Tuesday, July 19, 2016

GUIDELINES FOR ISSUANCE AND OPERATION OF PRE-PAID PAYMENT INSTRUMENTS IN INDIA INCLUDING GIFT CARDS AND PRE PAID CARDS

Guidelines for Issuance and Operation of Pre-paid Payment Instruments in India including Gift Cards and Pre Paid Cards


Reserve Bank of India has issued updated master circular on July 01, 2016 on Policy Guidelines on Issuance and Operation of Pre-paid Payment Instruments in India. The guidelines are applicable on issuance of pre paid cards e.g. law and procedure for issuance of gift cards, pre pard cards etc. requirement of obtaining RBI approval for issuance of pre paid cards, gift cards., who can issue gift cards, pre pard cards etc. what is the procedure of issuance of gift cards, pre pard cards etc. what are the compliances with respect to issue of gift cards, pre pard cards etc. 

Wednesday, June 17, 2015

PROCEDURE FOR SETTING UP A PROJECT OFFICE IN INDIA


Procedure, Process and Checklist of documents for setting up a Project office in India 

RBI has liberlised and simplified the the procedures for establishment of Project Offices in India. General permission has been granted to foreign entities for setting up Project Office(s) in India. This permission is subject to the adherence to the provisions of Regulation 4, and Regulation 5 of the FEMA Regulation No. 22 which inter alia includes the following conditions to be satisfied :

(i)       It has secured from an Indian company a contract to execute a project in India; and

(ii)       The project is funded by inward remittance from abroad; or

(iii)       The project is funded by a bilateral or multilateral International Finance Agency; or

(iv)       The project has been cleared by an appropriate authority; or

(v)      A company or entity in India awarding the contract has been granted Term Loan by a Public Financial Institution or a bank in India for the project.

In case the above criteria are not met, the foreign entity has to approach the Reserve Bank for approval.

The foreign company establishing a Project Office in India is required to furnish a report through the concerned AD Category - I bank branch to the concerned Regional Office of Reserve Bank of India under whose jurisdiction the Project Office is set up within 60 days of establishment of the new Project Office with the following details.

(i)       Name and address of the Foreign Company,
(ii)       Reference Number and date of letter awarding the contract
(iii)      Particulars of the authority awarding the projects / contract,
(iv)      The total amount of contract,
(v)       Address / e-mail address, / telephone number / fax number of the Project Office,
(vi)      Tenure of Project Office,
(vii)       Brief details of the Project undertaken,
(viii)       AD branch with whom the account has been opened and the foreign currency in which the account is opened
(ix)       An undertaking to the effect that the Project Office is eligible to avail of the General Permission under Regulation 5

OPENING OF FOREIGN CURRENCY ACCOUNT

Project Offices can through their AD Category – I banks open non-interest bearing Foreign Currency Account in India subject to the following:

(i)      The Project Office has been established in India, with the general / specific permission of Reserve Bank, having the requisite approval from the concerned Project Sanctioning Authority.

(ii)      The contract under which the project has been sanctioned, specifically provides for payment in foreign currency.

(iii)       The permissible debits and credits in the account shall be as under:

Debits:

Payment of project related expenditure.

Credits:

* Foreign currency receipts from the Project Sanctioning Authority, and 

* Remittances from parent / group company abroad or bilateral / multilateral international financing agency.

(iv)       The responsibility of ensuring that only the approved debits and credits are allowed in the Foreign Currency Account shall rest solely with the concerned branch of the AD.

(v)       The Foreign Currency account may be closed at the completion of the Project.


REPORTINGS

Foreign entities setting up Project Office in India need to submit a report to the Director General of Police (DGP) of the state concerned where the project office has been established within five working days of the PO becoming functional. In case of more than one office, the report should be furnished to each DGP of the concerned state where the office has been established. The copy of the report in should also be filed with AD Bank by the newly established Project Office. 

The Project Office shall also submit an annual activity certificate to the AD branch.


COMPLIANCES WITH THE REGISTRAR OF COMPANIES AND DIRECTOR GENERAL OF POLICE

Once Project office has been established, the PO is also required to be registered with the Registrar of Companies (“ROC”) in India under the provisions of the Companies Act, 2013, within a period of 30 days from such date of establishment of the LO. The registration application is to be filed in e-form FC-1. The same is to be filed online with the ROC along with the requisite documents.

