late filing of document - Fee for late filing of document is Rs 100 per day. Late filing upto 300 days is permissible [clause 69 of LLP Bill, 2008] 2.9 Compromise, winding up and dissolution of LLP Compromise, arrangements or reconstruction of LLP -amp;nbsp; Detailed provisions of compromise, arrangement or reconstruction of LLP made in the LLP Act [clauses 60 to 62amp;nbsp; of LLP Bill, 2008]. The provisions are similar to those contained in Companies Act. The powers are presently with High Court. These powers will be transferred to NCLT (National Company Law Tribunal) after its formation [clause 81 of LLP Bill, 2008] Winding up and dissolution of LLP - Winding up of LLP can be voluntary or by Tribunal. Procedures will be as per rules made by Central Government [clause 64 of LLP Bill, 2008]. The powers are presently with High Court. These powers will be transferred to NCLT (National Company Law Tribunal) after its formation [clause 81 of LLP Bill, 2008]. Strike off defunct LLP - Registrar of Companies can strike off defunct LLP after giving opportunity for hearing and following prescribed procedure [clause 73 of LLP Bill, 2008]amp;nbsp; 2.10 Other provisions Indemnity to and by partner - LLP will indemnify each partner for liabilities incurred by him in ordinary and proper conduct of business [clause 3 of First Schedule to LLP Act]. Partner will indemnify LLP for any loss incurred by LLP due to fraud committed by partner in conduct of business of LLP [clause 4 of First Schedule to LLP Act]. Liability of partner by holding out - If a person represents himself as partner of LLP, he will be liable to person who acts in good faith on basis of such representation [clause 29 of LLP Bill, 2008]. Whistle blowing - Any employee or partner can provide information about any wrong doing by LLP. In such case, penalty on him will be reduced by Tribunal and he will be protected from discharge, dismissal etc. [clause 31 of LLP Bill, 2008]. Such protection is only in respect of liabilities under LLP Act and not under other Acts. Assignment and transfer of partnership rights - Rights of profit or loss in partnership firm can be assigned. However, assignee does not become partner on such assignment and does not get any right to inspect accounts of LLP [clause 42 of LLP Bill, 2008] Investigation of affairs of LLP - Clauses 43 to 54 of LLP Bill, 2008 make provisions for investigation into affairs of LLP by Central Government. The provisions are similar to those under Companies Act. Investigation can be ordered on basis of order of Company Law Board (CLB). These powers will be transferred to NCLT (National Company Law Tribunal) after its formation [clause 81 of LLP Bill, 2008] Conversion of existing firms and companies - Any existing partnership firm, private company or a public unlisted company can convert itself into LLP by following prescribed procedures [clause 55 of LLP Bill, 2008 read with Second, Third and Fourth Schedules to LLP Act]. The schedules can be altered by Central Government by issuing a notification [clause 78 of LLP Bill, 2008]. Such conversion will not affect any rights or liabilities of erstwhile firm or company. Foreign LLP - Foreign limited liability partnershipamp;nbsp; means a limited liability partnership formed, incorporated or registered outside India which establishes a place of business within India [clause 2(1)(m) of LLP Bill]. Foreign LLP can establish business in India and its regulatory mechanism will be as per rules prescribed by Central Government [clause 59 of LLP Bill, 2008]amp;nbsp; A foreign LLP can be a partner in Indian LLP. 2.11 Income tax of LLP Provisions of income tax on LLP will be made under income Tax Act. It seems LLP will be taxed as a separate legal entity (just like a company or partnership firm). There is a demand that share of each partner should be taxed at the hands of individual partners (as was the provision in case of partnership upto 1993). We have to wait and see how LLP and individual partners are made liable to income tax. 3. Standard conditions of LLP Following provisions relating to mutual rights and duties of partners apply to each LLP in absence of any agreement to contrary [First Schedule to LLP Bill, read with section 23(4) of LLP Bill]. (1) The mutual rights and duties of the partners and the mutual rights and duties of the limited liability partnership and its partners shall be determined, subject to the terms of any limited liability partnership