Legal & Regulatory

Key Aspects of India’s Corporate Social Responsibility Mandate Clarified

Posted on by

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.

Continue reading…

Liaison Office Applications Facing Stricter Application Rules

Posted on by

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.’

Continue reading…

PAN Requirements for Foreign Nationals during Company Incorporation

Posted on by

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.

Continue reading…

Modi Cabinet Constitutes Special Investigative Team on Black Money

Posted on by

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.

Continue reading…

India Allows Conditional FDI in Limited Liability Partnerships (LLP)

Posted on by

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:

Continue reading…

India FDI M&A Pricing Guidelines Revised

Posted on by

The Reserve Bank of India (RBI) rolled out its first bi-monthly Policy Statement on April 1st, part B of which constitutes Development and Regulatory Policies addressing several areas. As per the policy statement by the RBI:

As regards foreign direct investment (FDI), it has been decided to withdraw all the existing guidelines relating to valuation in case of any acquisition/sale of shares and accordingly, such transactions will henceforth be based on acceptable market practices. Operating guidelines will be notified separately.

The RBI notification no. FEMA 205/2010 dated April 7th, 2010 mandates the pricing of shares by applying the Discounting Cash Flow Method (DCF) of valuation. DCF is one of the most practical methods for share pricing as it is based on the Income Approach for valuation, which is in turn based entirely on the Future Cash Earning Capacity of any business. This accordingly enables the price to reflect the optimum value of the business.

Continue reading…

Mandatory Corporate Identification Rules Take Effect

Posted on by

DELHI – As part of the Indian Companies Act 2013, Section 12, companies are now required to quote the following content on all employee business cards, corporate letterheads, invoices and all other corporate correspondence and publications:

Continue reading…

Changes to CENVAT Credit Rules Take Effect April First

Posted on by

DELHI – On April first, the Third and Fourth Amendments to India’s Central Value Added Tax (CENVAT) Credit Rules 2004 (CCR), which govern the CENVAT Credit of Central Excise Duty and Service Tax, will become effective. Additionally, the Central Board of Excise and Customs (CBEC) has provided the procedures for filing refund applications by a service provider under Rule 5B of the CENVAT CCR.

The first and second amendment rules to the CCR came into effect in early January.

Continue reading…

Asia Briefing Bookstore Catalogue 2013 Dezan Shira & Associates
Social Buttons by Linksku