List of Documents required for registration

- The certificate of incorporation/ registration. Latest Audited Balance Sheet of the applicant Foreign Company.

- Board Resolution of the Foreign Company on the Company Letter head

- List of Directors and Secretary of the Foreign Company, duly attested by any of its Directors.

- Power of Attorney (POA) authorize to represent the Foreign Company before the RBI and ROC.

- Declaration of the directors

If any of the above documents is not in English a certified translation is to be annexed to it.  Further, in terms of the present regulation, all the above mentioned documents are required to be duly notarized by the Notary Public (in the country of registration of the applicant company) and further attested by an official of the Indian High Commission Official/ Embassy situated in that country.

TIME FRAME

Registration of Project Office with Registrar of Companies takes 4-6 working days.


In case you have any queries feel free to write to us at csdeveshpandey@gmail.com or call at +91 9811237186.

Wednesday, September 10, 2014

NEW PRICING GUIDELINES FOR ISSUE AND TRANSFER OF SHARES UNDER FDI REGULATIONS


New Pricing Guidelines for Issue and Transfer of Shares under FDI Regulations

Reserve Bank of India has vide its circular no. RBI/2014-15/129 A. P. (DIR Series) Circular No. 4 has revised the pricing guidelines for issuance and transfer of shares. Here is the new and old guidelines.



S. No
Issue of Transfer of Shares
Existing Guidelines
Revised Guidelines
1
Issue of Shares
Issue of Shares to non-residents
Issue of Shares to non-residents


Price of shares issued to persons resident outside India under this Schedule, shall not be less than
Price of shares issued to persons resident outside India under this Schedule, shall not be less than


(a) the price worked out in accordance with the SEBI guidelines, as applicable, where the shares of the company is listed on any recognised stock exchange in India;
No Change in existing clause (a)


(b) the fair valuation of shares done by a SEBI registered Category - I Merchant Banker or a Chartered Accountant as per the discounted free cash flow method, where the shares of the company is not listed on any recognised stock exchange in India ; and
b) the fair valuation of shares done as per any internationally accepted pricing methodology for valuation of shares on arm’s length basis, duly certified by a Chartered Accountant or a SEBI registered Merchant Banker where the shares of the company are not listed on any recognised stock exchange in India


(c) the price as applicable to transfer of shares from resident to non-resident as per the pricing guidelines laid down by the Reserve Bank from time to time, where the issue of shares is on preferential allotment.
This provision is omitted
2
Transfer of Shares
Transfer by Resident to Non-resident (i.e. to foreign national, NRI, FII and incorporated non-resident entity other than erstwhile OCB)
Transfer by Resident to Non-resident (i.e. to foreign national, NRI, FII, QFI, RFPI and incorporated non-resident entity other than erstwhile OCB)


(a) where shares of an Indian company are listed on a recognized stock exchange in India, the price of shares transferred by way of sale shall not be less than the price at which a preferential allotment of shares can be made under the SEBI Guidelines, as applicable, provided that the same is determined for such duration as specified therein, preceding the relevant date, which shall be the date of purchase or sale of shares. 
No Change in the existing clause (a)


(b) where the shares of an Indian company are not listed on a recognized stock exchange in India, the transfer of shares shall be at a price not less than the fair value to be determined by a SEBI registered Category – I - Merchant Banker or a Chartered Accountant as per the discounted free cash flow method.
(b) where the shares of an Indian company are not listed on a recognized stock exchange in India, the transfer of shares shall be at a price not less than the fair value worked out as per any internationally accepted pricing methodology for valuation of shares on arm’s length basis which should be duly certified by a Chartered Accountant or a SEBI registered Merchant Banker.


