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COMPANY MEETINGS UNDER

COMPANY LAW IN INDIA

by :
DR. T.K. JAIN
AFTERSCHO☺OL
centre for social entrepreneurship
sivakamu veterinary hospital road
bikaner 334001 rajasthan, india
FOR PGPSE participants
AFTERSCHOOOL@IN.COM
mobile : 91+9414430763
5 DECEMBER 09 www.afterschool.tk 1
TYPES OF MEETINGS

1. AGM (ANNUAL GENERAL MEETING)


2. STATUTORY MEETING
3. EXTRAORDINARY GENERAL
MEETING
4. CLASS MEETING
5. BOARD MEETINGS
5 DECEMBER 09 www.afterschool.tk 2
STATUTORY MEETING
First general meeting of a public company
Once in the life of a company
only in a public company
in period from 1 to 6 month of start of
company
statutory report is presented with details of
issue / preliminary expenditure
penalty : 5000 sec. 165
5 DECEMBER 09 www.afterschool.tk 3
AGM
In 18 month from start – there after every
financial year – gap should not be more than
15 months.
Ordinary business : 1. annual reports &
accounts 2. dividends 3. directors & auditors
appointments & terms.
Any other special business
on any day except public holiday (as per NI act
1881)
5 DECEMBER 09 www.afterschool.tk 4
Place of AGM

Registered office or in the same city where


registered office is located at business hours
penalty for not organising (sec. 168) : 50000 +
2500 per day.

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Case : Asia Udyog

When police has seized the books of accounts,


the company is exempted from holding AGM

5 DECEMBER 09 www.afterschool.tk 6
CASE : MEENASKHI MILLS

THERE MUST BE ONE AGM EVERY


YEAR = AS MANY AGM AS THE YEARS
OF THE COMPANY

5 DECEMBER 09 www.afterschool.tk 7
CASE : WEST COAST
PLANNERS

NO AGM IS NECESSARY WHEN ONLY


ONE SHAREHOLDER IS LEFT

5 DECEMBER 09 www.afterschool.tk 8
EGM (169 TO 186)

Who may call it :


Directors
shareholders
company law board
requisitionists

5 DECEMBER 09 www.afterschool.tk 9
Time period of EGM

The board will call it in 21 days to 45 days


from the date of requisition
OTHERWISE
requisitonists can themselves call it (they must
th
have 1/10 of shares.

5 DECEMBER 09 www.afterschool.tk 10
CLASS MEETINGS

BY PARTICULAR CLASS OF
SHAREHOLDERS – FOR EXAMPLE BY
PREFERENCE SHAREHOLDERS ETC.
ON ANY MATTER AFFECTING THAT
CLASS OF SHAREHOLDERS – LIKE NON
PAYMENT OF DIVIDEND

5 DECEMBER 09 www.afterschool.tk 11
REQUISITIONS OF A VALID
MEETING
PROPER NOTICE
QUORUM TO BE PRESENT
PROPERLY HELD
AGENDA PROPERLY CIRCULATED
MINUTES PREPARED & PRESENTED IN
NEXT MEETING
PROPER CHAIRMAN
5 DECEMBER 09 www.afterschool.tk 12
NOTICE OF MEETING

At least 21 day clear notice


(less than 21 day notice is permitted if 95%
shareholders agree to it )
notice has to be sent to auditor also
notice must be sent to legal representative –
when the member is not alive / insolvent
5 DECEMBER 09 www.afterschool.tk 13
QUORUM
MINIMUM NUMBER OF MEMBERS
REQUIRED
5 MEMBERS FOR PUBLIC COMPANY
2 MEMBERS FOR PRIVATE COMPANY /
ADJUOURNED MEETING OF PUBLIC CO.
OR AS PER ARTICLES
(SEC. 174)
IF QUORUM DOESNT COME IN ½ HOUR,
THE MEETING IS POSTPONED FOR SAME
5 DECEMBER 09 TIME NEXT WEEK.
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CHAIRMAN

