Foreign Investments:- FDI Crackdown: RBI tightens rules on FDI disclosure on Companies, LLP and Startup
RBI, the regulator of the Foreign Investments of the Indian entities in India, through its latest circular bearing number 30, dated 07.06.2018, has come out with a new integrated and consolidated form for Foreign Investment (both direct and indirect investments) received in India with a view to creating transparency and cracking down on non-compliant entities in India attracted FDI either by way of issuing/transferring securities. The circular shall be applicable to Companies, LLP and Startup entities.
Along with Direct Investments made by the Indian entities, Indirect Foreign Investments, i.e. investments made by any Indian entity, which is in receipt of the foreign investment to the extent of more than 50% i\of its share capital, into any other Indian Entity. This shall also be reported in the form.
The objective behind this circular was to integrate the extant reporting structures of various types of foreign investment in India along with transparency in declaration of FDI.
Entity Master Form is to be filed online and the interface is available on RBI website www.rbi.org.in from June 28, 2018 to July 12, 2018. These entities are asked to file the information on such FDI with such interface.
Those who fail to report Entity Master Form within the stipulated time will lead to twofold result: first the entity’s name shall be placed with the list of defaulters and after the prescribed cut-off shall not be allowed to receive any types of foreign investment including FDI and second entity shall have to face the legal action under Foreign Exchange Management Act, 1999 and regulations made thereunder
To avoid the legal action even in loss making concern, make sure your organization have them and if compliances have become issue for companies which have closed their operation, the best recourse available is to close the company after reporting above by following due process of law and start a new venture.
“Last date for above reporting and making your entity compliant availing benefit under new interface is 12th July, 2018.
General Particulars to be filed
- Identity Number for Company or LLP (i.e. CIN/LLPIN)
- PAN
- Company Name and Incorporation Date
- Details of Registered Office
- Business Activity Details
- Foreign Portfolio Investment
- Foreign Investment in Company/LLP
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