Outbound Investment Structuring | A Detailed Guide

The Government has become liberal in the past few years regarding inbound and outbound investment regimes. The Industrial Policy Resolution of 1956 and Industrial Policy of 1991 provide the basic structure for the overall introduction of liberalization and Globalization in the Indian Economy. Until the 1980’s foreign investment was permitted only where the desired Technology was not available. Every single country has its own set of issues, the regulatory framework in terms of the legal and judicial system, tax structure and business dynamics. The economy has experienced a rapid economic growth rate, more foreign investment, and a boom in the Information Technology sector. This can also be referred to as cross-border Taxation policy were the countries.

What is Outbound Investment from India?

Most of the important sectors of commerce and economy due to liberal FDI policies have opened the doors for extensive investments in various profitable and financially secure sectors. Some of the preferable destinations for investment are the United States, United Kingdom, France. Germany, Hong Kong, Belgium, Spain, Canada, and the Gulf Countries. Latin American and African Countries have huge outbound investment structuring opportunities in the fields of mining, manufacturing, and agriculture. Indian firm’s basic investment in foreign countries through Mergers and Acquisition (M&A) activity. Investment by Indian companies is expected to increase backed by stable market conditions and considerable impact of the investments on local economies.

Benefits of Outbound Investment

Investments in Foreign Companies can be very beneficial to the economy of both countries. For investing the benefits are as follows:

Access to foreign Markets:
Acquiring or starting a business in foreign markets can gain access to the market for investors. More business opportunities will arise.

Access to resources:
Important natural resources such as precious metals and fossil fuels are available in Tanzania and Gulf Countries. It can be easily available at low prices by investing there.

Cost Savings: 
The cost of Production will be saved if the labor or production cost is less in another country.

How Enterslice can help you in Outbound Investments Structuring?

Incorporation Procedure of NBFC Registration in India

What is NBFC in India?

A Non – Banking Financial Corporation is a company incorporated under the Companies Act 2013 or 1956 which is engaged in the business of Loans and Advances, Acquisition of stocks, equities, debt etc issued by the government or any local authority. The main objective of this type of a company is to accept deposits under any scheme or manner.

According to section 45-I (c) of the RBI Act, a Non – Banking Company carrying on the business of a financial institution will be an NBFC. It is governed by the Ministry of Corporate Affairs as well as the Reserve Bank of India.

What is the Procedure for NBFC License in India?

The Reserve Bank of India controls and directs Non-Banking Financial Companies which are into the important business of loaning or obtaining of offers, stocks, bonds, and so forth. or money related to renting or contract buy or tolerating stores. The primary business of budgetary action is the point at which an organization's money related resources comprise more than 50 per cent of the absolute resources and pay from monetary resources establishes in excess of 50 per cent of the gross pay. An organization which satisfies both these criteria must have NBFC License. This test for NBFC License Procedure in India is prevalently known as the 50-50 test. In this way, organizations occupied with rural tasks, mechanical action, buy and closeout of merchandise, giving administrations or buy, deal or development of the undaunted property as their primary business and are doing some money-related action in a little manner, won't require NBFC Registration.

The Procedure of Registration of NBFCs

It shall be beneficial for you to know in brief about the procedure of Registration of NBFC:

• First formality is an incorporation of the applicant company under the Companies Act, 1956 or 2013, with Minimum
• Net Owned Fund of INR 2 crore (Equity Share Capital & not Preference Share Capital).
• Thereafter the applicant company needs to open a Bank Account and keep the entire sum of INR 2 crores in the bank’s deposit account, which should be free from all liens.
• The applicant is then required to apply for registration online on RBI’s official COSMOS website.
• Post submission of the form, CARN (Company Application Reference Number) is generated that is helpful in future references.
• Subsequently, the hard copies of all the documents are required to be submitted to the concerned Regional Office of RBI.
• The Regional Office shall scrutinize the authenticity of the documents and on being satisfied, shall forward it to the Central Office.
• The Central Office of RBI grants the NBFC registration only after the fulfilment of all prescribed requirements by the company under section 45-IA, of its act of 1934.