The price per share arrived at should be certified by a SEBI registered Category-I-Merchant Banker / Chartered Accountant.
3
Transfer of Shares
Transfer by Non-resident (i.e. by incorporated non-resident entity, erstwhile OCB, foreign national, NRI and FII) to Resident
Transfer by Non-resident (i.e. by incorporated non-resident entity, erstwhile OCB, foreign national, NRI, FII, QFI and RFPI) to Resident


Price of shares transferred by way of sale, by non-resident to resident shall not be more than the minimum price at which the transfer of shares can be made from a resident to a non-resident as given in para 2 above
  1. No Change in the existing clause



Sunday, April 27, 2014

KEY MANAGERIAL PERSONNEL IN A COMPANY: LAW AND PROCEDURE UNDER COMPANIES ACT 2013

Provisions of Appointment of Key Managerial Personnel under the Companies Act 2013

As per Section 203 (1) read with Rule 8 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, every listed company and every other public company having a paid-up share capital of ten crore rupees or more shall have the following whole-time key managerial personnel’s,—

(i) Managing director, OR Chief Executive Officer OR manager and in their absence, a whole-time director;
(ii) Company secretary; AND
(iii) Chief Financial Officer:

In this regard the following points to be noted:

(1)           An individual shall not be appointed or reappointed as the chairperson of the company as well as the managing director or chief executive officer of the company at the same time unless (a) the articles of such a company provide otherwise; or (b) the company does not carry multiple businesses:

(2)               Appointment of whole-time key managerial personnel should be in a Board meeting and by way of passing a Board resolution. The Board resolution should contain the terms and conditions of the appointment including the remuneration of such personnel.

(3)              If the office of any whole-time key managerial personnel is vacated (by resignation or otherwise), the resulting vacancy shall be filled-up by the Board of directors at a Board meeting within six months from the date of such vacancy.

(4)          Whole-time key managerial personnel can’t hold office in more than one company except in its subsidiary company at the same time. However, with the permission of the Board of directors, such key managerial personnel may be appointed as a director in any other Company. To clarify, a whole time key managerial person can’t hold any office in other companies at the same time (either as a director or otherwise) except (a) in its subsidiary company (b) as a director in any other company with the previous approval of Board.

(5)               A person can’t be appointed as a managing director of a company if he is the managing director or manager of another company except if such person is the managing director or manager of NOT MORE THAN ONE COMPANY he can be appointed as a managing director if his appointment is approved by a resolution passed at a meeting of the Board with the consent of all the directors present at the meeting. For such Board meeting specific notice should be been given to all the directors then in India.

PENALTY

If a company contravenes the aforesaid provisions (contained in Section 203 of the Companies Act), the company shall be punishable with a minimum fine of Rupees one lakh and maximum of Rupees five lakh. In addition every director and key managerial personnel of the company who is in default shall be punishable with fine which may extend to fifty thousand rupees and where the contravention is a continuing one, with a further fine which may extend to one thousand rupees for every day after the first during which the contravention continues.

ROC FILING FOR APPOINTMENT OF KEY MANAGERIAL PERSONNEL AND/OR CHANGES IN KEY MANAGERIAL PERSONNEL:

The Company is required to file a form MR. 1 for appointment of key managerial personnel (i.e. Managing Director, Whole Time Director or Manager, Chief Executive Officer (CEO), Company Secretary and Chief Financial Officer (CFO)).

Form MR 1 should be filed within sixty days from the date of appointment.

In addition to the aforesaid, form DIR 12 should also be filed with the Registrar of Companies for appointment and/or changes in the key managerial personnel(s) within thirty days of such appointment or change, as the case may be.

DISCLOSURES AND STATEMENT RELATED TO KEY MANAGERIAL PERSONNEL (KMP), DIRECTORS AND OTHER EMPLOYEES IN THE BOARD REPORT

(1)    EVERY LISTED COMPANY shall make the following disclosures in its Board report related to key managerial personnel ’s:

a)  the ratio of the remuneration of each director to the median remuneration of the employees of the company for the financial year; (NOTE: “median” means the numerical value separating the higher half of a population from the lower half and the median of a finite list of numbers may be found by arranging all the observations from lowest value to highest value and picking the middle one)

b)     the percentage increase in remuneration of each director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year;

c) the percentage increase in the median remuneration of employees in the financial year;

d)  the number of permanent employees on the rolls of company;

e) the explanation on the relationship between average increase in remuneration and company performance;

f) comparison of the remuneration of the Key Managerial Personnel against the performance of the company;

g)  variations in the market capitalisation of the company, price earnings ratio as at the closing date of the current financial year and previous financial year and percentage increase over decrease in the market quotations of the shares of the company in comparison to the rate at which the company came out with the last public offer in case of listed companies, and in case of unlisted companies, the variations in the net worth of the company as at the close of the current financial year and previous financial year;

h)   average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration;

i)  comparison of the each remuneration of the Key Managerial Personnel against the performance of the company;

j)  the key parameters for any variable component of remuneration availed by the directors;

k)  the ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year; and

(l)  affirmation that the remuneration is as per the remuneration policy of the company.

