Query on FDI

[VIKAS GUPTA]

Hello Friends,

 

Can anyone tell me that an Indian Company issue its shares to Overseas Corporate Bodies?? As Overseas Corporate Bodies has been debarred as a class of investor from September, 2003.

 

Now can we bring FDI from Overseas Corporate Bodies?? Is there any circular which clarififes that we can allot shares to them?? Or anybody issues shares to OVerseas Corporate Bodies??

 

Please reaply its urgent..

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THANKYOU
CS VIKAS GUPTA
Company Secretary
Shree Krishna Paper Mills & Industries Ltd.
vikas...@skpmil.com
9953620278

[Jalpa H. Salvi]

Kindly refer -  Foreign Exchange Management (Transfer or issue of security by a person resident outside India) Regulations, 2000 -  Notification No. FEMA 20 /2000-RB dated 3rd May 2000 - Regulation 5 read with Schedule 5..........

It might help you......

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Regards,

 

Jalpa H. Salvi

B.Com, ACS, LL.B.
09821431810

09869691458

[KAGGANTY NAGESH BABU]

 

 

Please refer below  FEMA master circular from RBI website

 

Notification No. FEMA 20 /2000-RB dated 3rd May 2000

 

On Fri, Jul 8, 2011 at 2:09 PM, VIKAS GUPTA <vickyp...@gmail.com> wrote:

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Regards

Nagesh Babu K L

+91 98867 65752

[VIKAS GUPTA]

Hi,

 

As per guidelines-

 

5. Permission for purchase of shares by certain persons resident outside India :-

(1) A person resident outside India (other than a citizen of Bangladesh or Pakistan or Sri Lanka) or anentity outside India, whether incorporated or not, (other than an entity in Bangladesh or Pakistan) ,may purchase shares or convertible debentures of an Indian company under Foreign Direct Investment Scheme, subject to the terms and conditions specified in Schedule 1.

(3) A non-resident Indian or an overseas corporate body may purchase shares or convertible debentures of an Indian company -

(i) on a stock exchange under the Portfolio Investment Scheme, subject to the terms and conditions specified in Schedule 3; or/and

(ii) on non-repatriation basis other than under Portfolio Investment Scheme, subject to the terms and conditions specified in Schedule 4.

As per this information, we cannot issue shares to Overseas Corportae Bodies. According to circulat issued in 2003, an indian company cannot issue shares under portfolio investment scheme.

[VIKAS GUPTA]

I would like to add one more query that is there any difference between Foreign Company and Overseas Corporate Bodies to whom we want to issue shares??

[Jalpa H. Salvi]

Dear Vikas,

As per Foreign Exchange Management (Deposit) Regulations, 2000:

 

Overseas Corporate Body (OCB)' means a company, partnership firm, society and

other corporate body owned directly or indirectly to the extent of at least sixty per cent

by Non-Resident Indians and includes overseas trust in which not less than sixty

percent beneficial interest is held by Non resident Indians directly or indirectly but

irrevocably

 

And there is no such definition of the term called as “Foreign Company” but as per companies act, it includes a Body Corporate or it is a company not incorporated or registered in India.

 

So, acc to me, the difference here lies that Overseas Body Corporate may not be necessarily incorporated outside India but it arrives to the aforesaid title on the basis of more than 60% NRI Holding in it whereas a body corporate or a foreign company is necessarily to be incorporated outside India.

 

Members views welcome!!

[R V SECKAR]

On 8 July 2011 15:44, R V SECKAR <rvsek...@gmail.com> wrote:

Hello

Overseas Corporate Bodies (OCBs) have been de-recognised as a class of investors in India with effect from September 16, 2003. Erstwhile OCBs which are incorporated outside India and are not under adverse notice of the Reserve Bank can make fresh investments under the FDI Scheme as incorporated non-resident entities, with the prior approval of the Government of India, if the investment is through the Government Route; and with the prior approval of the Reserve Bank, if the investment is through the Automatic Route. However, before making any fresh FDI under the FDI scheme an erstwhile OCB should through their AD bank take a one time certification from RBI that it is not in the adverse list being maintained with the Reserve Bank of India.

ADs should also ensure that OCBs do not maintain any account other than NRO current account in line with the instructions as per A.P. (DIR Series) Circular No. 14 dated September 16, 2003. Further, this NRO account should not be used for any fresh investments in India. Any fresh request for opening of NRO current account for liquidating previous investment held on non-repatriation basis should be forwarded by the AD bank to Foreign Exchange Department, Reserve Bank of India, Central Office, Mumbai. However, ADs should not close other category of accounts (NRE / FCNR / NRO) for OCBs which are in the adverse list of the Reserve Bank of India. These accounts are to be maintained by the respective AD banks in the frozen status.

Regards

R.V.Seckar

Pl do visit my blogs :

http://www.rvseckarcompanylaw.blogspot.com/

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R.V.Seckar

Pl do visit my blogs :

http://www.rvseckarcompanylaw.blogspot.com/

http://rvseckarfema.blogspot.com/

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[Bidu Bhusan Dash]

Excellent write up !

Regards

Bidu

[VIKAS GUPTA]

Hello madam,

 

I agree with your interpetation but as per definition of OCB means a COMPANY.. What does it mean??

 

if we see this, it means a company in which 60% holding held by NRI is considered as OCB.

 

Please can you justify this statement.. with some write up on OCB.. 

[VIKAS GUPTA]

Hello Sir,

 

Rightly said, OCB had de-recognised as an investor since 16th September, 2003. ERSTWHILE OCBs can invest with the prior approval of RBI if it is of automatic route..

 

And in FAQ mentioned on RBI website that OCB who has availed the scheme mentioned in FEMA cannot invest in Indian shares.

 

Further, I am not able to understand exact definition of OCB? is it include all foreign companies?? As OCB prima facie means corporate bodies which are incorporated outside India..

 

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