Also, read: NBFC: Things to know before Incorporating this Financial Institution

Checklist for Nidhi Company Registration

What is Nidhi Company?

Nidhi Company is governed by Section 406 of the Companies Act, 2013 and Company Nidhi Rules, 2014 which has a sole objective of cultivating the habit of thrift and savings amongst its members. Nidhi companies are allowed to take deposit from its members and lend to its members only. Therefore, the funds contributed for a Nidhi company are only from its members (shareholders) and used only among the shareholders of the Nidhi Company.

Nidhi Company is a class of NBFCs and RBI is empowered to issue directions to them in matters relating to their deposit acceptance activities. However, in recognition of the fact that these Nidhis deal with their shareholder-members only, RBI has exempted the notified Nidhis from the core provisions of the RBI Act and other directions applicable to NBFCs. Therefore, Nidhi Company Registration is an ideal entity to take deposit from and lend to a specific group of people

What you should know before Nidhi Company Registration Process?

1. Nidhi Company is made with the aim of cultivating the habit of savings amongst the member, receiving deposits from and lending to its members only for their mutual benefit.
2. Companies which are performing the Nidhi Business known by different names such as Permanent Funds, Mutual Benefit Funds, Mutual Benefit Company, etc.
3. As Nidhi falls under one class of NBFC, RBI is empowered to issue commands in subject related to deposit acceptance activities. However, RBI has exempted Nidhi’s from the core provisions of RBI Act and directions applied on NBFC registration. Nidhi Company Registration is one of the categories of Non-Banking Financial Company (NBFC) that does not require any Reserve Bank license

Requirements for a Nidhi Company Registration:

Within a period of 1 year of the starting of the rules, the company must ensure that it has the following –

1. Minimum number of members should be 200
2. The ratio of net owned funds to deposit should not be more than 1:20
3. Net owned funds should be Rs. 10,00,000/- or more.
4. Burden less term deposit of not less than 10% of the outstanding deposits as specified in Rule 14.

Also, read: Rules Regarding Nidhi Company Setup in India

General Restrictions on Nidhi Company:

No Nidhi shall carry on –
1. The business of chit fund, hire purchase finance, leasing finance, insurance or acquisition of securities by anybody corporate.
2. Issue preference shares, debentures, or any debt instrument by any name or in any form whatsoever.
3. Open any current account with member.
4. Acquire another company by purchase of securities or Control the composition of the Board of Directors of any other company in any manner whatsoever. Carry on any business other than the business of borrowing or lending in its own name;
5. Accept Deposits from or lend to any person, other than its members;
6. Pledge any of the assets lodged by its members as security;
7. Take Deposits from or lend money to anybody corporate;
8. Enter into any Partnership Arrangement in its borrowing or lending activities;
9. Issue or cause to be issued any advertisement in any form for soliciting deposit;
10. Pay any brokerage or incentive for mobilizing deposits from members or for deployment of funds or the granting loans.
11. Enter into any arrangement for the change of its management, unless it has passed a special resolution in its general meeting and also obtained the previous approval of the Regional Director having jurisdiction over Nidhi.

Memorandum of Understanding: A Complete Guide on this Concept

MoU is an acronym form for the memorandum of understanding, and it is also known as a Letter of Intent (LoI) in India. An MoU agreement is drafted when both the parties have mutually agreed to enter into a contract. But it is significant to note that the formalities of the said contract are yet to be negotiated. Thus, this document simply means that two parties have reached a mutual decision.

Further, it is significant to note that this document is used to gauge the intention of both the transacting parties before a contract is officially signed between them. Hence, this document is not of binding nature as it does not grant rights to either of the concerned party.