SENIORMOST DIRECTOR
OR
IF NO DIRECTOR IS PRESENT IN 15
MINUTES – MEMBERS TO CHOOSE
AMONG THEMSELVES
CHAIRMAN WILL HAVE CASTING VOTE
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PROXY
Right of every shareholder to proxy (send
someone else in his place) – proxy form is is
sent with notice – must be submitted in
company before 48 hours before meeting.
Proxy cannot speak in meeting, cannot vote in
show of hand– he can only vote in poll
no person / company convass for proxy
any member can inspect proxy list
5 DECEMBER 09 www.afterschool.tk 16
Voting (177 to 185)

By show of hand or by poll


poll can be demanded by members / proxy /
chairman and must be held in 48 hours of
demand.
Chairman will appoint 2 scrutinizer at poll out
of whom one should be a member

5 DECEMBER 09 www.afterschool.tk 17
Adjournment of meeting

1. when qorum is not present in ½ hours


2. when members demand adjuournment
3. when there is chaos – chairman may adjourn
it for short period

5 DECEMBER 09 www.afterschool.tk 18
Resolution

Ordinary : 51%
speical : 75%
motion is a proposal – it is also seconded by
someone – when it is passed – it is resolution

5 DECEMBER 09 www.afterschool.tk 19
Resoluions requiring special
notice (sec. 190)

All the matters that require special notice –


require that 14 day notice be given - then only
that matter can be taken up in meeting
some matters require special notice are :
appointment of auditor (sec. 225)
appointment of director (sec. 284)
5 DECEMBER 09 www.afterschool.tk 20
Registration of resolutions ...

All special resolutions have to be registered


with registrar of companies
some other resolutions alsohave to be filed
with registrar – like resolution to wind up
company voluntarily

5 DECEMBER 09 www.afterschool.tk 21
MINUTES (193 to 197)

It is proceedings of the meetings - prepared by


the secretary and must be signed by chairman
in 30 days of the meeting
they should not be in loose leaf - but be in
hard bound books/ registers
members have the right to inspect minute
book / get a copy of it (on payment of fees @1
per 100 words)
5 DECEMBER 09 www.afterschool.tk 22
Contents of chairman speech :

Situation of the country


situation of industry
situation of company
performance of company
environment / employee / society welfare
measures etc.
5 DECEMBER 09 www.afterschool.tk 23
Postal Ballot

Every member gives vote by post (ballot =


vote)
Company amendment act (2000) require
postalballot on some matter like :
alteration of memorandum / articles
change in registered office
5 DECEMBER 09 www.afterschool.tk 24
5 DECEMBER 09 www.afterschool.tk 25
Definitions
Foreign exchange sec 2 (n) : -foreign currency,
notes, draft etc.
Foreign security sec 2(o) : shares, debentures
etc. In foreign company
capital account transaction 2(e) : which alters
assets / liabilities out of india
current account transaction 2(j) : foreign trade
payments etc.
5 DECEMBER 09 www.afterschool.tk 26
Current account transactions

They are generally permitted and dont require


RBI permission. However, schedule I gives a
list of transactions which require prior
permission, some of these are : remittances
relating to lottery, commission (if rate is more
than 10% of export price), payments from NRE
(rupee) account etc.
5 DECEMBER 09 www.afterschool.tk 27
Prior approval of RBI is required
in the following cases :

Forex more than $10000 for private visit


abroad
gift over $5000
exchange facilities for emigrants / visitors
above $5000
over $100000 per annum for any person
purchase of foreign trade mark / franchise
5 DECEMBER 09 www.afterschool.tk 28
Capital account transactions –
require prior permission of RBI
Lease of property in India for more than 5
years by foreigner require prior permission
transfer of shares / sale of securities to
foreigners require RBI approval
foreign currency loans out of India by Indian
residents
transfer of immovable property out of India by
residents
5 DECEMBER 09 www.afterschool.tk 29
FDI

There are two routes :


1. automatic
2. government

5 DECEMBER 09 www.afterschool.tk 30
Restricted sectors for FDI

Retail, atomic energy, lottery business,


gambling, betting, nidhi company, chi fund,
real estate business, agricultural, plantation,
trading in transferable development rights
agriculture doesnt include floriculture,
horticulture, seeds etc.

