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June 2013

A. P. (DIR Series) Circular No. 104 dated 17th May, 2013

By Gaurang Gandhi, Chartered Accountant
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28. A. P. (DIR Series) Circular No. 104 dated 17th May, 2013
    
Foreign Direct Investment (FDI) in India – Issue of equity shares under the FDI scheme allowed under the Government route against pre-operative/pre-incorporation expenses

Presently, shares can be allotted to a foreign investor under the Approval Route of the FDI Scheme against payments made by him (the foreign investor) towards pre-operative/pre-incorporation expenses (including payments of rent, etc.) only if the payment is routed through the bank account of the investee company.

This circular has modified the said condition and provides that equity shares can be allotted to a for-eign investor under the Approval Route of the FDI Scheme against payments made by him (the foreign investor) towards pre-operative/pre-incorporation expenses (including payments of rent, etc.) if the payment is routed through the bank account of the investee company or the payment is made from the bank account opened by the foreign investor as provided under FEMA Regulations. The amended paragraph is as under: –

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