Purpose Behind Drafting Memorandum of Understanding

Once the phase of negotiation is complete among the members of the concerned parties, then the only left is a verbal agreement. Hence, the main reason behind drafting a Memorandum of Understanding (MoU) is to captures all that has been agreed mutually between parties. The following listed are the other purposes which are annexed with the concept of Memorandum of Understanding –

1. Clarifying and elucidating the main purposes behind the concerned project for the comfort of its members
2. The statements and the terms on which the concerned parties are negotiating over are duly noted
3. Gather the advances that occur in each one of the statements
4. Survey the interest of the other party to achieve the task
5. Confirms if the said arrangement scrunches amid negotiation.

Features of Memorandum of Understanding

Following listed are the features annexed with the concept of Memorandum of Understanding –

1. Firstly, this document must specify the name and other details of the concerned parties between whom the Memorandum of Understanding (MoU) is being signed.
2. It should clearly stipulate the purpose and the objectives for which the said memorandum is being signed.
3. It should also specify the plans related to the meetings between the parties. For Example - the parties are required to meet at least once in a quarter.
4. This document should also specifically talk about the amount of capital contribution to be made by each concerned party.
5. It should also mention the name of the person authorized to take the major financial decisions.
6. The financial record keeping of the assignment and program being undertaken should also be maintained.
7. The Memorandum of Understanding may also provide about the appointment of the persons who will be responsible for taking care of the day to day operations of the program. Further, the role, responsibilities, and remuneration should also be mentioned.
8. Once the MOU is duly prepared and agreed upon by all the parties involved, it should be dated and signed by the authorized individuals representing each party or the organization.
9. The memorandum should also talk about the duration of such agreement signed between parties, i.e., the beginning and the ending dates of the said memorandum. Moreover, it should stipulate the situations in which such a memorandum shall be deemed terminated.

How to Draft a Memorandum of Understanding

Memorandum of Understanding has a very distinctive drafting process. The following listed are the steps involved in the process of drafting an MOU -

1. The first and the foremost step is to determine the wants of the parties involved and also what they are willing to negotiate on.
2. Once the planning is duly done, the second step is all about the drafting of the initial MOU. Also, both the parties are involved in drafting their initial MOU.
3. In the third step, guidelines are decided by both the parties involved as per their requirements. This stage is also known as the Negotiation Phase.
4. Once the phase of negotiations is complete, a time frame for the said MOU is then established. An overall time frame from the commencement of the Memorandum of Understanding (MoU) until its expiry date is decided.
5. The final and the last step in the process of drafting an MOU is to add privacy statements, restrictions, etc. by both the parties engaged and then sign the final drafted MOU.

The Legality of the Memorandum of Understanding

Generally, as we all know, that Memorandum of Understanding has no legal binding effect. However, if the transaction concerning the exchange of money is engaged, then it may have legal implications on the parties concerned. In order to be legally binding, the said MOUs must include the following listed -

1. All the parties engaged in the memorandum must be listed by their legal name, business, and address.
2. MOU should recognize itself as an MOU and not as a contract.
3. For an MOU to be legally binding, it should clearly identify the purpose of the agreement. Moreover, a separate section of the intentions and goals of each party should be listed.
4. The financial obligations and responsibility of both parties should be decided.
5. Finally, all the parties engaged should sign the MOU.

What should all content be included in the Format of a Memorandum of Understanding?

The following listed are the content that should be included in the format of a Memorandum of understanding -

1. Purpose of entering into an MOU.
2. Responsibilities and duties of both the parties involved in MOU
3. Meetings and the manner of reporting
4. Financial and technical support
5. Any kind of monetary consideration, if in the case involved
6. The person who will be responsible and accountable for managing all the future operations
7. Duration of the concerned MOU, from the beginning till it expires
8. Confidentiality clause between both the parties involved
9. Any sort of conditions or restrictions which may take the MOU towards the termination
10. Indemnity Clause etc

Language to be used in Memorandum of Understanding

Language plays a crucial role as it helps in determining whether the said MOU is legally binding or not. If, in case the language used in the Memorandum of Understanding outlines the terms and conditions of the offer and is also backed by considerations, then the said MOU will function as a legally enforceable contract. However, if the said memorandum specifically and clearly mentions that “This memorandum is no way a legally enforceable contract between parties mentioned above,” then this document will not have any binding effect. Thus, the use of language plays a significant role while drafting the format of the Memorandum of Understanding.