5 DECEMBER 09 www.afterschool.tk 31
FDI In SSI

Upto 24% investments in SSI are permitted


(even if it is in FTZ)

5 DECEMBER 09 www.afterschool.tk 32
ARCs

Investment upto 49% of capital in Asset


Reconstruction companies is permitted by FDI

5 DECEMBER 09 www.afterschool.tk 33
Infrastructure companies

26% FDI and 23% FII investment is permitted


in infrastructure companies

5 DECEMBER 09 www.afterschool.tk 34
Reporting of FDI ?

AFTER ISSUE OF SECURITIES TO


FOREIGNERS, INDIAN COMPANY / FIRM
WILL HAVE TO FILE FC-GPR FORM
WITHIN 30 DAYS TO AUTHORISED
DEALER / RBI
ISSUE PRICE OF SECURITIES HAVE TO
BE FINALISED AS PER SEBI GUIDELINES
5 DECEMBER 09 www.afterschool.tk 35
DIRECT INVESTMENT OUT
OF INDIA

INDIAN RESIDENTS ARE PERMITTED TO


INVEST OUT OF INDIA IN COMPANIES
IN JOINT VENTURES / WHOLLY OWNED
SUBSIDIARIES (WOS)
INVESTMENT IN REAL ESTATE
BUSINESS/ BANKING BUSINESS IS
PROHIBITTED.
5 DECEMBER 09 www.afterschool.tk 36
HOW TO FUND
INVESTMENTS OUT OF INDIA

Use your funds from FCCB, EEFC, foreign


exchange funds, capitalisation of exports, swap
of shares, foreign currency funds etc.

5 DECEMBER 09 www.afterschool.tk 37
Immovable property out of India

A person requires RBI permission for acquring


immovable property out of India. He may buy
it using his RFC account (Resident foreign
currency account)
similarly, an NRI will have to take prior
permission to acquire agriculture / plantation
property in India – (no permission required for
other property)
5 DECEMBER 09 www.afterschool.tk 38
Place of business

As per FEMA prior approval of RBI is


required for foreign companies which are
opening their offices in India and similarly
when Indian companies go out of India and
open their office out of India

5 DECEMBER 09 www.afterschool.tk 39
FCCB

Foreign currency convertible bond – these are


permitted upto $500 million as per guidelines
of RBI and SEBI

5 DECEMBER 09 www.afterschool.tk 40
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Bonus and rights issue to NRIs

Indian companies can issue bonus / rights to


NRI shareholders without RBI / SEBI
permission – subject to sectoral caps.
Bonus issue : free issue to a shareholder
rights issue : a share issued to existing
shareholder

5 DECEMBER 09 www.afterschool.tk 42
Who is resident?

182 days of stay in India during last financial


year.

5 DECEMBER 09 www.afterschool.tk 43
Difference between foreign
currency and foreign exchange

Foreign currency means currency notes of


other countries
foreign exchange is a wider word and includes
currency, cheque, drafts and other instruments
of other countries.

5 DECEMBER 09 www.afterschool.tk 44
HOW MUCH FOREIGN
CURRENCY CAN YOU TAKE?

Authorised dealers can release upto $25000 for


a business trip to any country except Nepal and
Bhutan. If you want more amount, you have to
obtain permission from RBI.

