FDI & Allotment.

[Deepesh Nayak]

Dear friends,

A Private Limited Company received FDI from fours foreign investors in form of share application money in October, 2010. According to RBI & Fema, till now, the said remittance has not informed to RBI say intimation to RBI not given in 30 days, FIRC not filled, Allotment not done, consequently Form FCGPR also not filled till date.

RBI also not questioned about that till now. Now management of the Company want to make default good.

Please suggest me what action we should take on the matter. It came to my knowledge that the default can be made good by Compounding of Offense, but we are not much sure about sequence of the actions to be taken in this regard.

Regards,
Deepesh

[Ganga Anil Kumar]

As you know it is better to go for Compounding, if you received the money for real business purpose then no need to bother about the consequences of delay, i would be some  fine. That's it.

Thank you
CS Ganga Anil Kumar | Hyderabad | +91 80082 99901 | +91 84980 84006 

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[Deepesh Nayak]

Ok, sir can you also explain procedures of compounding in detailed. Also, can we allot share in present date and make default good in all respect, then go for compounding.??? or before doing anything in the matter we will  have to go for compounding.???

Regards,
Deepesh

Thanking you,

*CS Deepesh Kumar Nayak*
 Company Secretary
 STI India Limited
 Indore (Madhya Pradesh)
*Mob. 097134-80215*
*csdeepe...@gmail.com*

[Ganga Anil Kumar]

What was/is the amount involved.

Thank you
CS Ganga Anil Kumar | Hyderabad | +91 80082 99901 | +91 84980 84006 

[Deepesh Nayak]

4.50 crores (approx)

Thanking you,

*CS Deepesh Kumar Nayak*
 Company Secretary
 STI India Limited
 Indore (Madhya Pradesh)
*Mob. 097134-80215*
*csdeepe...@gmail.com*

[Ganga Anil Kumar]

Hmm okay,

Now you can go for Compounding if the violation is not because of Willful, malafide and fraudulent, which will not be compounded by the Reserve Bank.

The Compounding procedure is very simple.

Please refer the Link for information: http://www.rbi.org.in/scripts/FAQView.aspx?Id=80

Please find the attachments for procedure and Application for Compounding.

Thank you
CS Ganga Anil Kumar | Hyderabad | +91 80082 99901 | +91 84980 84006 

[Ganga Anil Kumar]

If you need any help regarding Documentation/Application for this purpose, I am ready to help/assist you.

Thank you
CS Ganga Anil Kumar | Hyderabad | +91 80082 99901 | +91 84980 84006 

[Deepesh Nayak]

Thanks you so much sir the materials provided by you is very useful to us.

Sir intention of management, to receive and use of FDI was bonafide however due to non awareness of the FEMA provisions they could not complied the same, also no qualified person was on the place to look after the same.

Sir, please suggest what first step we should take on the matter, can we allot share first then  go for compounding or applied for compounding first without taking any actions.

Regards,

Deepesh

Thanking you,

*CS Deepesh Kumar Nayak*
 Company Secretary
 STI India Limited
 Indore (Madhya Pradesh)
*Mob. 097134-80215*
*csdeepe...@gmail.com*

[Ganga Anil Kumar]

That is the reason why we the Company Secretaries created / appointed. To create awareness and to make the compliance cake-walk to Company and other stakeholders.

In your case first file a Compounding Application, after getting the Compounding order you can do Allotment, FCGPR Filing etc.

Before that just get all the information regarding this default like FDI Amount Received, Received Date, AD details etc, and read the Compounding Application so that you can come to know what you need to study.  

Thank you
CS Ganga Anil Kumar | Hyderabad | +91 80082 99901 | +91 84980 84006 

[Deepesh Nayak]

Dear Sir,

I have some FAQ's regarding compounding of Offense, wherein i find out the following:

Q.8. Can an application for compounding be sent to the Reserve Bank pending fulfillment of certain obligations?

Ans.  No. All requisite approvals should be obtained and compliances should be completed before seeking compounding of contravention. Compounding can be done only after rectifying the records by way of obtaining post-facto approvals or unwinding the transactions in cases where such transactions are not permissible under FEMA, 1999. Copies of approvals and other compliances should be enclosed along with the application.

After careful reading of the above, can we say that before going for Compounding, we should comply all the compliances related to allotment of shares etc.

Please suggest further on the basis of above.