agreement or in the absence of any such agreement on any matamp;shy;ter, by the provisions in this Schedule. (2) All the partners of a limited liability partnership are entitled to share equally in the capital, profits and losses of the limited liability partnership. (3) The limited liability partnership shall indemnify each partner in respect of payamp;shy;ments made and personal liabilities incurred by him - (a) in the ordinary and proper conduct of the business of the limited liability partnership; or (b) in or about anything necessarily done for the preservation of the business or property of the limited liability partnership. (4) Every partner shall indemnify the limited liability partnership for any loss caused to it by his fraud in the conduct of the business of the limited liability partnership. (5) Every partner may take part in the management of the limited liability partnership.amp;nbsp; (6) No partner shall be entitled to remuneration for acting in the business or manageamp;shy;ment of the limited liability partnership. (7) No person may be introduced as a partner without the consent of all the existing partners. (8) Any matter or issue relating to the limited liability partnership shall be decided by a resolution passed by a majority in number of the partners, and for this purpose, each partner shall have one vote. However, no change may be made in the nature of business of the limited liability partnership without the consent of all the partners. (9) Every limited liability partnership shall ensure that decisions taken by it are reamp;shy;corded in the minutes within thirty days of taking such decisions and are kept and maintained at the registered office of the limited liability partnership. (10) Each partner shall render true accounts and full information of all things affecting the limited liability partnership to any partner or his legal representatives. (11) If a partner, without the consent of the limited liability partnership, carries on any business of the same nature as and competing with the limited liability partnership, he must account for and pay over to the limited liability partnership all profits made by him in that business. (12) Every partner shall account to the limited liability partnership for any benefit derived by him without the consent of the limited liability partnership from any transaction concerning the limited liability partnership, or from any use by him of the property, name oramp;nbsp;amp;nbsp; any business connection of the limited liability partnership. (13) No majority of the partners can expel any partner unless a power to do so has been conferred by express agreement between the partners. (14) All disputes between the partners arising out of the limited liability partnership agreement which cannot beamp;nbsp; resolved in terms of such agreement shall be referred for arbitraamp;shy;tion as per the provisions of theamp;nbsp; Arbitration and Conciliation Act, 1996. Some standard conditions not practicable amp;ndash; Some of the standard conditions specified are not practical. Hence, practically, every LLP will be required to have a written LLP agreement. 4. Comparison of LLP with firm and company form of business organisation As stated above, LLP removes defects of partnership firm and at the same time retains flexibility in operations which is absent in company form of organisation. Following tables gives differences and similarities between these forms of organisation. 4.1 Comparison between traditional partnership and LLP Traditional Partnership Limited Liability Partnership Distinctions Unlimited personal liability of each partner for dues of the partnership firm. Personal property of each partner also liable. No personal liability of partner, except in case of fraud. Written agreement not essential. Incorporation document essential. Partnership can be registered under Partnership Act. Registration is not mandatory. LLP is incorporated under LLP Act. Incorporation is mandatory. Not a legal entity separate from its partners It is a legal entity separate from its partners, having perpetual succession Property cannot be held in name of partnership firm. Property can be held in name of LLP. Partnership deed/agreement is executed. Even verbal agreement is valid. amp;lsquo;Incorporation Documentamp;rsquo; is required to be executed. In addition, LLP Agreement is required in almost all cases, though such LLP agreement is not mandatory. Documents are