5 DECEMBER 09 www.afterschool.tk 45
What is non cooperative countries
/ territories?

List of the countries where you cannot take


foreign exchange – as identified by FATF
(FINANCIAL ACTION TASK FORCE)
see the website : www.fatf-gafi.org

5 DECEMBER 09 www.afterschool.tk 46
For students ...

Students going abroad for studies are treated as


NRIs and are given all the facilities that are
offered to NRIs. They can receive remittances
upto $100000
they can take with them $2000 for their
expenditure in cash and remaining amount in
traveller cheque/ bank draft.
5 DECEMBER 09 www.afterschool.tk 47
Private visit abroad

If you are going for private visit (for example


for tourism) you are allowed to take upto
$10000 per annum from authorised dealers.
You may visit more than once, but the total
aggregate foreign exchange withdrawals may
be upto $10000, beyond which you have to
take permission from RBI. You Can take it for
visit for education / employment also.
5 DECEMBER 09 www.afterschool.tk 48
VISIT TO NEPAL & BHUTAN

No foreign exchange is available for visit to


Nepal and Bhutan

5 DECEMBER 09 www.afterschool.tk 49
Visit to Iraq & Libya

Normally a person can get foreign currency


notes upto $2000 when he visits abroad, but
when a person is visiting Iraq or Libya, he can
get upto $5000 .

5 DECEMBER 09 www.afterschool.tk 50
How to get foreign exchange?

Go to any authorised dealer / money exchanger


and collect foreign exchange against rupees.
You can do it in cash upto Rs. 50000. if the
amount is more than Rs. 50000, you have to do
it against cheque / draft.

5 DECEMBER 09 www.afterschool.tk 51
ICC

With international credit card, you can make


payment of international journals, international
payments etc. You can also buy international
book and meet personal expenses in foreign
exchange through ICC.

5 DECEMBER 09 www.afterschool.tk 52
Foreign Traveller

A foreign traveller can keep upto Rs. Rs. 5000,


and foreign currency upto $5000 and total
foreign exchange upto $10000. if the amount is
more than this limit, the traveller will have to
make declaration at airport in Currency
Declaration form at the customs office.

5 DECEMBER 09 www.afterschool.tk 53
Current account / capital account

Current account transaction refers to


expenditure on day to day items and other
usual transactions. Capital account transactions
refers to investments for long term like
Debentures / mutual funds etc. Current account
transactions in foreign exchange are generally
permitted. Capital account transactions
generally require prior permission.
5 DECEMBER 09 www.afterschool.tk 54
Permissible capital account
transactions....
Following capital account transactions are
permissible :
schedule I – for residents in India
schedule II – fore persons from out of India
Non permissible : - real estate investments,
TDR (transferrable development rights),
agriculture, plantation,nidhi company, chit
fund, etc.
5 DECEMBER 09 www.afterschool.tk 55
Schedule I

for residents in India :

insurance policy out of india


investment in foreign security
export / import of foreign currency
etc.
5 DECEMBER 09 www.afterschool.tk 56
Schedule II – for persons from out
of India

Foreign currency accounts


export / import of foreign currency
remittance out of india
acquisition of immovable property in India
etc.

5 DECEMBER 09 www.afterschool.tk 57
Restrictions on Indian residents
Generally Indian residents are not permitted to
give loan in Rupees to a foreign nationals
subject to some exceptions. Indian residents
can take loan in Rupees on non-repatriation
basis from non-residents subject to some
conditions like amount has to come from
NRE / NRNR/NRO account and period of loan
should not be more than 3 year. Rate of interest
should not be more than 2% than bank rate.
5 DECEMBER 09 www.afterschool.tk 58
Indian companies issueing
debentures...
If Indian companies issues debentures to non-
residents, they have to inform RBI about it. If
they issue non-convertible debentures, they
will have to give all the details to RBI in 30
days. Rate of interest should not be more than
PLR of SBI + 300 basis points. Minimum
duration of such debenture must be 3 years.
The company cannot deal in agri / plantation /
nidhi / chit fund activities.
5 DECEMBER 09 www.afterschool.tk 59
Immovable property out of India

