Indian businesses now cleared for cross-border mergers
In a major push to attract greater foreign direct investment (FDI), the federal government has greenlit cross-border mergers in India if they are approved by the Reserve Bank of India. This means that Indian business entities can now negotiate mergers with foreign companies, after meeting select criteria. The policy shift opens up the merger and acquisitions (M&A) landscape in the country and incentivizes foreign companies to enter the Indian market more aggressively.
Such outbound mergers will, however, be subject to certain requirements. The most important among these is that the foreign company must be incorporated in a jurisdiction that is compliant with the standards as established by the Financial Action Task Force (FATF) – the international body responsible for policing money laundering and funding of terrorism-related activities. Additionally, the M&A deal must be compliant with specified international statutory financial requirements.
Aadhaar mandatory for expats staying beyond 182 days
From July 1, expatriates living and working in India for a period longer than six months will be mandatorily required to submit Aadhaar identification when filing their tax returns.
The income tax department has clarified that if an expatriate has stayed in India for at least 182 days in India a year before July 1, 2017, the individual will need to apply for Aadhaar if he/she is filing tax returns in India. Alternately, as a short-term measure, the person can file returns before June 30.
Dormant companies in India to get dissolved
Around 250 million companies across India face closure for not commencing business operations within one year of their incorporation or not reporting any business activity in the immediate preceding two financial years. These entities have been notified by the Registrar of Companies (RoC) as they have not obtained ‘dormant company’ status under the Companies Act, 2013.
The development comes after the corporate affairs ministry notified the ‘Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016’ in December 2016, and issued the Amendment Rules 2017 and Forms STK-1 to STK-7.
Form STK-5 (Public Notice), in particular, enables the RoC to remove/strike off the company’s name from its records unless adequate cause is shown within thirty days from the date of issuance. Over the past two weeks, regional offices of the RoC has issued such public notices, naming entities in Mumbai (71,000), Delhi (53,000), Hyderabad (40,000), and Bengaluru (22,000).
RBI to set up cyber-security unit for financial sector
India’s central bank, the Reserve Bank of India (RBI), will soon be setting up a cyber-security unit. Named the Computer Emergency Response Team for the Financial Sector (CERT-Fin), the primary responsibility of the response unit is to ensure the country’s financial stability, in the backdrop of increasing global attacks on sovereign financial systems.
The RBI already has a specialized cell called ‘C-SITE’, which conducts a detailed IT examination of banks’ cyber-security preparedness, to identify security gaps and monitor the progress of remedial measures. As of 2016-17, more than 30 major banks are covered by this IT surveillance by the RBI, while all banks are set to be covered by 2017-18.
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Working as an Expat in India
In this issue of India Briefing Magazine, we look at India’s living and working environment, HR and payroll laws, and the taxation norms as applicable to foreign nationals. India is the second most favored destination for expatriates that want to work in the emerging markets. Expatriates should take note of the basic social and welfare c