required to be filed with Registrar of Firms (of respective State) Registrar of Companies (ROC) is the administrating authority. Death of partner dissolves a firm, in absence of agreement Death of partner does not dissolve LLP. Minimum two and maximum twenty partners Minimum two partners. No limit on maximum number of partners Each partner can take part in business of firm. Each partner can take part in business of firm, but LLP Agreement can provide to the contrary. All partners are liable for statutory compliances under Partnership Act Only designated partners are liable for statutory compliances as are required under LLP Act (not necessarily in respect of other Acts). Partner cannot enter into business with firm, though he can give loan to firm. Partner of LLP can enter into business with LLP. He can also give loans to LLP. Every partner of firmamp;nbsp; is agent of firm and also of other partners. He can bind partnership firm as well as other partners by his acts. Every partner of LLP is agent of LLP but not of other partners. Thus, he can bind LLP by his acts but not other partners. However, LLP agreement can restrict powers of individual partner. Filing of accounts, statement of solvency and annual return not required. Filing of accounts, statement of solvency and annual return not required. Partnership can be amp;lsquo;at willamp;rsquo; i.e. any partner can resign or dissolve firm Individual partner can resign but cannot dissolve the LLP. Death of partner dissolves partnership unless there is contract to contrary Death of partner does not dissolve LLP. Public notice is required for retirement of a partner. Filing of return of retirement of partner with ROC is required, but no provision for public notice of retirement of partner. Partnership firm can be dissolved. LLP can be would up. No specific provision toamp;nbsp; enter into compromise, arrangement, amalgamation, reconstruction etc. This can be done only under civil laws. LLP can enter into compromise, arrangement, amalgamation, reconstruction etc. Minor can be admitted to benefit of partnership. There is no specific provision to admit minor to benefit of partnership. It is doubtful if this can be done. Similarities Partner is not employee of firm Partner is not employee of LLP. Liability of a person foramp;nbsp; amp;lsquo;holding outamp;rsquo;, i.e. representing himself as partner, though he is not Liability of a person foramp;nbsp; amp;lsquo;holding outamp;rsquo; i.e. representing himself as partner, though he is not [clause 29 of LLP Bill, 2008] Partner of firm entitled to remuneration only if partnership agreement so provides Partner of LLP entitled to remuneration only if LLP agreement so provides New partner can be introduced only with consent of all existing partners New partner can be introduced only with consent of all existing partners, unless LLP Agreement provides otherwise. Insolvent person cannot continue as partner of firm. Insolvent person cannot continue as partner of LLP. Rights of partnership can be assigned. Rights of partnership can be assigned. Partner liable to firm for any personal profits made by him by use of property, name or business connection of firm. Partner liable to LLP for any personal profits made by him by use of property, name or business connection of LLP Partner cannot undertake competing business without consent of other partners Partner cannot undertake competing business without consent of LLP. Otherwise, liable to account for and pay profits to LLP Partner liable to firm if he commits fraud. First India Mon, 05 Jan 2009 00:00:00 +0530 http://www.indiacorporateconsultants.com/ http://www.indiacorporateconsultants.com/ ACTION CHART FOR POSTAL BALLOT PROCESS Sr. No.amp;nbsp;Particularsamp;nbsp;Specimen Date 1.amp;nbsp;Draft the following: (a)amp;nbsp;Notice u/s 192A (b)amp;nbsp;Draft Resolution (c)amp;nbsp;Explanatory Statement (d)amp;nbsp;Postal Ballot Formamp;nbsp;27th April, 2006 2.amp;nbsp;Obtain consent of the Scrutinizer. amp;nbsp;27th April, 2006 3.amp;nbsp;Hold the Board Meeting to do the following and inform the SE: (a)amp;nbsp;Approve the documents drafted as in (1) above.amp;nbsp; (b)amp;nbsp; Appoint the Scrutinizer. (c) Pass a Resolution nominating a Managing amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; Director/Whole-time Director and the Companyamp;nbsp;amp;nbsp; amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; Secretary, for being responsible, to Complete the amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; amp;#39;Postal Ballotamp;#39; process. (d) Approve the calendar of events. amp;nbsp;1st May, 2006 4.amp;nbsp;A copy of the Board Resolution along with the calendar of events to be forwarded to the Registrar of Companies within one week of the Board Meeting. [DCA General Circular No. 16/2001 dated 24/07/2001]amp;nbsp;7th May, 2006 5.amp;nbsp;Make application for Business Reply Permission to Post Office alongwith approximates Postage Charges.amp;nbsp;7th May, 2006 6.amp;nbsp;Print Notice, postal ballot forms and arrange for self-addressed envelopes (bearing the name and address of the Scrutinizer), address slips, etc. amp;nbsp;14th May, 2006 7.amp;nbsp;Complete dispatch of Notices (names of shareholders to be ascertained on a date as close as possible to the dispatch date). amp;nbsp;1st June, 2006 8.amp;nbsp;Release an advertisement in newspapers giving the date of completion of dispatch of the Notice and the last date for receipt of postal ballot forms from the shareholders. amp;nbsp;3rd June, 2006 9.amp;nbsp;Last date for receipt of postal ballot forms (thirty days from the last date of dispatch). amp;nbsp;1st July, 2006 10.amp;nbsp;To keep safe custody of all postal ballot forms in closed envelopes and put the receipt stamp on envelopes as and when these are received till the last date for receiving the postal ballot form.amp;nbsp;1st July, 2006 11.amp;nbsp;Preparation of Scrutinizeramp;#39;s Report andamp;nbsp; submission of the same to the Chairman by the Scrutinizer amp;nbsp;17th July, 2006 12.amp;nbsp;Declaration of resultamp;nbsp;17th July, 2006 13.amp;nbsp;Result to be displayed on Notice Board and released to the Press amp;amp; SEamp;nbsp;17th July, 2006 14.amp;nbsp;File the Resolution with Registrar of Companies. amp;nbsp;16th August, 2006 15.amp;nbsp;Last date for signing the Minutesamp;nbsp;16th August, 2006 CALENDAR OF EVENTS Sr. No.amp;nbsp;Particularsamp;nbsp;Specimen Date 1.amp;nbsp;Date of consideration of the matter in the Board Meeting amp;nbsp;15-7-2006 2.amp;nbsp;Date on which consent given by the scrutinizer to act as suchamp;nbsp;15-7-2006 3.amp;nbsp;Date of Appointment of the scrutinizeramp;nbsp;15-7-2006 4.amp;nbsp;Date of Board resolution authorizing one of functional directors and executive officer to be responsible for the entire poll processamp;nbsp;15-7-2006 5.amp;nbsp;Date of dispatch of notice of meeting in which the business as notified by C.G. will be transacted through postal ballotamp;nbsp;16-7-2006 6.amp;nbsp;Date of completion of dispatch of notice along with postal ballotamp;nbsp;16-7-2006 7.amp;nbsp;Filing of intimation of the Board resolution and event of calendar for conducting postal ballot to the ROCs amp;amp; SEamp;nbsp;16-7-2006 8.amp;nbsp;Publication of notice in newspaper for postal ballot process and appointment of scrutinizer and compliance officeramp;nbsp;21-7-2006 9.amp;nbsp;Last date for receiving postal ballot paper by scrutinizer amp;nbsp;14-8-2006 10.amp;nbsp;Date of handling over the ballot papers to the designated authorityamp;nbsp;16-8-2006 11.amp;nbsp;Date of EGM in which the results of the postal ballot will be announced by the chairmanamp;nbsp;16-8-2006 12.amp;nbsp;Date of signing of the minutes book by the chairman in which the result of ballot is recordedamp;nbsp;17-8-2006 13.amp;nbsp;Date of returning the ballot papers, register required to be maintained by the scrutinizer u/r 5(e) and other related papers to the chairman by the scrutinizer amp;nbsp;17-8-2006 Items requiring voting by postal ballot: 1.amp;nbsp;Alteration in the Object Clause of Memorandum; 2.amp;nbsp;Alteration of Articles of Associations in relation to deletion or insertion of provisions defining private company;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; 3.amp;nbsp;Buy-back of own shares by the company under sub-section (1) of section 77A; 4.amp;nbsp;Issue of shares with differential voting rights as to voting or dividend or other wise under sub-clause (ii) of clause (a) of section 86; 5.amp;nbsp;Change in place of Registered Office out side local limits of any city, town or village as specified in sub-section (2) of section 146; 6.amp;nbsp;Sale of whole or substantially the whole of undertaking of a company as specified under sub-clause (a) of sub-section (1) of section 293; 7.amp;nbsp;Giving loans or extending guarantee or providing security in excess of the limit prescribed under sub-section (1) of section 