Crowdnetic Technologies Pvt Ltd

In the matter of M/s Crowdnetic Technologies Private Limited H.No. 8-2-293/82/A/701-II/301, Third Floor, Solitaire Building, Road No. 36, Jubilee Hills, Hyderabad 500033 (Applicant) In exercise of the powers conferred under sub-section (1) of Section 15 of Foreign Exchange Management Act, 1999 and the Regulations/ Rules/ Notifications/ Orders made thereunder, I pass the following Order The applicant has filed the compounding application dated November 28, 2018 received on January 4, 2019 for compounding of contraventions of the provisions of the Foreign Exchange Management Act, 1999 (the FEMA) and the regulations issued thereunder. The contraventions sought to be compounded are (i) delay in reporting receipt of foreign inward remittances and (ii) delay in submission of Form FC-GPR to Reserve Bank of India after issue of shares towards subscription to Compounding of contraventions under FEMA 1999 M/s Crowdnetic Technologies Private Limited CA No. HYD 397 equity and (iii) delay in filing of FLA returns in terms of Paragraph 9(1)(A), Paragraph 9(1)(B) and Paragraph 9(2) respectively of Schedule 1 to Foreign Exchange Management Regulations, 2000 notified vide Notification No. FEMA.20/2000-RB dated May 03, 2000 (hereinafter referred to as Notification No. FEMA 20/2000-RB) as then applicable and Regulation 13.1(3) of Schedule 1 to FEMA 20(R) dated November 7, 2017(hereinafter referred to as Notification No. FEMA 20R/2017-RB) as amended from time to time. 2. The relevant facts of the case are as follows: a) The applicant is a resident company incorporated as Private Limited Company under the Companies Act, 2013 on 18.01.2016 (CIN: U72200TG2016FTC102764). The company is engaged in IT Consultancy Services. b) The applicant had received foreign inward remittances for subscription to equity shares as indicated below: Name of remitter Date of Date of S.No Amount (INR) Receipt reporting Crowdnetic Corporation 1 1313730.00 22/03/2016 23/03/2017 Inc, United States Crowdnetic Corporation 2 1077080.83 04/05/2016 Inc, United States 03/05/2017 Crowdnetic Corporation 3 358001.88 25/05/2016 Inc, United States 14/04/2017 Crowdnetic Corporation 4 376439.00 02/09/2016 Inc, United States 21/07/2017 Crowdnetic Corporation 5 375701.00 25/07/2017 Inc, United States 29/09/2016 Crowdnetic Corporation 439906.50 31/08/2018 6 Inc, United States 01/07/2016 3940859.21

Compounding of contraventions under FEMA 1999 M/s Crowdnetic Technologies Private Limited CA No. HYD 397

The applicant reported receipt of remittances towards share subscription amounting to ₹ 39,40,859.21 to the Regional Office of Reserve Bank of India which were reported with delays ranging from 8 months 26 days to 2 years 1 month approximately as indicated above. Whereas in terms of Paragraph 9(1)(A) of Schedule 1 to Notification No. FEMA 20/2000-RB, an Indian company issuing shares or convertible debentures in accordance with these Regulations should report to the Reserve Bank of India as per the prescribed procedure not later than 30 days from the date of receipt of the amount of consideration. c) The company allotted shares and filed form FC-GPRs as indicated below. Name of Amount for investor Date of No. of which Date of S.No allotment of Shares shares reporting to shares allotted allotted RBI (INR) Crowdnetic 1 Corporation Inc, 22/03/2016 131373 1313730 31/08/2018 United States Crowdnetic 2 Corporation Inc, 04/05/2016 107708 1077080 31/08/2018 United States Crowdnetic 3 Corporation Inc, 25/05/2016 35800 358000 31/08/2018 United States Crowdnetic 4 Corporation Inc, 02/09/2016 37644 376440 31/08/2018 United States 5 Crowdnetic 37570 375700 31/08/2018

Compounding of contraventions under FEMA 1999 M/s Crowdnetic Technologies Private Limited CA No. HYD 397 Corporation Inc, 29/09/2016 United States Crowdnetic 6 Corporation Inc, 01/07/2016 43990 439900 02/04/2019 United States Total 39,40,850 The applicant filed form FCGPRs for the allotment of shares amounting to ₹39,40,850/- as indicated above which were reported with delays ranging from 1 year 10 months 2 days to 2 years 8 months 2 days approximately beyond the prescribed time limit. Whereas in terms of Paragraph 9(1)(B) of Schedule 1 to Notification no. FEMA 20/2000-RB, an Indian company issuing shares in accordance with these Regulations has to submit to Reserve Bank a report in form FCGPR along with documents prescribed therein within 30 days from the date of issue of shares to person resident outside India. d) The company has delayed in filing FLA Return (Foreign liabilities and Assets) for 3 years as shown below: Sl Particulars Financial Due date of Date of No year filing actual filing 1 FLA Return 2015-16 15/07/2016 27/03/2019 2 FLA Return 2016-17 15/07/2017 27/03/2019 3 FLA Return 2017-18 15/07/2018 27/03/2019

