Downstream Investment under FDI.

[Manpreet Singh]

Downstream Investment under FDI.

Dear All, Pls guide

An Indian Company (wholly owned subsidiary of Foreign Co.) wants to open its 100 % subsidiary in India. As per FDI Policy issued in Oct 2010, such type of investments covered under Downstream Investments and such Companies have to follow same Compliances as in case of Direct Investment of Investing Company.

Now please guide me which Compliances have to follow by Investee Company. Does the interpretation means that In case Indian company invest in another Indian Company then such investee Company have to file Intimation of Application, Form FCGPR etc though in actual such Investee Company will not receive any Application in form of FIRC.

Can anyone have clarifications on this in Black & white. Pls provide ..


Thanks in advance.
Manpreet singh

[Vivek Aggarwal]

Dear Manpreet

Your interpretation is right. The 100% subsidiary need to do all the Compliances like filing of FCGPR etc.

 

Regards
CS Vivek Aggarwal

---

From: Manpreet Singh <manpreetsi...@gmail.com>
To: csmy...@googlegroups.com
Sent: Mon, 7 February, 2011 2:11:57 PM
Subject: [CSMysore] Downstream Investment under FDI.

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[esha sharma]

Dear Nr, Vivek

I'll be obliged if you or anyone else in the group bestow some light on the term 

Downstream Investment under FDI.

and would like to request to pls provide a step wise procedure of all the compliances required to be made in this regard.

[Manpreet Singh]

Dear Vivek,

Thanks

But please clear me in practical example. like if M/s X wholly owned subsidiary of Foreign Company incorporates another Ms/ Y wholly owned Subsidiary of M/s X. Now at the time of investing in Y by X whether Y have to file intimation, FCGPR while allotting shares to X etc. and Compliance of X is only to intimate SIA regarding investment in Y.

Rgds

On Mon, Feb 7, 2011 at 4:21 PM, Vivek Aggarwal <vivek_...@yahoo.co.in> wrote:

[Vivek Aggarwal]

Dear Esha

Please go through the attachment & hopefully it will clear answer most of your queries.

 

Regards
CS Vivek Aggarwal

From: esha sharma <esha...@gmail.com>
To: csmy...@googlegroups.com
Cc:
Sent: Monday, 7 February 2011 4:31 PM
Subject: Re: [CSMysore] Downstream Investment under FDI.

Dear Nr, Vivek

I'll be obliged if you or anyone else in the group bestow some light on the term 

Downstream Investment under FDI.

and would like to request to pls provide a step wise procedure of all the compliances required to be made in this regard.

On Mon, Feb 7, 2011 at 4:21 PM, Vivek Aggarwal <vivek_...@yahoo.co.in> wrote:

Dear Manpreet

Your interpretation is right. The 100% subsidiary need to do all the Compliances like filing of FCGPR etc.

 

Regards
CS Vivek Aggarwal

From: Manpreet Singh <manpreetsi...@gmail.com>
To: csmy...@googlegroups.com
Sent: Mon, 7 February, 2011 2:11:57 PM
Subject: [CSMysore] Downstream Investment under FDI.

Downstream Investment under FDI.

Dear All, Pls guide

An Indian Company (wholly owned subsidiary of Foreign Co.) wants to open its 100 % subsidiary in India. As per FDI Policy issued in Oct 2010, such type of investments covered under Downstream Investments and such Companies have to follow same Compliances as in case of Direct Investment of Investing Company.

Now please guide me which Compliances have to follow by Investee Company. Does the interpretation means that In case Indian company invest in another Indian Company then such investee Company have to file Intimation of Application, Form FCGPR etc though in actual such Investee Company will not receive any Application in form of FIRC.

Can anyone have clarifications on this in Black & white. Pls provide ..


Thanks in advance.
Manpreet singh

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[Vivek Aggarwal]

Dear Manpreet

Yes, you have to do all these compliances. I am also doing this for one of my group companies.

 

Regards
CS Vivek Aggarwal

From: Manpreet Singh <manpreetsi...@gmail.com>
To: csmy...@googlegroups.com
Cc:
Sent: Monday, 7 February 2011 4:33 PM
Subject: Re: [CSMysore] Downstream Investment under FDI.

Dear Vivek,

Thanks

But please clear me in practical example. like if M/s X wholly owned subsidiary of Foreign Company incorporates another Ms/ Y wholly owned Subsidiary of M/s X. Now at the time of investing in Y by X whether Y have to file intimation, FCGPR while allotting shares to X etc. and Compliance of X is only to intimate SIA regarding investment in Y.

Rgds

[esha sharma]

Thanx Mr. vivek fr the press note but it will be really helpful if you are doing it in your company, can you provide me the documentation involved.

Thanx in advance@@

[Vivek Aggarwal]

Dear Esha

All the Forms are given in the Master Circular on Foreign Investment dated 1-7-2010 issued by the RBI. I am attaching the same for your reference.

If you have any other query, I will be happy to help.