372A; 8.amp;nbsp;Election of a director under sub-section (1) of section 252; 9.amp;nbsp;Variation in the rights attached to a class of shares or debentures or other securities as specified under section 106. PROCEDURE FOR OBTAINING BR PERMISSION Sr. No.amp;nbsp;Particularsamp;nbsp;Whether complied or not? 1.amp;nbsp;Make an application to Post Office for BR. Alongwith the application give a copy of material (Postal Ballot Notice draft BR cover and Window envelop). If possible, get the draft printed before making BR application, so that the exact weight can be measured.amp;nbsp; 2.amp;nbsp;Make sure that the size of the BR cover does not exceed the size prescribed by the Post Office. The gape between the columns in BR cover is also prescribed by the Post Office and they shall be complied with.amp;nbsp; 3.amp;nbsp;After scrutiny, the Post Office issues an in-principle BR Permission letter. As soon as the letter is received, deposit the BR charges. The BR charges = (Postage Charges + Rs. 1 for Post Office charges) * No. of shareholders The Postage Charges depends upon the weight of the material (Postal Ballot Notice, draft BR cover and Window envelop) The slab for Postage Charges are as under: amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; Upto 20 gm. Weight of material : Rs. 5 per material amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; After 20 gm. weight : Rs. 5 per each additional 20 gm i.e. if the weight is 21 gm., the charges is Rs. 10, amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; For 35 gm. the charges is Rs. 10, amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; For 41 gm. the charges is Rs. 15 Note : The payment shall be made preferably by cash, as in case of DD/Pay Order/Cheque, the Post Office shall not issue BR No., until realization of cash. amp;nbsp; 4.amp;nbsp;Alongwith the BR charges, deposit Rs. 200 in respect of charges for BR approval. amp;nbsp; 5.amp;nbsp;After the deposit of charges, the Post Office will issue BR Number. This number shall be printed on BR envelope.amp;nbsp; 6.amp;nbsp;The BR Number is valid till the end of the financial year i.e. upto 31st March. It is renewable by payment of Rs. 200 per year. One BR No. can be used for any purpose, apart from the Postal Ballot and one BR is valid for all Postal Ballot subject to its validity and renewal.amp;nbsp; amp;nbsp; First India Fri, 19 Dec 2008 00:00:00 +0530 http://www.indiacorporateconsultants.com/ http://www.indiacorporateconsultants.com/ Checklist for incorporating a WOS company in India by a foreign company. amp;nbsp; amp;nbsp; Requirements for filing Form 1A for name availability: amp;nbsp; amp;nbsp; 1.amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; Board resolution of the Parent company duly notarized and consularised in the country of the parent company authorizing to form a WOS in India . amp;nbsp; 2.amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; Name of the promoters of the company. In case of a WOS of a foreign company the name of the nominee of the foreign company has to be given who shall subscribe for at least one share in the capital on behalf of the company. amp;nbsp; 3.amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; Details of the proposed directors of the company along with their DIN Nos. amp;nbsp; 4.amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; Proposed objects of the company. amp;nbsp; 5.amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; Proposed authorized capital of the company. amp;nbsp; amp;nbsp; Requirements for incorporation after name availability: amp;nbsp; 1.amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; Power of Attorney of the parent company duly notarized and consularised favouring some person who shall represent the company in the office of ROC for making necessary changes in the incorporation documents and who shall also subscribe to the MOA/AOA on behalf of the parent company. The POA has to be adjudicated by the SDM in India also. amp;nbsp; 2.amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; 4 copies of the MOA/ AOA printed and 1 copy duly stamped. amp;nbsp; 3.amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; Forms 1, 18, 32. amp;nbsp; 4.amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; Board resolution of the Parent company duly notarized and consularised in the country of the parent company authorizing to form a WOS in India if not given earlier at the time of name