(2)   The board’s report shall include a statement showing the name of every employee of the company, who:

a) if employed throughout the financial year, was in receipt of remuneration for that year which, in the aggregate, was not less than sixty lakh rupees;

b)  if employed for a part of the financial year, was in receipt of remuneration for any part of that year, at a rate which, in the aggregate, was not less than five lakh rupees per month;

c)   if employed throughout the financial year or part thereof, was in receipt of remuneration in that year which, in the aggregate, or as the case may be, at a rate which, in the aggregate, is in excess of that drawn by the managing director or whole-time director or manager and holds by himself or along with his spouse and dependent children, not less than two percent of the equity shares of the company.

d)        The said statement shall also indicate –
-          designation of the employee;
-          remuneration received;
-          nature of employment, whether contractual or otherwise;
-          qualifications and experience of the employee;
-          date of commencement of employment;
-          the age of such employee;
-          the last employment held by such employee before joining the company;
-          the percentage of equity shares held by the employee in the company within          the meaning of clause (iii) of sub-rule (2) above; and
-          whether any such employee is a relative of any director or manager of the   company and if so, name of such director or manager:

e)  Particulars of employees posted and working in a country outside India, not being directors or their relatives, drawing more than sixty lakh rupees per financial year or five lakh rupees per month, as the case may be, as may be decided by the Board, shall not be circulated to the members in the Board’s report, but such particulars shall be filed with the Registrar of Companies while filing the financial statement and Board Reports. Such particulars shall be made available to any shareholder on a specific request made by him in writing before the date of such Annual General Meeting wherein financial statements for the relevant financial year are proposed to be adopted by shareholders and such particulars shall be made available by the company within three days from the date of receipt of such request from shareholders. In case of request received even after the date of completion of Annual General Meeting, such particulars shall be made available to the shareholders within seven days from the date of receipt of such request.

RECORDS TO BE MAINTAINED AND KEPT BY A COMPANY IN RELATION TO KEY MANAGERIAL PERSONNEL

Rule 17 of Companies (Appointment and Qualification of Directors) Rules, 2014 requires a register of its directors and key managerial personnel to be kept by every company at its registered office. Such register shall have the following details:

a)  Director Identification Number (optional for key managerial     personnel);
b)   present name and surname in full;
c)    any former name or surname in full;
d)   father’s name, mother’s name and spouse’s name(if married) and surnames in full;
e)   date of birth;
f)   residential address (present as well as permanent);
g)   nationality (including the nationality of origin, if different);
h)   occupation;
i)    date of the board resolution in which the appointment was made;
j)    date of appointment and reappointment in the company;
k)    date of cessation of office and reasons therefor;
l)     office of director or key managerial personnel held or relinquished in any other body corporate;
m)   membership number of the Institute of Company Secretaries of India in case of Company Secretary, if applicable; and
n)     Permanent Account Number (mandatory for key managerial personnel if not having DIN);

In addition to the details of the directors or key managerial personnel, the company shall also include in the aforesaid Register the details of securities held by them in the company, its holding company, subsidiaries, subsidiaries of the company’s holding company and associate companies relating to- (i) the number, description and nominal value of securities; (ii) the date of acquisition and the price or other consideration paid; (iii) date of disposal and price and other consideration received; (iv) cumulative balance and number of securities held after each transaction; (v) mode of acquisition of securities; (vi)  mode of holding – physical or in dematerialized form; and (vi) whether securities have been pledged or any encumbrance has been created on the securities.

Disclaimer: This writing is not an opinion. Prior advise should be obtained before acting on the same.