Certification by Professionals Chartered Accountant Statutory Auditor 16

Certification by Professionals

Chartered Accountant/ Statutory Auditor. . . 1/6 FDI 1. Reporting of issue of shares - Form FC-GPR/ FC-TRS A certificate from SEBI registered Merchant Banker / Chartered Accountant indicating the manner of arriving at the price of the shares issued to the persons resident outside India. Also for Transfer of shares/ compulsorily and mandatorily convertible preference shares (CMCPS)/ debentures/ others by way of sale from resident to non-resident/ non-resident to resident. 2. Issue of equity shares against Pre-operative / pre – incorporation expenses is allowed under the Government route: Verification and certification of the pre-incorporation / pre-operative expenses by the statutory auditor 3. In case of winding up otherwise than by a court An auditor's certificate to the effect that there is no legal proceedings pending in any court in India against the applicant or the company under liquidation and there is no legal impediment in permitting the remittance. 4. Pledge of Shares The Statutory Auditor has certified that the borrowing company will be utilized / has utilized the proceeds of the ECB for the permitted end use/s only. Non-resident holding shares of an Indian company, can pledge these shares in favour of the AD bank in India to secure credit facilities being extended to the resident investee company for bonafide business purpose Submission of a declaration/ annual certificate from the statutory auditor of the investee company that the loan proceeds will be / have been utilized for the declared purpose; Non-resident holding shares of an Indian company, can pledge these shares in favour of an overseas bank to secure the credit facilities being extended to the non-resident investor / non-resident promoter of the Indian company or its overseas group company, Submission of a declaration/ annual certificate from a Chartered Accountant/ Certified Public Accountant of the non-resident borrower that the loan proceeds will be / have been utilized for the declared purpose. The AD may also obtain a certificate ‘ex post’, from the statutory auditor of investee company, that the loan proceeds received consequent to pledge of shares, have been utilised by the investee company for the declared purpose;

Chartered Accountant/ Statutory Auditor. . . 2/6 5. Downstream investment made by in the subsidiary companies at second level and so on FDI recipient Indian company at the first level which is responsible for ensuring compliance with the FDI conditionalities like no indirect foreign investment in prohibited sector, entry route, sectoral cap/conditionalities, etc. for the downstream investment made by in the subsidiary companies at second level and so on and so forth would obtain a certificate to this effect from its statutory auditor on an annual basis as regards status of compliance with the instructions on downstream investment and compliance with FEMA provisions. The fact that statutory auditor has certified that the company is in compliance with the regulations as regards downstream investment and other FEMA prescriptions will be duly mentioned in the Director’s report in the Annual Report of the Indian company. In case statutory auditor has given a qualified report, the same shall be immediately brought to the notice of the Reserve Bank of India, Foreign Exchange Department (FED), Regional Office (RO) of the Reserve Bank in whose jurisdiction the Registered Office of the company is located and shall also obtain acknowledgement from the RO of having intimated it of the qualified auditor report. RO shall file the action taken report to the Principal Chief General Manager, Foreign Exchange Department, Reserve Bank of India, Central Office Building, Shahid Bhagat Singh Road, Mumbai 400001. 6. Multi Brand Retail Trading In respect of proposals involving FDI beyond 51%, sourcing of 30% of the value of goods purchased, will be done from India, preferably from MSMEs, village and cottage industries, artisans and craftsmen in all sectors. The quantum of domestic sourcing will be self-certified by the company, to be subsequently checked, by statutory auditors from the duly certified accounts which the company will be required to maintain. 7. Single Brand product retail trading Self-certification by the company, to ensure compliance of the conditions at serial nos. (ii), (iii) and (iv) above, which could be cross -checked, as and when required. Accordingly, the investors shall maintain accounts, duly certified by statutory auditors. 8. Person resident in India for transfer of shares to a person resident outside India by way of gift to a close relative In case of Government dated securities and treasury bills and bonds, a certificate issued by a Chartered Accountant on the market value of such security. In case of shares and convertible debentures, a certificate from a Chartered Accountant on the value of such securities according to the guidelines issued by Securities & Exchange Board of India or fair value worked out as per any internationally accepted pricing methodology for valuation of shares for listed companies and unlisted companies, respectively.