availability. amp;nbsp; 5.amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; Consent of the directors to act as directors of the company. amp;nbsp; The minimum paid up capital in case of Pvt. Co. is Rs.One Lakh which has to be subscribed by the promoters of the company. amp;nbsp; amp;nbsp; amp;nbsp; amp;nbsp; Fee to be paid to the ROC for registering a company. amp;nbsp; amp;nbsp; CAPITAL amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; ROC FEEamp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; STAMPING FEE amp;nbsp; amp;nbsp; Rs.1,00,000.00amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; Rs.48,00.00amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; Rs.350.00 amp;nbsp; Rs.5,00,000.00amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; Rs.17,200.00amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; Rs.950.00 amp;nbsp; Rs.10,00,000.00amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; Rs.27,200.00amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; Rs.1700.00 amp;nbsp; Rs.50,00,000.00amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; Rs.1,08,000.00amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; Rs.7,700.00 amp;nbsp; Rs.1,00,00,000.00amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; Rs.1,58,000.00amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; Rs.15,200.00 amp;nbsp; Rs.2,00,00,000.00amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; Rs.2,08,000.00amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; Rs.30,200.00 amp;nbsp; Rs.5,00,00,000.00amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; Rs.3,58,000.00amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; Rs.75,200.00 amp;nbsp; amp;nbsp; REQUIREMENTS AFTER INCORPORATION: amp;nbsp; amp;nbsp; amp;nbsp; 1.amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; MOA and AOA have to be printed. amp;nbsp; amp;nbsp; 2.amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; Stamps and common seal have to be prepared. amp;nbsp; amp;nbsp; 3.amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; Share certificates have to be printed. amp;nbsp; amp;nbsp; REQUIREMENTS OF REGISTRATION UNDER VARIOUS ACTS. amp;nbsp; amp;nbsp; LIST OF DOCUMENTS REQUIRED FOR VAT amp;nbsp; amp;nbsp; 1.amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; MOA amp;amp; AOA amp;nbsp; 2.amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; Resolution by Board of Directors for appointing Authorised Person amp;nbsp; 3.amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; 4 PP photograph of the Authorised person amp;nbsp; 4.amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; Local (Mumbai) and permanent address proof of Authorised person amp;nbsp; 5.amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; PAN Card copy of Authorised person amp;nbsp; 6.amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; PAN Card copy of the company amp;nbsp; 7.amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; Rent or Lease Agreement of the premises amp;nbsp; 8.amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; List of branches of the company with TIN (In India ) amp;nbsp; 9.amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; Copy of TIN Certificates of all branches. amp;nbsp; 10.amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; Location of Attorney in Form 555 amp;nbsp; amp;nbsp; P.T. FORM 1 amp;nbsp; amp;nbsp; 1.amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; MOA amp;amp; AOA amp;nbsp; 2.amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; Business Premises Rent Agreement amp;nbsp; 3.amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; Extract of Resolution for Appointing Authorized Person amp;nbsp; 4.amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; 2 PP Photographs of Authorized person amp;nbsp; 5.amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; List of employees with date of appointment and present salary amp;nbsp; 6.amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; I.D. Proof of Authorized person amp;nbsp; amp;nbsp; P.T. FORM 2 amp;nbsp; amp;nbsp; 1.amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; Cheque of Rs.2500/- favouring Profession Tax Officer amp;nbsp; 2.amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; MOA amp;amp; AOA amp;nbsp; 3.amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; Rent Agreement of Premises amp;nbsp; 4.amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; Extract of Resolution for