Doing Business in India - RSM Austria

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ii. Subject to compliance with the provisions, an Indian company which proposes to undertake activities included in Annexure 2 is permitted to issue shares / convertible debentures to persons resident outside India out of fresh capital issued for financing expansion programme for carrying on such activities. 2.4.3 Certain important aspects of the FDI scheme i. Price of shares issued by Indian Company to persons resident outside India under the FDI Scheme, shall be on the basis of SEBI guidelines in case of Companies listed on any recognized stock exchange in India. In case of companies not listed on any recognized stock exchange in India, valuation of shares has to be done on fair valuation basis by a Registered Category - I Merchant Banker or a Chartered Accountant as per Discounted Cash Flow method. ii. iii. iv. The rate of dividend on preference shares issued by an Indian company to a person resident outside India should not exceed 300 basis points over the Prime Lending Rate of State Bank of India prevailing as on the date of the Board meeting of the company in which issue of such shares is recommended. Indian companies which are eligible to issue shares to persons resident outside India under the FDI Scheme will be allowed to retain the share subscription amount in a foreign currency account with the prior approval of RBI. It is worth noting that there are no separate schemes for Non-Resident Indians (‘NRIs’) for direct investment in India on repatriation basis. NRIs are now on par with any other foreign investor and they may invest in the shares/ fully convertible debentures issued by an Indian company under the FDI Scheme. 2.5 Foreign Portfolio Investments Foreign Institutional Investors (FIIs) registered with SEBI and Non-resident Indians (NRIs) are eligible to purchase shares and convertible debentures issued by Indian companies under the Portfolio Investment Scheme (PIS). 2.5.1 Investment by FIIs under Portfolio Investment Scheme (PLS) Reserve Bank has given general permission to SEBI registered FIIs / sub-accounts to invest under the PIS. Shareholding i. Total shareholding of each FII/sub-account under this Scheme shall not exceed 10 % of the total paid up capital or 10 % of the paid up value of each series of convertible debentures issued by the Indian company. 62 DOING BUSINESS IN INDIA
ii. Total holdings of all FIIs/sub-accounts put together shall not exceed 24 % of the paid-up capital or paid-up value of each series of convertible debentures. This limit of 24 % can be increased to the sectoral cap / statutory limit, as applicable to the Indian company concerned, by passing a resolution of its Board of Directors followed by a special resolution to that effect by its General Body. iii. A domestic asset management company or portfolio manager, who is registered with SEBI as an FII for managing the fund of a sub-account can make investments under the Scheme on behalf of a. a person resident outside India who is a citizen of a foreign state, or b. a body corporate registered outside India; Provided such investment is made out of funds raised or collected or brought from outside through normal banking channel. Investments by such entities shall not exceed 5 % of the total paid-up equity capital or 5 % of the paid-up value of each series of convertible debentures issued by an Indian company, and shall also not exceed the overall ceiling specified for FIIs. SEBI registered FIIs have been permitted to purchase shares / convertible debentures of an Indian company through offer/private placement, subject to the ceilings prescribed, i.e. individual FII/sub account - 10% and all FIIs/sub-accounts put together - 24% of the paid-up capital of the Indian company and to the sectoral limits, as applicable. Indian company is permitted to issue such shares provided that: i. in the case of public offer, the price of shares to be issued is not less than the price at which shares are issued to residents; and ii. in the case of issue by private placement, the price is not less than the price arrived at in terms of SEBI guidelines or guidelines issued by the erstwhile Controller of Capital Issues, as applicable. Purchases can also be made of PCDs / FCDs/ Right Renunciations / Warrants / Units of Domestic Mutual Fund Schemes. 2.5.2 Investments by Non –Resident Indians (NRIs) i. NRIs are allowed to invest in shares of listed Indian companies in recognized Stock Exchanges under the PIS. NRIs can invest through designated ADs, on repatriation and non-repatriation basis under PIS route up to 5% of the paid up capital / paid up value of each series of debentures of listed Indian companies. The aggregate paid-up value of shares / convertible debentures purchased by all NRIs cannot exceed 10% of the paid-up capital of the company / paid-up value of each series of debentures of the company. The aggregate ceiling of 10% can be raised to 24%, if the General Body of the Indian company passes a special resolution to that effect. DOING BUSINESS IN INDIA 63
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International global excellence in
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Doing business in India
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Marine Drive, Mumbai
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Contents Hawa Mahal, Jaipur
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Education .........................
