Legal & Regulatory

Investors Push for Changes to India’s Companies Act 2013

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DELHI – As Narendra Modi takes charge as Prime Minister, Indian businesses and foreign investors are pushing for a review of several provisions in the Companies Act 2013.

Last year, the Companies Act 2013 replaced the Companies Act 1956, stipulating updated regulations for incorporation, responsibilities within a company and the dissolution process. The new 2013 version of the Companies Act (effective April 1, 2014) incorporates a number of changes including the introduction of new definitions, raising the number of members in a private company from 50 to 200 and modifications to the roles and standards that independent directors must maintain, among others.

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MoF Releases New Foreign Exchange Rate for Imported and Exported Goods

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India’s Ministry of Finance (MoF) has released new guidelines regarding the rate of foreign exchange for calculating customs duties on goods being imported and exported from the country.

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India Extends Excise Duty Cuts on Vehicles and Capital Goods

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DELHI – India’s Ministry of Finance (MoF) has officially extended existing duty concessions on several items including vehicles, capital goods and consumer durables to December 31, 2014.

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Key Aspects of India’s Corporate Social Responsibility Mandate Clarified

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DELHI – The Ministry of Corporate Affairs (MCA) released a new circular last Wednesday that clarifies certain aspects of India’s corporate social responsibility (CSR) mandate.

General Circular No. 21/2014 (dated June 18, 2014) clarifies a number of aspects of the CSR mandate, including specifying items that can be included under Schedule VII of the Companies Act and what can and cannot be considered a CSR expenditure.

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Liaison Office Applications Facing Stricter Application Rules

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DELHI – Foreign companies seeking to register liaison offices (LOs) in India have begun encountering difficulties in having LO applications approved.

Establishing a liaison office in India is often an attractive option for foreign companies seeking to establish a local business presence at low financial and legal risk. LOs are permitted to facilitate and promote a parent company’s business activities, and act as a communications channel between the foreign parent company and Indian companies. Unable to engage in commercial, trading, or industrial activities, liaison offices must be sustained by private, inward remittances received from their foreign parent company and are not subject to profits tax rates.

Recently, however, authorities have begun applying a stricter interpretation of the LO application rules which specifically prohibit LOs from engaging in any ‘commercial activities’ and possessing a ‘direct trading connection between the LO and the parent.’

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PAN Requirements for Foreign Nationals during Company Incorporation

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India’s Ministry of Corporate Affairs (MCA) has issued General Circular No. 16/2014 (dated June 10, 2014) to clarify the applicability of Permanent Account Number (PAN) requirements for foreign nationals when submitting an application for company incorporation. This follows the release of a similar circular, General Circular No. 12/2014, last month.

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Modi Cabinet Constitutes Special Investigative Team on Black Money

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DELHI – At Prime Minister Narendra Modi’s first cabinet meeting yesterday, a special investigative team (SIT) was established to recover “black money,” or undeclared income, from international tax havens.

The new SIT is to be led by retired Supreme Court Justice M.B. Shah, and will comply with a May 23 Supreme Court directive that gave the central government one week to order the establishment of an SIT with the power to investigate and recover black money stored in tax havens abroad.

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India Allows Conditional FDI in Limited Liability Partnerships (LLP)

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The Reserve Bank of India (RBI) has notified that limited liability partnerships (LLP) can now accept foreign direct investment (FDI), subject to certain criteria. The original notification from the RBI can be found here.

With these changes, limited liability partnerships will be eligible for FDI with government approval in sectors where 100 percent FDI is permitted. Requirements regarding pricing are additionally subject to the following conditions:

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Asia Briefing Bookstore Catalogue 2013 Dezan Shira & Associates
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