appointing Authorized person amp;nbsp; 5.amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; 2 PP Photographs of Authorized person amp;nbsp; amp;nbsp; SHOP amp;amp; ESTABLISHMENT amp;nbsp; amp;nbsp; 1.amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; MOA amp;amp; AOA amp;nbsp; 2.amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; Extract of Resolution for appointing Authorized person amp;nbsp; 3.amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; Rent Agreement amp;nbsp; 4.amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; List of Employees. amp;nbsp; amp;nbsp; amp;nbsp; amp;nbsp; amp;nbsp; SERVICE TAX amp;nbsp; amp;nbsp; 1.amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; MOA amp;amp; AOA amp;nbsp; 2.amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; Board Resolution for registration under Service Tax amp;nbsp; 3.amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; Form - 18 amp;nbsp; 4.amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; PAN Card amp;nbsp; amp;nbsp; IEC REGISTRATION amp;nbsp; amp;nbsp; 1.amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; Board Resolution with respect to making of application for IEC amp;nbsp; 2.amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; Certification from the bank that the company is maintaining an account with them. amp;nbsp; 3.amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; Two Photographs each of all of the directors attested by bankers of the company amp;nbsp; 4.amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; List of Directors amp;nbsp; 5.amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; Attested copy of PAN amp;nbsp; 6.amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; Certified true copy of MOA/AOA amp;nbsp; 7.amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; Application for IEC in the prescribed format amp;nbsp; 8.amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp;amp;nbsp; Authority letter in favour of some person who has to represent the company in related matters. amp;nbsp; amp;nbsp; amp;nbsp; amp;nbsp; First India Fri, 19 Dec 2008 00:00:00 +0530 http://www.indiacorporateconsultants.com/ http://www.indiacorporateconsultants.com/ National Securities Clearing Corporation Limited First Indian Clearing Corporation to get rated CRISIL has assigned its highest corporate credit rating of amp;lsquo;AAAamp;rsquo; to the National Securities Clearing Corporation Ltd (NSCCL). amp;#39;AAAamp;#39; rating indicates highest degree of strength with regard to honouring debt obligations. NSCCL is the first Indian Clearing Corporation to get this rating. The rating reflects NSCCLamp;rsquo;s status as Clearing Corporation for NSE, Indiaamp;rsquo;s largest stock exchange. The rating also factors in NSCCLamp;rsquo;s rigorous risk management controls and adequate settlement guarantee cover. First india Fri, 19 Dec 2008 00:00:00 +0530 http://www.indiacorporateconsultants.com/ http://www.indiacorporateconsultants.com/ PRESS RELEASE PR No.293/2008 SEBI amends DIP Guidelines to provide for combined offering of Non-Convertible Debentures (NCDs) with warrants, through Qualified Institutions Placement (QIP) mechanism The Honamp;rsquo;ble Finance Minister, in his announcement in the Union Budget for the year 2007-08, has proposed, inter-alia, to enhance the tradability of Domestic Convertible Bonds (DCBs). This requires a mechanism that will enable investors to separate the embedded equity option from the convertible bond and trade it separately. This mechanism requires basic enablers like existence of long tenor callable Credit Derivatives market, ability to borrow stock for long tenors to enable short selling, etc. SEBI, in consultation with market participants, explored alternate structures which would yield the same benefits as that of DCBs to the issuer and enhance the suite of products from the investorsamp;rsquo; point of view. SEBI has now put in place a framework whereby a listed company can make a combined offering of Non-Convertible Debentures (NCDs) with warrants to QIBs, under the Qualified Institutions Placement mechanism. SEBI (DIP) Guidelines, 2000 have been amended today to this effect. Qualified Institutional Buyers can subscribe to the combined offering of NCDs with warrants or to the individual instruments, i.e., either NCDs or warrants, where separate books are run for NCDs/ warrants. Mumbai December 08, 2008 First India Mon, 08 Dec 2008 00:00:00 +0530