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SIGNIFICANT COMPANY LAW REGULATIONS
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ANNEXURE 1 Sectors Prohibited for F
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Chapter 1 India - A Profile Golden
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2.2 Language India is a land of man
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5.2 Communication The Indian teleph
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7.5 Public Holidays The statutory p
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CHAPTER 2 INDIAN BUSINESS AND INVES
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This resulted in a fall in the Bomb
Page 28 and 29: 4.3.3 Designs After expiry of three
Page 30 and 31: non-banking finance activities viz.
Page 32 and 33: trading in derivative based on BSE
Page 34 and 35: same as those where concessional fi
Page 36 and 37: 10.3 Low Research and Development C
Page 38 and 39: CHAPTER 3 BUSINESS ENTITIES 1.0 FOR
Page 40 and 41: Sr. No. Criteria Requirements 1 Tra
Page 42 and 43: The project is funded by inward rem
Page 44 and 45: cause the disassociation of the par
Page 46 and 47: 2.1.2 MOA 2.1.3 AOA Companies for r
Page 48 and 49: paid up equity capital can be less
Page 50 and 51: The requirements for public and pri
Page 52 and 53: 3.0. STATUTORY REQUIREMENTS FOR COM
Page 54 and 55: 3.4 Online Filing System Ministry o
Page 56 and 57: Section Nature of default 168 Defau
Page 58 and 59: 4.0 SIGNIFICANT COMPANY LAW REGULAT
Page 60 and 61: 4.7 Audit Committees For better cor
Page 62 and 63: The meetings of the board are requi
Page 64 and 65: Chapter 4 Human Resources Kathakali
Page 66 and 67: Employee benefit What is it? Applic
Page 68 and 69: Employee benefit D e p o s i t L i
Page 70 and 71: 2.5 The Equal Remuneration Act, 197
Page 72 and 73: The Factories Act safeguards agains
Page 74 and 75: CHAPTER 5 FOREIGN INVESTMENT IN IND
Page 76 and 77: 2.3 Prohibition on investments 2.3.
Page 80 and 81: ii. iii. iv. The NRI investor has t
Page 82 and 83: ii. On repatriation basis An NRI ca
Page 84 and 85: Indian company can issue ESOPs to e
Page 86 and 87: ii. iii. iv. The foreign equity aft
Page 88 and 89: vi. Branch Offices have to submit A
Page 90 and 91: ii. ECB up to US$ 20 million or equ
Page 92 and 93: 3.2 Approval Route 3.2.1 Eligible B
Page 94 and 95: 3.2.6 End Use not permitted i. Util
Page 96 and 97: issued by Reserve Bank from time to
Page 98 and 99: Sr. No. Sector/Activity FDI Cap / E
Page 100 and 101: Sr. No. II C POWER Sector/Activity
Page 106 and 107: Sr. No. 29. Sector/Activity Telecom
Page 108 and 109: Chapter 6 Taxation System India Gat
Page 110 and 111: Entity Domestic Company Financial y
Page 112 and 113: **** Mutual funds, other than equit
Page 114 and 115: interest deductible is restricted t
Page 116 and 117: 2.4 Tax Relief In order to encourag
Page 118 and 119: Section Details of Exemption / Dedu
Page 120 and 121: Section 35 DDA 54G 54GA 54EC 10(34)
Page 122 and 123: Sr. No. Nature of activity and loca
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Sr. No. xviii Nature of activity an
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No deduction under 80IA, 80IB, 80IA
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Tax is payable in advance on income
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3.1.2 Other Non-corporate Entities
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the Finance Act 2010, 'bullion' is
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Rs. 40,00,000. The scheme is applic
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4.5 Income of Offshore Funds Income
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7.3 Advance Rulings The Indian gove
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9.0 INDIRECT TAXES 9.1 Goods and Se
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on goods manufactured and vice vers
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Annexure I Double Taxation Avoidanc
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Sr. No. Country Dividend [Note 1] T
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ANNEXURE II: TAX DEDUCTION AT SOURC
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NOTES 142 DOING BUSINESS IN INDIA
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RSM International Executive Office,
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