Sunday, August 26, 2012

Foreign Direct Investment by citizen or entity Incorporated in Pakistan

The Reserve bank of India has issued a circular on 22 August, 2012 regarding the Foreign direct investment(FDI) by citizen or entity incorporated in Pakistan.

Previously FDI is not allowed for citizen of Pakistan or Company incorporated in the Pakistan but RBI in a view of Globalisation has given investment entry though Approval route of the Foreign Exchange management Act, 1999 (FEMA).
 i.e a person who is a citizen of Pakistan or a entity incorporated in Pakistan may, with the prior approval of the Foreign Investment Promotion Board(FIPB) of the Government of India, purchase shares and convertible debentures of an Indian company under Foreign Direct Investment Scheme.

However receiving foreign direct investment is not permitted in the prohibited sectors, shall not engage in sectors / activities pertaining to defence, space and atomic energy and sectors / activities prohibited for foreign investment.

HERE YOU CAN FIND THE RBI CIRCULAR:

Saturday, August 25, 2012

Amendment in Rationalisation of Form Overseas Direct Investment(ODI)

The Reserve Bank of India on August 21st, 2012 has issued a circular by revising the ODI forms for Indian entities making in investments in aboard.

An Indian party is required to submit to the Reserve bank of India(Regional office where company registered office is situate) through the Authorised Dealer every year within 60 days from date  of expiry of the statutory period of audited accounts  of the Joint venture (JV) / Wholly Owned Subsidiary (WOS) outside India, an Annual peromance report (APR) in Form ODI Part III in respect of each JV or WOS set up or acquired by the Indian party.

Further, an Indian party is allowed to undertake overseas direct investments under general permission route (Automatic Route) subject to compliance to the Regulation 6  or Regulation 7 of the notification. as per Regulation 6(2) (iv) requires that the India party has to submit the APR in respect of all its overseas investments  in the format given in part III of the Form ODI.

The Following items in section 'E'  and 'F' of form ODI part I, to be submitted by every Indian party in terms of Regulation 6(2) (vi) of the Notification, while undertaking ODI transactions

a) In Section 'E' after item (c), item (d) wherever applicable, the Annual permanence Report (APR), as required in terms of Regulations 15 iii of the notification no.FEMA 120/ RB-2004 dated July, 2004 , as amended from  time to time in respect of all the existing JV or WOS of the Indian party has submitted.

b)  In Section 'F' , after item (v) a clause "Further , certified that, wherever applicable, the Annual performance Report, as required in terms of Regulation 15(iii) of the Notification ibid, in respect of all the existing JV or WOS of the Indian party has been submitted."


 THE REVISED ODI FORMS ARE IN THE  BELOW RBI CIRCULAR: 
RBI/2012-13/171 A.P(DIR Series) circular No.15

Friday, August 10, 2012

Certificate of Incorporation

The Certificate of Incorporation is actually a Simple Doucment which contains the date of registration ,Name of the company incorporated and also where the company was incorporated.The Registrar of Companies in India  is the responsible for issuing the Certificate of Incorporation to Companies.Usually it takes about 2-3 days after submitting the Memorandum and Articles of Association of the Company along with the other documents required for incorporation  with the Registrar of Companies .If the Registrar of Companies  satisfy that the submitted documents has Complied  with the procedures and provisions under the Companies Act,1956 and other Statutory Legislations for the time being in force, then the Registrar of  Companies will issue the Certiifcate of Incorporation.After issuing of Certificate of Incorporation only, the Company will be considered as Legal Entity and  register itself with the other statutory authorities according to the nature of business.Without the Certificate of Incorporation, A  company could not able to open a Bank Account and register with VAT, PAN(Permanent Account Number) & TAN (Tax Account Number) for deducting TDS.For applying of the above facilities, a company should handover the copy of Certificate of Incorporation with the concerned authorities.(e.g. for applying of Importer-Exporter Code,Service Tax ,Central Excise & Customs Act , Copy of Certificate of Incorporation is mandatory).



As per Section 35 of the Companies Act,1956 "A Certificate of Incorporation given by the Registrar in respect of any association shall be conclusive evidence that all the requirements of this Act have been complied with in respect of registration and matters precedent and incidental thereto, and that the association is a company authorised to be registered and duly registered under this act.".

When ever company changes the name of the company during the course of the business  and company has shifted its registered office from one state to other state then Registrar of the companies will issue fresh Certificate of Incorporation with effect to the changes.


So the Certificate of Incorporation is the primary document of the Company and it is very essential to keep safe and preserve it permanently.

Thursday, August 9, 2012

When to conduct the Annual General Meeting

As per Section 166 of the Companies Act,1956 Every Company, which is Public or Private, limited by Shares or Guarantee, with or without share capital or Unlimited Company is required to be conduct Annual General Meeting once a year.Every Company must in each year hold an Annual General Meeting not more than fifteen months from the date of Last  annual general meeting of a company.No  approval from regulatory authority is required for hold such Meeting.


As per Section 210 (3) (b) of the Companies Act,1956  everry company is required to hold its subsequent Annual General Meeting within six months from the end of the Financial year.

While reading Sections 166 and 210(3)(b) of the Companies Act,1956 there seems to be some contradictions between the provisions.If the Company follows section 166 and conducts Annual General Meeting within 15 months from the end of the Last Annual General Meeting( taking into consideration of Three Months extended time  given by Registrar of Companies),there could be non-compliance of Section 210(3)(b), for not holding the Annual General Meeting within Six Months from the end of the Financial year.

To overcome the non-compliance situation, the Department of Company Affairs (Now Ministry of Corporate Affairs) has advised that the Annual General Meeting of the Company to be held earlier of the following dates : vide its Circular No.8/45(166)64-PR dated 12-01-1965:

-Six Months from the date of Close of the Financial year.(Section 210(3)(b)

-Within 15 Months from the Last Annual General Meeting.(Section 166(1)

- Last Date of Next Financial year.

Therefore in my opinion, a company can convene a Annual General Meeting within the Periods advised by the Ministry of Corporate Affairs to avoid the Penalty and Contravention of the Sections 166 and 210 of the Companies Act,1956.

Thursday, August 2, 2012

Appointment of First Auditors

Appointment of Auditors in a company is a vital part in the running of a company. Without Auditors, we could not able to get our accounts audited and filed with Registrar of companies as per the compliance of Section 220 of the Companies Act,1956.

O.K.Let's move to our topic.

As per Section 224(5), the first Auditor or Auditors of a company shall be appointed by the Board of Directors by passing a Board resolution within one month of the date of Incorporation of the Company; and the auditor or auditors so appointed shall hold office until the conclusion of the First Annual General Meeting.

If the Board of Directors fail to appoint the Auditors within one month,they have to appoint the Auditors in the company General Meeting.There is notneed to file Form 23B for the appointemnt of First Auditor.

The Appointed First Auditor shall not suffer any disqualifications Covered U/s.226(3) of the Companies Act,1956  and the Auditor or Auditors so appointed shall hold office until the conclusion of the First Annual General Meeting.