Chartered Accountant/ Statutory Auditor. . . 3/6 FDI in an LLP: Either by way of capital contribution or by way of acquisition / transfer of ‘profit shares’, would have to be more than or equal to the fair price as worked out with any valuation norm which is internationally accepted/ adopted as per market practice (hereinafter referred to as “fair price of capital contribution/profit share of an LLP”) and a valuation certificate to that effect shall be issued by a Chartered Accountant or by a practicing Cost Accountant or by an approved valuer from the panel maintained by the Central Government. Establishment of Liaison/Branch/Project Offices in India by Foreign Entities 1. Annual Activity Certificates Branch Offices / Liaison Offices have to file Annual Activity Certificates (AAC) from Chartered Accountants, at the end of March 31, along with the audited Balance Sheet on or before September 30 of that year. In case the annual accounts of the LO/ BO are finalized with reference to a date other than March 31, the AAC along with the audited Balance Sheet may be submitted within six months from the due date of the Balance Sheet to the designated AD Category I bank, and a copy to the Directorate General of Income Tax (International Taxation), New Delhi along with the audited financial statements including receipt and payment account. 2. Closure of Branch/Liaison Offices Auditor’s certificate- i) indicating the manner in which the remittable amount has been arrived at and supported by a statement of assets and liabilities of the applicant, and indicating the manner of disposal of assets; ii) confirming that all liabilities in India including arrears of gratuity and other benefits to employees, etc. , of the Office have been either fully met or adequately provided for; and iii) confirming that no income accruing from sources outside India (including proceeds of exports) has remained un-repatriated to India. 3. Intermittent Remittances by Project Offices in India The Project Office submits an Auditors' / Chartered Accountants’ Certificate to the effect that sufficient provisions have been made to meet the liabilities in India including Income Tax, etc. The Project Office shall also submit to the AD branch on an annual basis, a Certificate from a Chartered Accountant showing the Project Status and certifying that the accounts of the Project Office has been audited and the activities undertaken are in conformity with the General / Specific permission given by the Reserve Bank. 4. Powers relating to transfer of assets of Liaison / Branch Office/Project Office A certificate is to be submitted from the Statutory Auditor furnishing details of assets to be transferred indicating their date of acquisition, original price, depreciation till date, present book value or WDV value and sale consideration to be obtained. Statutory Auditor should also confirm that the assets were not re-valued after their initial acquisition. The sale consideration should not be more than the book value in each case.

Chartered Accountant/ Statutory Auditor. . . 4/6 5. Branch Offices are permitted to remit outside India profit of the branch net of applicable Indian taxes A Chartered Accountant’s certificate certifying i. the manner of arriving at the remittable profit ii. that the entire remittable profit has been earned by undertaking the permitted activities iii. that the profit does not include any profit on revaluation of the assets of the branch. ODI 1. Form ODI: Section F- Certificate by the Statutory Auditors of the Indian Party Section F: Certificate by the Statutory Auditors of the Indian Party It is certified that the terms and conditions contained in Notification No. FEMA 120/RB-2004 dated July 7, 2004, as amended from time to time (Foreign Exchange Management (Transfer or Issue of any Foreign Security) Regulations, 2004) have been complied with by the Indian party(Name of the Indian Party) in respect of the investment under report. In particular, it is certified that: (i) the investment is not in real estate oriented or banking business, and amount (ii) foreign the of exchange proposed purchased be to remittance for towards investment the together with remittances all for overseas investments already made and exports and other dues capitalized / swap of shares / investment from ECB / FCCB balances for investment abroad under the Automatic Route is within the limit stipulated by the Reserve Bank from time to time. This has been verified with reference to the net worth of the Indian party (Name of the Indian Party) as on the date of last audited balance sheet, i. e. -------(date) (iii) has complied with the valuation norms prescribed for the investment (iv) has complied with the ECB guidelines # (v) adequacy as prescribed by the regulatory authority concerned; (c) has been registered with the appropriate regulatory authority in India and (d) has obtained approval for the investment in financial services sector activities from the regulatory authorities concerned in India and abroad*. Further, certified that, wherever applicable, the Annual Performance Report, as required in terms of Regulation 15(iii) of the Notification ibid, in respect of all the existing JV / WOS of the Indian party has been submitted. Note: * Applicable only in cases where the investment is in the financial services sector (e. g. insurance, mutual fund, asset management, etc. ). # Applicable where investment is funded through ECB/FCCB balances.

Chartered Accountant/ Statutory Auditor. . . 5/6 2. Direct Investment by Residents in Joint Venture (JV)/Wholly Owned Subsidiary (WOS) Abroad In case of partial / full acquisition of an existing foreign company, where the investment is more than USD 5 million, valuation of the shares of the company shall be made by a Category I Merchant Banker registered with SEBI or an Investment Banker / Merchant Banker outside India registered with the appropriate regulatory authority in the host country; and, in all other cases by a Chartered Accountant or a Certified Public Accountant. 3. Transfer by way of sale of shares of a JV / WOS If the shares are not listed on the stock exchange and the shares are disinvested by a private arrangement, the share price is not less than the value certified by a Chartered Accountant / Certified Public Accountant as the fair value of the shares based on the latest audited financial statements of the JV / WOS; 4. Annual Performance Report (APR) Certified by Statutory Auditors of the Indian party, through the designated AD Category– I bank every year by June 30 th as long, as the JV / WOS is in existence. Where the law of the host country does not mandatorily require auditing of the books of accounts of JV / WOS, the Annual Performance Report (APR) may be submitted by the Indian party based on the un-audited annual accounts of the JV / WOS provided: a. The Statutory Auditors of the Indian party certify that ‘The un-audited annual accounts of the JV / WOS reflect the true and fair picture of the affairs of the JV / WOS’ and b. That the un-audited annual accounts of the JV / WOS has been adopted and ratified by the Board of the Indian party. 5. Report on Closure / Disinvestment / Voluntary Liquidation / Winding Up of JV/WOS If the shares are not listed on the stock exchange, and the shares are disinvested by a private arrangement, the share price is not less than the value certified by a Chartered Accountant /Certified Public Accountant as the fair value of the shares based on the latest audited financial statements of the Joint Venture or Wholly Owned Subsidiary; In all other cases, by a Chartered Accountant or a Certified Public Accountant.