Enforceability of the Memorandum of Understanding as per the Law

The concept of MOU (Memorandum of Understanding) is governed and regulated by the provisions of the Indian Contract Act, 1872. Also, it is significant to note that if in case all the conditions mentioned under the provisions of the Indian Contract Act are duly complied with, then the performance of the said MOU can also be enforced under the provisions of the Specific Relief Act, 1963. The relief under the provisions of the Specific Relief Act, 1963, is granted when the compensation cannot be ascertained in the monetary terms.

If, in case the conditions prescribed under the provisions of the Indian Contract Act, 1872, are not duly complied with or fulfilled, then the said MOU is not acknowledged as a legally valid contract. Further, it is significant to note that this MoU can still be enforced in the court of law based on the principles of promissory estoppels and equity.

Stamp Duty payable on the Memorandum of Understanding

Generally, no stamp duty is payable on the MOU. However, the said MoU should be duly stamped if it establishes an agreement to purchase for an immovable property worth more than Rs. 100 and also when one needs to produce it in the court.

Further, if in case the stamp duty is paid, then this document gets evidentiary value and will also be admitted as a piece of evidence in court. Hence, the document not duly stamped, will not be admitted as evidence by the Court.

The Concept of Exclusive and Non-Exclusive Memorandum of Understanding

A Memorandum of Understanding (MoU) can either be elite or non-elite or even both. Whenever an exclusive MOU is drafted, then parties concerned are kept restrained from agreeing with a similar MoU with any other entity until the tenure of the first MOU is complete. While, in the case of non-exclusive MOU, the parties concerned are allowed to enter into another similar MoU with any other entity.

If, in the case, one is uneasy that the rivals may likewise approach the other party and may commence transactions with them, then in this said case, he or she can go for the option of MoU on a chosen premise with another party. Entering into an MoU means that, till the tenure of Memorandum of Understanding, the other concerned party is being prohibited from consulting with some other entity.

Performa of the Memorandum of Understanding

Memorandum of Understanding

between

(Partner)

and

(Partner)

This Memorandum of Understanding (“MOU” or “Agreement”) sets the terms, conditions. and understanding between (partner’s name) and (partner’s name) to (description of activity).

1. Background -

(General description of the said Agreement)

2. Purpose -

This MOU will (purpose or the goals of partnership)

The above goals will be achieved by undertaking the following listed activities -

(List and describe all the activities that are planned for the said partnership and also specify who will do what)

3. Contact Information -

Partner name -

Partner’s representative -

Position -

Address -

Telephone -

Fax -

E-mail -

Partner name -

Partner’s representative -

Position -

Address -

Telephone -

Fax -

E-mail -

4. Roles and Responsibilities of the concerned Parties -

(Describe partners’ responsibilities under this Agreement)

5. Funding -

(Specify that this Memorandum of Understanding is not a commitment of funds)

6. Duration -

The said MOU is at will and may be modified by the mutual consent of all the authorized officials (list partners). Further, this MOU shall become effective upon the signature by all the authorized officials from the (list partners) and will remain in force until further modified or terminated by anyone of the said partners by mutual consent. In the absence of the mutual agreement by the authorized officials from (list partners), this concerned MOU shall end on (end date of the said partnership).