Regards
CS Vivek Aggarwal

From: esha sharma <esha...@gmail.com>
To: csmy...@googlegroups.com
Cc:

[Vivek Hegde]

Dear Mr. Manpreeth

As per my understanding the step down subsidiary (in your case "Y") need not file FCGPR etc., unless it receives FDI directly from foreign holding Company.

Vivek Hegde

Warm Regards

CS Vivek Hegde,B.com, ACS, CWA
Company Secretary in Practice
No. 405, 4th Block, 7th Cross
Koramangala, Bangalore-560034
Mob: 09019756940/09900898223

[amarnadh baratam]

dear manpreet,

1. after getting inward remittance, you need to obtain
FIRC Certificate from banker and file with RBI with in 30days of
remittance and obtain UID number for each and every remittance
separately.

2. After that u need to pass a board resolution and get share
valuation certificate from CA and allot shares accordingly. allotment
should be done with 180days of inward remittance.
3. immediately after allotment u need to file FCGPR with RBi.

On 2/7/11, Manpreet Singh <manpreetsi...@gmail.com> wrote:
> *Downstream Investment under FDI*.

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Manager & company Secretary
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VGN Pragnya Realty Pvt. Ltd.
(A Group Company of VGN DEVELOPERS PVT. LTD)
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Ph. 91-44-4343 9999 Extn.127
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[Vivek Aggarwal]

Dear Amarnadh

These compliances are required to be done in case of FDI & not in case of Downstream Investment.

 

Regards
CS Vivek Aggarwal

---

From: amarnadh baratam <csama...@gmail.com>
To: csmy...@googlegroups.com
Sent: Wednesday, 9 February 2011 8:00 PM

Subject: Re: [CSMysore] Downstream Investment under FDI.

[Manpreet Singh]

Dear Vivek and All.

 

As per our Healthy discussions earlier in this mail, I have been advised to do all compliances for Subsidiary Company. I am confirming it again, that When X, an Indian Company will give application money to Y for allotment, then whether Y have to intimate to RBI just in case of FDI (What will be the document in replacement of FIRC, is it Bank Statement) and whether Y have to file FCGPR.

 

What will be the Compliance for X. Whether X has to intimate to RBI about investment made in Y within 30 days or in advance and if yes in which format (if any specific).

 

Rgds

Manpreet Singh

[Vivek Aggarwal]

Dear Manpreet

Co. Y need not give intimation to RBI as this needs to be given by Co. X which received the money as FDI. Co. Y needs to file FC-GPR  Part A with RBI within 30 days of allotment of shares against application money received.

Alos Co. Y needs to give an intimation to The Director, FIPB and Secretariat of Industrial Assiatnacne (SIA) as per Press Note 4 of 2009.

 

Regards
CS Vivek Aggarwal

---

From: Manpreet Singh <manpreetsi...@gmail.com>
To: csmy...@googlegroups.com

Sent: Thursday, 10 February 2011 11:29 AM

[Manpreet Singh]

Dear Vivek.

 

What type of intimation by Y to FIPB (any prescribed format) and further as per my understanding from Clause 6(a) of Press Release 4 of 2009, intimation is required to be given by following companies:

 

Operating cum Investing Companies

Investing Companies

And, Companies who are not operating and do not have Downstream Investment.

 

It means Companies who are in Category of 'Operating' only and do not have business of investment is not required to follow compliance 6(a). Pls correct me if I am wrong.

 

Nothing to be done on part of X?

 

Rgds

[ankit das]

Dear Manpreet

 

You need to give a letter to FIPB, intimating them about the said Investment in Investee Company.......There is no prescribed format as such.......

 

The letter must be addressed to:

 

The Dept of Economic Affairs

Foreign Investment Promotional Board (FIPB)

Ministry of Finance

Government of India

North Block,New Delhi-110011

 

and in the Subject of the Letter, be sure to mention the Foreign Collaboration (FC) approval Number obtained by the Investor Company.

 

 

Regards    

Ankit Das

Mob: +91-9701891816

[Manpreet Singh]

Thanks Mr. Ankit.

[Vivek Aggarwal]

Dear Manpreet

No prescribed format is there for intimation to FIPB. I am attaching the one I use for your ready reference.

Your undertsanding is correct but please consider that Co. X is not receiving downstream investment but is receiving FDI. So it needs to intimate to RBI about receipt of money in Annex 6 to the RBI Circular.

 

Regards
CS Vivek Aggarwal

---

From: Manpreet Singh <manpreetsi...@gmail.com>
To: csmy...@googlegroups.com

Sent: Thursday, 10 February 2011 12:19 PM

[Manpreet Singh]

Dear Vivek,

Thanks for your advice. I am unable to find any attachment. Can you send it once again.

Rgds

[Vivek Aggarwal]

Dear Manpreet

Sorry, I missed the attachment. Please find attached.

 

Regards
CS Vivek Aggarwal

---

From: Manpreet Singh <manpreetsi...@gmail.com>
To: csmy...@googlegroups.com

Sent: Friday, 11 February 2011 5:27 PM