Regards,

Deepesh

 

Thanking you,

*CS Deepesh Kumar Nayak*
 Company Secretary
 STI India Limited
 Indore (Madhya Pradesh)
*Mob. 097134-80215*
*csdeepe...@gmail.com*

[Ganga Anil Kumar]

According to this we have to do all formalities first, so go for allotment, FCGPR filing etc.

Thank you
CS Ganga Anil Kumar | Hyderabad | +91 80082 99901 | +91 84980 84006 

[Deepesh Nayak]

yes, i also consult with my friend, who suggested that we can do allotment, FCGPR etc  in current financial year of 2012-13.

Please share yours view.

Regards,

Deepesh

Thanking you,

*CS Deepesh Kumar Nayak*
 Company Secretary
 STI India Limited
 Indore (Madhya Pradesh)
*Mob. 097134-80215*
*csdeepe...@gmail.com*

[ishan jain]

Dear Sir,

 

You have to comply with the following procedures:-

 

1) File Form Advance Reporting to RBI through the Authorised Dealer of the company in order the comply the reporting requirement at the time of receipt of funds along with KYC.

 

2) Since the funds is being received in the October 2010 and no allotment is being done till date and no share application money is being refunded and as per your mail your Board of Directors want to use this fund then in that case you have to allot shares not later than March 2011 i.e. 180 days from the date of receipt of funds. I understand that it will be trouble for you because you have already filled balance sheet in IT dept and to RoC both.

 

3) if in case allotment is being done then you have to File Form FC-GPR along with supporting documents of the allotment being made.

 

4) after getting confirmation from the RBI then you may proceed for Compounding of Offence as per the Master Circular attached by Anil Kumar Sir in the relevant format.

 

As per my practical experience whole process takes almost 5-6 months including compounding from RBI depends upon the availability of the documents.

 

Thanks and Regards

 

Ishan Jain

Thanks and Regards

ISHAN JAIN

[Deepesh Nayak]

Thanks you ishan sir,

I would like to inform you that luckily the Balance Sheet of 2010-11 is not filled anywhere and still pending. Also it came to my knowledge that we can do every thing in the current financial year i.e. 2012-13 say allotment of share, form FCGPR, filling of balance sheet of 10-11, 11-12 and 12-13 etc etc. and thereafter we can go for compounding.

Please suggest further.

Regards,
Deepesh

Thanking you,

*CS Deepesh Kumar Nayak*
 Company Secretary
 STI India Limited
 Indore (Madhya Pradesh)
*Mob. 097134-80215*
*csdeepe...@gmail.com*

[Rajiv Sharma]

Dear Mr. Deepesh,

There is no doubt that you have to go for compounding and compounding is done by RBI Mumbai only.

On your query of whether you need to allot shares .... I would suggest that you get in touch with your local RBI office and they will guide you on this. 

Regards, Rajiv Sharma

[Harini Prasad]

Dear Mr Deepesh,

Before anything in compounding, the applicant has to make good the default, meaning the provisions has to be complied BEFORE compounding the offense. 

The Compounding Order is the conclusive evidence that the law not complied earlier has been now complied with, which also prescribes the penalty, if any imposed by the RBI Compounding Authority and shall be complied 100% as ordered strictly within the timelines as prescribed there under and preserve the evidence of making the penalty payment.

Thank you

With Regards

Harini

[Deepesh Nayak]

Thanks sir,

Please also confirm whether we can allot share in current year i.e. 2012-13 and file FCGPR and any other things which has to be complied in this regard and then go for Compounding.

Please also suggest for which offense we have to go for compounding its for Advance Reporting, delay in allotment more than 180 days, filing of form FCGPR or for each one.??

Will we need to apply for compounding of each offense separately or a Consolidated application can be acceptable.??

Which amount of penalty may be imposed by RBI.??

Regards,

'Deepesh

Thanking you,

*CS Deepesh Kumar Nayak*
 Company Secretary
 STI India Limited
 Indore (Madhya Pradesh)
*Mob. 097134-80215*
*csdeepe...@gmail.com*

[ishan jain]

Dear Deepesh,

 

You have to go for compounding for each and every case by filling single consolidate compounding application as per the format prescribed by RBI for these types of matters.

 

In my personal view, since you can allot your shares in the back date then you should prefer back date option only because as per the RBI policies company have allot or refund share application money within 180 days of the date of receipt.

 

Further, u/s 13 of the FEMA RBI can impose penalty upto 3 times of the sum involved. But as per practical experience if this type of default is done by the company first time then in that case RBI normally gives warning and did not impose any penalty.

 

Thanks and Regards

 

Ishan Jain