PROLEGAL UNIVERSAL, Advocates & Advisors

PROLEGAL UNIVERSAL, Advocates & Advisors An integrated Law Firm in India having offices at New Delhi & Gurgaon, and advising, amongst other matters, on India Entry Strategy, Joint Ventures, Technical Collaborations, Mergers and Amalgamations, Income Tax issues, Legal Compliance, Regulatory Approvals, Commercial Contracts, Corporate Governance etc.
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An integrated Law Firm in India having offices at New Delhi & Gurgaon, and advising, amongst other matters, on India Entry Strategy, Joint Ventures, Technical Collaborations, Mergers and Amalgamations, Income Tax issues, Legal Compliance, Regulatory Approvals, Commercial Contracts, Corporate Governance etc.

Latest Updates

Compounding of Contravention under FEMA - Delegation of authority by RBI, Central Office, Mumbai

The Reserve Bank of India (RBI), vide A.P. (DIR Series) Circular No. 36 dated 16.10.2014 has delegated certain powers to Regional Offices to compound the contravention of certain matters, viz:
(1) Delay in submission of Form FC-TRS on transfer of shares from resident to non-resident; (2) Delay in submission of Form FC-TRS on transfer of shares from non-resident to resident; and
(3) Taking on record, the transfer of shares by investee company, in the absence of certified form FC-TRS.

There is an exception though. Kochi and Panaji Regional offices can compound the aforestated contraventions only for an amount below Rupees One Crore/ Ten Million. The cases involving contraventions of Rupees One Crore/ Ten Million or more will continue to be compounded at Central Office, Mumbai, as earlier. This has been made effective immediately.

Further, with retrospective effect from July 15, 2014, RBI Delhi Regional Office is now authorized to compound the contraventions without any limit as to the amount of contravention vis-a-vis
(1) Contravention relating to acquisition and transfer of immovable property outside India;
(2) Contravention relating to acquisition and transfer of immovable property in India;
(3) Contraventions relating to establishment in India of Branch office, Liaison Office or project office; and
(4) Contraventions falling under Foreign Exchange Management (Deposit) Regulations, 2000.

   Over a month ago
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FEMA UPDATE
General Permission by RBI to issue non- convertible bonus preference shares/debentures to non-resident shareholders.

Vide A.P. (DIR Series) Circular No. 84 dated 06.01.2014, the RBI has granted general permission to Indian Companies to issue non convertible bonus preference shares/debentures to non-residents shareholders (including the depositories that act as trustees for the ADR/GDR holders) from general reserve under a Scheme of Arrangement approved by a Court in India under the provisions of the Companies Act, as applicable, subject to no-objection from the Income Tax Authorities.

Prior to the above stated circular, RBI was granting permission to do so, on a case to case basis.

In nutshell, following points to be kept in mind before issuing bonus non-convertible preference shares/debentures;
• Can be issued only out of general reserve;
• Can be issued only under a scheme of arrangement approved by the Court, under the provisions of the Companies Act, as applicable and
• Can be issued only upon getting a No-Objection Certificate from the income-tax authorities.

It may however be noted that, issue of non-convertible, optionally convertible or partially convertible preference shares/debentures issued otherwise, are treated as debt, and continue to be governed by the External Commercial Borrowings (ECB) regulations issued by the RBI.


About us:
PROLEGAL UNIVERSAL is an integrated law firm in New Delhi, India, advising international and domestic clients on various issues such as India Entry Advisory including setting up of wholly-owned subsidiaries, Joint Ventures, Technical Collaborations, Mergers and Amalgamations, Legal Due Diligence, Corporate Governance, Commercial Contracts etc.
The Firm’s client list consists of an impressive array of MNC and large Indian business houses. The constant endeavour of the Firm is to provide its clients with impeccable service and value for money, keeping in mind the clients’ goals and objectives.
Most of our lawyers are dually qualified as Chartered Accountants, Company Secretaries etc.
For a copy of our profile, please write to info@prolegal.in, giving your full name, designation, company’s name and complete address.

   Over a month ago
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Background: The newly introduced Companies Act, 2013 is full of anomalies. We are running a series on this newly introduced law (which has not been notified fully) to review some of the important provisions and anomalies therein.

 Section 139(1) of the Companies Act, 2013 provides for appointment of auditors at the First Annual General Meeting for a period of five years and at every sixth Annual General Meeting thereafter. The First Proviso to Section 139(1) provides for ratification of appointment of Auditor made under Sub-Section (1) by members at every Annual General Meeting.

PROLEGAL comments: It is very strange though that the appointment of auditor is required to be ratified by the members even though said appointment has earlier been made by the members themselves. If appointment is to be ratified every year, what is the purpose of appointing the auditor for 5 years at once?

 Section 140(4) provides for Special notice for a resolution at an annual general meeting appointing as auditor a person other than a retiring auditor, or providing expressly that a retiring auditor shall not be reappointed, except where the retiring auditor has completed a consecutive tenure of five years or, as the case may be, ten years, as provided under Section 139(2).

PROLEGAL comments: If Special Notice is required for not appointing the existing auditor during his tenure of 5 years or 10 years, as the case may be, then why ratification is required at every Annual General Meeting? Also if there is no special notice, does it means that members have no objection in continuing with the existing auditor.

About us:
PROLEGAL UNIVERSAL is an integrated law firm in New Delhi, India, advising international and domestic clients on various issues such as India Entry Advisory including setting up of wholly-owned subsidiaries, Joint Ventures, Technical Collaborations, Mergers and Amalgamations, Legal Due Diligence, Corporate Governance, Commercial Contracts etc.
The Firm’s client list consists of an impressive array of MNC and large Indian business houses. The constant endeavour of the Firm is to provide its clients with impeccable service and value for money, keeping in mind the clients’ goals and objectives.
Many of our lawyers are dually qualified as Chartered Accountants, Company Secretaries etc.

For a copy of our profile, please write to info@prolegal.in, giving your name, designation, company’s name and company’s complete address.

   Over a month ago
SEND