RBI has made Foreign exchange management


(acquisition and transfer of immovable
property out of India) regulations 2000 – as per
that no person can acquire immovable property
out of India other than as gift without RBI
permission. This doesnot apply to NRI or non-
residents.
5 DECEMBER 09 www.afterschool.tk 60
Repatriation of foreign exchange
If you earn any foreign exchange than you
have to bring it to India within maximum 60
days (if you resident in India) as per FEM
(realisation, repatriation and surrender of
foreign exchange) regulations 2000
if you have taken some foreign exchange from
an authorised dealer for travel etc, you have to
return it back in 90 days from return back to
India
5 DECEMBER 09 www.afterschool.tk 61
Facilities for foreign tourists
For a short stay in India, they can open NRO
rupee account for maximum 6 months. When
they return back they can get it converted into
foreign exchange. AD (Authorised dealers)
have to ensure that repatriation of money from
India is such which is repatriable. A resident
in India can repatriate to his relative upto his
salary only. Forign nationals living in India can
open resident rupee account with banks and
can deal in rupees.
5 DECEMBER 09 www.afterschool.tk 62
Role of AD

They have follow all the rules and ensure that


they give money as per FEMA. They can
release foreign exchange upto $25000 for
business trip, $100000 for education /
employment / medical purpose and upto
$10000 for tourism purpose. They have to
ensure that forign exchange is repatriated as
per law.
5 DECEMBER 09 www.afterschool.tk 63
Gifts from residents

You can give gifts upto Rs. 500000 to non-


residents.

5 DECEMBER 09 www.afterschool.tk 64
5 DECEMBER 09 www.afterschool.tk 65
IMPORTANT INFORMATION
DOCUMENTS
EXIM POLICY
HANDBOOK OF IMPORT AND EXPORT
PROCEDURE
FEMA
EXCHANGE CONTROL MANUALS
FEDAI DOCUMENTS

5 DECEMBER 09 www.afterschool.tk 66
IMPORTANT DOCUMENTS AT
THE TIME OF IMPORT

IMPORT LICENSE
FOREIGN EXCHANGE CONTROL COPY
BILL OF ENTRY FOR HOME
CONSUMPTION
CUSTOMS ASSESSMENT CERTIFICATE
OR POSTAL ASSESSMENT FORM
5 DECEMBER 09 www.afterschool.tk 67
OPENING L/C
Importer will approach his bank for opening an
L/C
L/C = Letter of credit
the bank of the importer will give a guarantee
about payment to the bank of the exporter
under L/C. When the exporter exports, he can
obtain immediate payment from his bank on
producing L/C of the importer's bank. The
banks will have transaction between
5 DECEMBER 09
themselves.
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Difference between packing credit
and L/C
Packing credit is issued to exporter, but L/C is
issued to importer. Packing credit covers all the
expenditure till export, L/C covers the price of
import = and as per this the exporter gets
payment as soon as he exports. The bank of the
importer provides this facility to the importer
against some charges.

5 DECEMBER 09 www.afterschool.tk 69
Foreign exchange requirements
Importer requires foreign exchange for
imports. The banker / authorised dealer
provides foreign exchange after looking at the
necessary documents like import licence etc.
The foreign exchange must be used for the
purpose for which it has been obtained. The
banker / authorised dealer has to ensure that
only that amount is released which is actually
required.
5 DECEMBER 09 www.afterschool.tk 70
Mode of payment
Authorised dealers will ensure that payment
regarding impor is made in account. Cash
payments are not permitted.
In case advance payment is made, physical
goods must come in 3 months. If the amount is
more than $25000 then there must be a
guarantee from some international bank.
Proper EC copy must be submitted by the
importer
5 DECEMBER 09 www.afterschool.tk 71
Time limit for settlement

Import payments must be settled within 6


months from the date of import. If it is more
than 6 months, then it will be treated as ECB
(external commercial borrowing) and will
require prior permission of RBI/ Government

5 DECEMBER 09 www.afterschool.tk 72
Export remittances

The exporter has to declare exports to RBI and


has to ensure that payments are received within
time and as per approved methods of
payments. Payments can be collected through
bank account / international credit card / FCNR
/ NRE account / escrow account etc

5 DECEMBER 09 www.afterschool.tk 73
Exports that dont require
declarations....

Demonstrations / sales promotions (UPTO 2%


OF TOTAL EXPORTS ONLY) , gifts (upto 1
lakhs), exports for reimports only, goods sent
for repairs, goods less than 25000 rupees in
value, samples, publicity material, personal
goods of travellers.