The company had filed FLA returns for 3 years with delays ranging from 8 months 12 days to 2 years 8 months 12 days approximately. Whereas, in terms of Paragraph 9(2) of Schedule I to Notification No. FEMA 20/2000-RB dated May 03, 2000 as then applicable and Regulation 13.1(3) of Schedule I to FEMA 20(R) dated November 7, 2017, all Indian companies which have received Foreign Direct Investment in the previous year(s) including the current year shall submit to the Reserve Bank of India, on or before the 15th day of July of each year, [a report titled

Compounding of contraventions under FEMA 1999 M/s Crowdnetic Technologies Private Limited CA No. HYD 397 ‘Annual Return on Foreign Liabilities and Assets’ (FLA) as specified by the Reserve Bank from time to time. 3. (a) The applicant was given an opportunity for personal hearing vide Reserve Bank’s letter No. HY.FE.FID/2501/14.66.003/2018-19 dated May 8, 2019 for further submission in person and/or producing documents, if any, in support of the application. (b) The company vide email dated May 8, 2019 informed us that they choose not to avail of the Personal Hearing. In view of the foregoing, the applicant requested to take a lenient view in disposal of the application. The application for compounding is, therefore, being considered on the basis of the averments made in the application. 4. I have given my careful consideration to the documents on record. Accordingly, I hold that the applicant has contravened the following FEMA provisions issued in terms of: - (a) Paragraph 9(1)(A) of Schedule 1 to Notification No. FEMA 20/2000-RB for delay in reporting the receipt of consideration towards issue of shares amounting to ₹ 39,40,859.21 and the delay ranges from 8 months 26 days to 2 years 1 month approximately.

(b) Paragraph 9(1)(B) of Schedule 1 to Notification No. 20/2000-RB for delay in submission of Form FC-GPR to Reserve Bank of India after issue of shares to persons resident outside India and the contravention relates to an amount of ₹ 39,40,850/- and the delay ranges from 1 year 10 months 2 days to 2 years 8 months 2 days approximately. (c) Paragraph 9(2) of Schedule 1 to Notification No. 20/2000-RB and Regulation 13.1(3) of Schedule I to Notification No. FEMA 20R/2017-RB for delay in filing of FLA Return to Reserve Bank of India for the three financial years viz 2015-16 to 2017-18 and the delay ranges from 8 months 12 days to 2 years 8 months 12 days approximately. 5. It has been declared in the compounding application dated November 28, 2018 that the particulars given by the applicant in the application are true and correct to Compounding of contraventions under FEMA 1999 M/s Crowdnetic Technologies Private Limited CA No. HYD 397 the best of their knowledge and belief. It has been declared in the declaration dated January 7, 2019 that the applicant was not under any enquiry/investigation/adjudication by any agency as on the date of the application and has, in this regard, not informed of initiation of any such enquiry/investigation/adjudication proceedings against it thereafter.

It has further been declared that the applicant has not filed any appeal under section 17 or section 19 of FEMA, 1999. Accordingly, the above contraventions which are being compounded in this Order are subject to the veracity of the above declarations made by the applicant and this order is without prejudice to any other action which may be taken by any authority under the extant laws if the said declarations are subsequently discovered to be false and/or incorrect. 6. In terms of Section 13 of the FEMA, any person contravening any provision of the Act shall be liable to a penalty up to thrice the sum involved in such contravention upon adjudication. However, taking into account the relevant facts and circumstances of the case as stated in the foregoing paragraphs, I am persuaded to take a lenient view on the amount for which the contravention is to be compounded and I consider that an amount of ₹79805/-(Rupees Seventy Nine Thousand Eight Hundred and Five Only) will meet the ends of justice. 7. Accordingly, I compound the admitted contraventions, namely, the contraventions of Paragraph 9(1)(A),Paragraph 9(1)(B) and Paragraph 9(2) respectively of Schedule 1 to FEMA.20/2000-RB and Regulation 13.1(3) of Schedule 1 to Notification no. FEMA 20R/2017-RB by the applicant on the facts discussed above in terms of the Foreign Exchange (Compounding Proceedings) Rules, 2000 on payment of an amount of ₹79805/-(Rupees Seventy Nine Thousand Eight Hundred and Five Only) which shall be deposited by the applicant with the Reserve Bank of India, Foreign Exchange Department, 1st Floor, Saifabad, Hyderabad - 500004 by a demand draft drawn in favour of the "Reserve Bank of India" and payable at Hyderabad within a period of Compounding of contraventions under FEMA 1999 M/s Crowdnetic Technologies Private Limited CA No. HYD 397 15 days from the date of this order.

In case of failure to deposit the compounded amount within the above mentioned period, Rule 10 of the Foreign Exchange (Compounding Proceedings) Rules, 2000 dated May 3, 2000 shall apply.

The application is disposed of accordingly. Dated this 10th day of May 2019

Sd/- (C Nageswara Rao) Deputy General Manager