Monthly Archives: July 2013
Calculation of total foreign investment in Indian companies, transfer of ownership and control of Indian companies and downstream investment by Indian companies – comprehensive guidelines by RBI
July 4 2013
It was a moment of joy for foreign investors when Government of India allowed Foreign Direct Investment (FDI) in the Civil Aviation Sector. However, as is the case with the most of recent initiatives taken up by the government; there lacks the ground work, required to successfully implement such initiatives. Be it the prolonged Jet-Etihad deal or one may even go back to the introduction of negative list based service tax regime.
RBI has, in consultation with the Government of India has issued circular RBI/2013-14/117 A.P. (DIR Series) Circular No.01 providing a comprehensive guidelines on how to calculate total foreign investment in Indian Companies, requirement of ownership by Indian residents in certain sectors falling under approval route, conditions with respect to downstream investments etc..
Earlier Government vide vide Press Notes 2 and 3 (2009 series) dated February 13, 2009, had issued guidelines for calculation of total foreign investment, i.e., direct and indirect foreign investment in Indian companies and for establishment of Indian companies/ transfer of ownership or control of Indian companies from resident Indian citizens to non-resident entities, in sectors with caps
A very interesting situation is that with the introduction of such revised comprehensive guidelines, Indian companies will have to check for any such transactions entered into between 13 February, 2009 till 07th June, 2013 i.e the date of notification of above circular & have to intimate to RBI within 90 days from the date of this circular about the compliance of such transactions with regulatory framework prescribed now!!!!!????Read More