Chartered Accountant/ Statutory Auditor. . . 6/6 ECB 1. Form-83: (Reporting of loan agreement details under Foreign Exchange Management Act, 1999) Forward one copy (within 7 days from the date of signing loan agreement between borrower and lender) for allotment of Loan Registration Number (LRN) We hereby certify that the particulars given above are true and correct to the best of our knowledge and belief and no material information has been withheld and/or misrepresented. Furthermore, the ECB is in compliance with the extant ECB guidelines. 2. ECB-2: Reporting of actual transactions of External Commercial Borrowings (ECB) under Foreign Exchange Management Act, 1999 (for all categories and any amount of loan) Certificate from Company Secretary / Chartered Accountant We hereby certify that the ECB availed in terms of approval granted by Government or RBI or under approval route / automatic route is duly accounted in the books of accounts. Further, ECB proceeds have been utilised by the borrower for the purpose of ___________. We have verified all the related documents and records connected with the utilisation of ECB proceeds and found these to be in order and in accordance with the terms and conditions of the loan agreement and with the approval granted by Go. I (Mo. F) or RBI or under approval route / automatic route and is in conformity with the applicable ECB Guidelines. Exports of Goods and Services Write off of export bills In case of self-write-off, the exporter should submit to the concerned AD bank, a Chartered Accountant’s certificate, indicating the export realization in the preceding calendar year and also the amount of write-off already availed of during the year, if any, the relevant EDF/SDF Nos. to be written off, Bill No. , invoice value, commodity exported, country of export. The CA certificate may also indicate that the export benefits, if any, availed of by the exporter have been surrendered.

Company Secretary FDI 1. Reporting of issue of shares - Form FC-GPR A certificate from our Company Secretary certifying that (a) all the requirements of the Companies Act, 1956 have been complied with; (b) terms and conditions of the Government approval, if any, have been complied with; (c) the company is eligible to issue shares under these Regulations; and (d) in accordance with paragraph 8 of Schedule 1 to Notification No. FEMA 20/2000 -RB dated May 3, 2000. ECB 2. Form-83: (Reporting of loan agreement details under Foreign Exchange Management Act, 1999) Forward one copy (within 7 days from the date of signing loan agreement between borrower and lender) for allotment of Loan Registration Number (LRN) We hereby certify that the particulars given above are true and correct to the best of our knowledge and belief and no material information has been withheld and/or misrepresented. Furthermore, the ECB is in compliance with the extant ECB guidelines. 3. ECB-2: Reporting of actual transactions of External Commercial Borrowings (ECB) under Foreign Exchange Management Act, 1999 (for all categories and any amount of loan) Certificate from Company Secretary / Chartered Accountant We hereby certify that the ECB availed in terms of approval granted by Government or RBI or under approval route / automatic route is duly accounted in the books of accounts. Further, ECB proceeds have been utilised by the borrower for the purpose of _________. We have verified all the related documents and records connected with the utilisation of ECB proceeds and found these to be in order and in accordance with the terms and conditions of the loan agreement and with the approval granted by Go. I (Mo. F) or RBI or under approval route / automatic route and is in conformity with the applicable ECB Guidelines. Portfolio Investment 4. Indian Investee Company eligible to raise the aggregate cap of 24% for RFPI to sectoral cap/ statutory limit 5. Indian Investee Company eligible to raise the aggregate cap of 10% to 24 per cent for Portfolio Investments by SEBI registered NRI/PIO

Proposed Changes in Timeframe for Issue of Shares and Reporting of FDI S. No. Paragraph of Schedule 1 1 8 2 Proposed Amendments Time frame for issue of shares: At the time of filing FC-GPR the investee company shall be required to submit a certificate from a practising Company Secretary/Chartered Accountant to the effect that provisions of section 42 of Companies Act, 2013 have been complied with. 9(1) (A) and 9(1) Time frame for reporting: Delay in reporting beyond the prescribed period (30 (B) days from receipt of funds in case of report ARF and 30 days from issue of shares in case of report FC-GPR) shall attract a penalty of one percent of the total amount of investment subject to a minimum of Rupees Five thousand maximum of Rupees Five lakh per month or part thereof for the first six month of delay and twice that rate thereafter, to be paid online into a designated account in Reserve Bank of India. Proposed to introduce similar penalty structure for other mandatory reporting requirements under FEMA, 1999. Without paying the penalty as mentioned above shall be liable to penal provisions mentioned in FEMA, 1999 and the rules/regulations framed there under including compounding. Since compounding is an elaborate process imposing a burden on the contravener as well as the Reserve Bank, it was felt that with a view to improving the ease of compliance, a summary framework may be put in place for dealing with reporting delays without compromising with the reporting discipline. 9