5 DECEMBER 09 www.afterschool.tk 74
What is consignment export ?

Consignment means you are sending goods to


someone for trade on your responsibility – and
if goods are not sold, they are your property
and you may get it back. Consignment export
means sale or return back. It has to be settled
in 6 months.

5 DECEMBER 09 www.afterschool.tk 75
Exports requiring RBI approval

Examples : project exports, export as contract


against imports, elongated payment period,
exports relating to agrements of government of
India or other governments

5 DECEMBER 09 www.afterschool.tk 76
Remittances relating to exports...

These include : agency commission, export


claims etc.

5 DECEMBER 09 www.afterschool.tk 77
SEZ

If you are operating from SEZ you are


permitted to have foriegn currency account
with an authorised dealer

5 DECEMBER 09 www.afterschool.tk 78
Authorised dealers

These are listed with RBI as per FEMA, they


have to obtain RBI permission for some
specified business transactions. Example: they
cannot give guarantee in favour of exporters
without RBI permission unless that exporter is
listed as non-caution exporter.

5 DECEMBER 09 www.afterschool.tk 79
Forfaiting

Factoring and forfaiting can be undertaken by


EXIM bank / authorised dealers. Under this
they collect payments regarding export
receivables against commission.

5 DECEMBER 09 www.afterschool.tk 80
New trends....

Indian companies are now permitted to have


foreign exchange accounts in other countries
and to have properties in other coutnries (with
prior approval from RBI) and they can acquire
businesses / firms in other countries also as per
their business requiremetns (as per govt.
Policies) .
5 DECEMBER 09 www.afterschool.tk 81
PEM

PEM stands for Project Export memorandum –


when companies are entering into project
exports, they have to follow guidelines relating
to this. Project exports generally has deferred
payments - therefore prior permission must
obtained before enteringi into PEM.

5 DECEMBER 09 www.afterschool.tk 82
Other provisions

Authorised dealers have to ensure that they get


copesof GR Form and other documents
required andforeign currency is used for acutal
import / export and all required documents are
submitted.

5 DECEMBER 09 www.afterschool.tk 83
FDI

Upto 100% Foreign Direct Investment is


permitted under automatic route in many
sectors. Investors will have to inform regional
office of RBI in 30 days of remittances. In
some sectors industrial licence is required and
in some sectors, FDI is not permitted. But in
most of the sector, now it is permitted
including atomic energy etc.
5 DECEMBER 09 www.afterschool.tk 84
Shares issue to NRIs

Within 30 days of share issue to Non-residents,


FC – GPR form has to be submitted. They have
to submit all the details like they have
implemented all the provisions of companies
act & FEMA for this purpose.

5 DECEMBER 09 www.afterschool.tk 85
Transfer from NR

Now non residents can transer shares to other


non-residents / residents and such transfer can
be for consideration / as a gift. This tranfer
can be only to an NRI / resident Indian. They
can also sell it in stock exchanges through
brokers. They will have to take NOC from
income tax department
5 DECEMBER 09 www.afterschool.tk 86
Tranfer by residents

As per RBI notification of 2000, residents can


also tranfer to non-residents – as per FEMA –
so long as it is in automatic route. You have to
keep in mind SEBI (Substantial acquisition of
shares and takeover) regulation 1997 +
required regulations under IRDA or other such
laws.
5 DECEMBER 09 www.afterschool.tk 87
Permission from RBI

If it is not falling in automatic route, apply for


permission to RBI with a copy of FIPB
approval and details like pric, mode of
payment etc. Price must not be lower than the
higher of the average weekly high / low of last
6 months. FC-GPR form with details of
existing shareholding must also be submitted.
5 DECEMBER 09 www.afterschool.tk 88
FDI in different modes

FEMA regulations 2000 give schedule I which


gives list of industries for which automatic
route is there. It doesnt requre prior RBI
permission, for othe industries, take prior
permission from RBI. Rate of dividend should
not exceed SBI prime lending rate + 300 basis
points. For other sectors take permission from
SIA / FIPB/ RBI for investments.
5 DECEMBER 09 www.afterschool.tk 89
PORTFOLIO INVESTMENT

FIIs including asset management companies,


mutual funds, hedge funds etc. Are permitted
to invest in shares in India. FII have to invest
in ratio of 70:30 in equity and debt when they
invest in India, they are also permitted to invest
as 100% debt.