________________________

Partner name -

Organization -

Position -

Date -

________________________

Partner name -

Organization -

Position -

Date -

How a Memorandum of Understanding is Distinct from an Agreement

BASIS FOR COMPARISON	AGREEMENT	MEMORANDUM OF UNDERSTANDING (MoU)
Meaning	An agreement is a document in which two parties mutually agree upon working together to attain a common objective.	A Memorandum of Understanding or an MoU is a legal document that specifies the terms and conditions of an arrangement between the two or more parties making a bilateral or multilateral agreement.
Elements	Offer and Acceptance.	Offer, Acceptance, Intention, and Consideration.
Enforceability	An agreement can be made enforceable in the court of law.	A Memorandum of Understanding or an MoU cannot be made enforceable in the court of law unless the same is duly stamped
Binding nature	It is always binding on the parties to the agreement.	It is binding upon the concerned parties only if the memorandum is engaged in the transaction dealing with the exchange of monetary consideration.
Collateral Rights	Yes	No
Form	Oral or Written	Written

Conclusion

MOUs play a crucial role in the business world as it helps in duly noting down all the statements and the terms on which the concerned parties are negotiating. Further, MOUs normally do not involve transactions dealing with the exchange of money. Generally, MOUs do not have any legal binding force. However, if there is a transaction involving the exchange of money, then MoU is considered as a legally binding contract.

Complete Process for Shop and Establishment Registration

Finding how to get shop and establishment registration? Then here is the complete process for the registration procedure along with important documents:

shop and establishment banner official

Process for online shop and establishment registration

Shop and establishment is a state act due to which procedures may vary from state to state. Here is the basic procedure you need to follow to get shop and establishment registration in your state.

Step 1- Download the application:

Visit the official website of your state and download the application in the prescribed format.

Step 2- fill in the application:

Once you have downloaded the application, fill in the required details. You need to fill in following given details accurately:

• Name of establishment
• Name of owner
• Details of the owner
• Number of employees at time of incorporation of the business
• Address of the establishment
• Sale deed or rental agreement of the place
• Pan card of the owner and business

Step 3- submission of the application:

Once you are done with filling the required details, submit the application to the inspector in charge or to the Chief Inspector of Shop and Establishment Act along with the prescribes fees. 

Step 4- issuance of certificate:

Once you have submitted the application, it will be further scrutinized by the higher authorities and if all goes well and they are satisfied with the documents and application they will grant you the certificate. 

This was all about the procedure for obtaining shop and establishment registration. It takes around 15-20 days to get the certificate. However the days may vary from state to state. Now here are the important documents you need to get the certificate.

Documents required for the registration of shop and establishment:

• Identity proof of the owner including his PAN card
• Address proof of the establishment along with the sale deed or rental agreement
• Employee details.

Still have some queries? do ask us at info@enterslice.com.

Different types of FSSAI License Required for food Business

Food safety and Standard authority of India deals with providing FSSAI license to the people who are involved in the various food business. It is mandatory to be obtained by all the food business operators in India whether they are transporters, manufacturers or distributors.

In this article, we discuss the different types of FSSAI license and how to do FSSAI license renewal with the help of enterslice team.

What is FFSAI license?

FSSAI license contains a 14 digit registration or license number that is used by the food business operators on their manufactured food products. FSSAI license creates accountability for quality standards of the manufactured food products. It is granted by the FSSAI that is an autonomous organization established under the Food Safety and Standards Act, 2006 and constituted under the Ministry of Health & Family Welfare, Government of India. FSSAI registration is a mandatory compliance for all the food business in India. So, it becomes very important for all the FBO’s to get their FSSAI License renewal at specified time intervals to avoid any kind of legal conflicts or disputes.

FSSAI License

What are the different types of FSSAI License or Registration in India?

Based on the criteria of business turnover FSSAI license is further divided into 3 categories that are given as follows:

1. Basic Food Registration: it is for all the petty food business operators mainly the hawkers, vendors or temporary stall holder whose business turnover does not exceed the limit of Rs. 12 lacks per annum.
2. FSSAI State License – FSSAI State license is required by the food Business whose turnover lies between Rs. 12 Lac to Rs. 20 Cr. annually or/additionally. The annual turnover limit is the same for an FSSAI State Manufacturing license or FSSAI State trading license.

• FSSAI Central License – it is required for the business whose Turnover limit is above Rs. 20 Cr per year in Case of food Manufacturing or food Trading or food Storage as specified by the law.

