Being Compliant with the Reserve Bank of India (For Foreign Investors).

1) After receiving the funds from investors

After receiving funds from foreign investors the company needs to provide the following details to the Reserve Bank of India (RBI) in an advance reporting form.

• Name and address of the foreign investors;

• Date of receiving funds and the amount equivalent in rupees;

• Name and address of the bank/authorized dealer through whom the funds have been received;

• Details of the government approval, if any; and

• KYC report on the non-resident investor from the overseas bank, remitting the amount of consideration.

The share issuance process needs to be completed within 180 days from the date of receiving funds. Failure of this may lead to violation of the Foreign Exchange Management Act (FEMA) regulation.

2) On issuance of shares to investors outside India

The company needs to report the details of the issue of shares / convertible debentures in the specified form (FC-GPR) to the Reserve Bank of India along with the following within 30 days from the date of issuance of shares:

A) A Certificate from the Company Secretary certifying that:

• The company has complied with the procedure for the issue of shares, as laid down under the Foreign Direct Investment (FDI) Scheme, and,

• The investment is below the ceiling permissible under the Automatic Route of the Reserve Bank, and/or in terms of the approval of the government, as the case may be, and that all the requirements of the Companies Act have been complied with

B) A certificate from a Chartered Accountant indicating:

• The manner of arriving at the price of the shares issued to the foreign investors.

It is a very important process after pre-funding and post-funding compliance.