5 DECEMBER 09 www.afterschool.tk 90
Limits for FII investment

An NRI / PIO can buy upto 5% in a company.


All NRI/PIO/OCB can invest upto 10% in a
company. A single FII can invest upto 10% in
a company and all FIIs together can invest upto
24% in a company. Companies can raise this
limit by passing board resolution and special
resolution in general meeting subject to
sectoral cap (like 49'% or 74% etc.)
5 DECEMBER 09 www.afterschool.tk 91
FII dealings

FII can deal through stock exchanges without


RBI permission, but if they are dealing without
stock exchanges, they have to obtain
permission from RBI.

5 DECEMBER 09 www.afterschool.tk 92
NRI dealings

NRIs have to deal through NRE /FCNR


account only. Sometimes they are permitted to
deal in NRO account also – when they are
investing on non-repatriation basis.

5 DECEMBER 09 www.afterschool.tk 93
PERMITTED FIIs

FOLLOWNG CAN REGISTER AS FII WITH


RBI & SEBI:
banks, pension funds, hedge funds, mutual
funds, insurance companies, investment funds
etc.

5 DECEMBER 09 www.afterschool.tk 94
ECB

External commercial borrowings : Indian


comapnies can raise loans from other countries
through various routes like : FRN (floating rate
note), ECP (euro commercial paper), FCCB
(foreign currency convertible bond), NIF (note
issue facility), syndicate loan, etc.

5 DECEMBER 09 www.afterschool.tk 95
ECB MECHANISMS

Companies engage in many ECB mechanisms


like :
arbitrage
hedging
underwriting
fund raising etc.

5 DECEMBER 09 www.afterschool.tk 96
ADR /GDR
American depository receipt / Global
depository receipt are permitted by RBI as per
scheme of 1993, companies can also sponsor
issue of ADR / GDR. Infosys, Wipro etc. Are
some of the companies which went for ADR /
GDR during 1990s. After ADR/ GDR
company will have to submit return in
proforma as per annexure C of RBI
notification 2000.
5 DECEMBER 09 www.afterschool.tk 97
Royalty / technical fees

Upto $2million of royalty upto 5% of


domestic sale or 8% of export sale is permitted
as royalty.

5 DECEMBER 09 www.afterschool.tk 98
EEFC account

Exchange Earners Foreign Currency account –


a person who has earned foreign currency can
retain 50% of the foreign currency earned in
EEFC account with authorised dealers. This
account can be used for current account
transactions or for permitted capital account
transactions.
5 DECEMBER 09 www.afterschool.tk 99
RFC account

Resident foreign currency account – if an NRI


is returning India for ever, he can keep his
foreign currency in RFC account and there are
no restriction on use of funds in RFC account.

5 DECEMBER 09 www.afterschool.tk 100


RFC (DOMESTIC) ACCOUNT

A Resident who lives in India but receives


foreign exchange payments / honorarium can
open RFC (Domestic) account for retaining
such payments.

5 DECEMBER 09 www.afterschool.tk 101


Liberalised Remittance Scheme

Residents can use upto $25000 for payments


for permitted transactions per annum in this
scheme Foreign Exchange Management
(current account transactions) rules 2000
schedule I and II.

5 DECEMBER 09 www.afterschool.tk 102


THANKS....

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AFTERSCHOOOL NETWORK / START
AFTERSCHOOOL NETWORK IN YOUR
CITY
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5 DECEMBER 09 www.afterschool.tk 103

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