Another criterion for obtaining registration or license is based upon the production capacity of the food business unit. Latter criteria are used to provide the FSSAI license to various Food Processing Units, Meat processing Units, Slaughtering Units. No matter what the criteria are or what type of FSSAI license is issued to the FBO’s it is always mandatory for all the food business to get their FSSAI License renewal without any delay.

Why do you require FSSAI License Renewal?

FSSAI license is mandatory to start a food business in India. Although, it is not enough to obtain the license, it is equally important to renew the FSSAI license from time to time. FSSAI license renewal possesses a valid food license that ensure that consumers are still provided the products that are safe for consumption and are according to the standards laid down by the authority and Act. The initial validity of the food license obtained by FBO’s ranges from 1 year to 5 years. After that, it becomes compulsory to get your FSSAI License renewal from the authorities by submitting an application 30 days before the expiry of the current food license. In case the applicant has not applied for FSSAI license renewal he is charged Rs. 100 for per day of delay.

Conclusion: FSSAI License is a mandatory compliance for all the FBO’s in India whether they are wholesale manufacturers or caterers or food distribution. They are provided with a 14 digit registration number that is printed upon their food products. FSSAI license renewal is as compulsory and important as obtaining an FSSAI Registration. Enterslice helps you in obtaining FSSAI license and getting it time to time renewed by applying for FSSAI state and central license renewal process on behalf of you. Get your registration now or know more about these food licenses by dropping a mail to Enterslice at info@enterslice.com.

State of RERA Implementation: Are Home Buyers Really Safe?

Are you thinking about spending all your life savings into a home purchase? Do you know about RERA (real estate regulatory authority) implementation? If not, then you should become aware of RERA before buying a property. The rules prescribed under RERA are to protect the rights of both residential and commercial segment buyers.  So far, only fourteen states have implemented the RERA rules completely. Soon, you will expect RERA implementation in your city. Continue reading to know the benefits and impact of RERA implementation and RERA Registration completely.

A Quick Overview of RERA 

RERA actually stands for Real Estate Regulatory Authority, which is an act for the promotion and regulation of the real estate sector in order to make sure the sale of plot, apartment, and building in the transparent and efficient manner. Its major aim is to protect the consumer's interest. In May 2016, the parliament enacted the RERA act and it has come into effect from 1 May 2017 with all its 92sections throughout the country.

The implementation of RERA is actually bringing a huge relief to the homebuyers because builders will be responsible for the timely delivery and quality of the project. It also protects the buyers/consumers from the fraud sellers. On the other hand, developers would gain from the improved confidence of the consumers in the highly regulated ambiance.

For all developers, it is mandatory to get approvals from several government agencies before launching their product as well as disclose all the details on the site, which respective state RERA will set up. Regulator offers a registration number for all the real estate agents, which should be mentioned in every property sale. This helps in removing the possibility of misleading the buyers. 

Rera Registration

How to get RERA Registration? 

Do you wish to get RERA Registration for your upcoming projects? Then, you should follow the below steps carefully.

• Firstly, you should file the application form along with the required documents and fee to get registered under RERA
• Upon successful registration, you will get the registration number from the regulator, which should mention in every property
• You are also needed to maintain the books of records, account, and documents related to the transactions on a quarterly basis
• Share all sorts of documents and information about the project with the purchaser
• During the registration process, real estate agent may be suspended from the fraud and misrepresentation

Benefits of RERA Implementation 

RERA implementation is absolutely safe for home buyers. In fact, this act will help them to take a more informed and smart buying decision. Additionally, homebuyers can enjoy following benefits.

• As builders disclose all the details regarding the project on the authority site, you will never worry about losing your hard earned money through fraud agents
• Buyers need to pay only for the area within walls, not for the life, stairs, lobby, and balcony
• Timely completion of projects because about 70% of money gathered from buyers and transferred to separate bank account to use them solely for completing the project construction works
• Any defect in the building for 5years will be accountable for builder and any delay in the project completion will need developers to pay 2% interest rate to the buyers.