OMP India Private Limited

In exercise of the powers under Section 15 (1) of Foreign Exchange Management Act, 1999 and the Regulations / Rules / Notifications / Orders made thereunder, I pass the following Order. ORDER The applicant has filed the compounding application dated September 21, 2018 (received at Reserve Bank of India, New Delhi on October 9, 2018) for compounding of contravention of the provisions of the Foreign Exchange Management Act, 1999 (hereinafter referred to as FEMA) and the regulations issued thereunder. The contravention sought to be compounded are those of (i) delay in reporting foreign inward remittance received for issue of shares, (ii) delay in filing Form FC-GPR after issue of shares, and (iii) receipt of amount of consideration after allotment of shares and delay in allotment of shares beyond 180 days of the receipt of the amount of consideration from persons resident outside India, in terms of paragraphs 9(1)(A), 9(1)(B) and 8 of Schedule 1 to Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000 notified vide Notification No. FEMA 20/2000-RB dated May 3, 2000, as amended from time to time.

OMP India Private Limited CA No. NDL 315/2018

2. The relevant facts of the case are as follows: (a) The applicant company was incorporated on January 11, 2007 and is engaged in manufacture of other transport equipment, such as, pushcarts, handcrafts etc. (b) The applicant had reported the receipt of twenty one foreign inward remittances during the period January 22, 2007 to February 8, 2017 with delay ranging from 4 days to 9 years, 3 months and 26 days beyond the prescribed period, as detailed below, in contravention of paragraph 9(1)(A) of Schedule 1 to Notification No. FEMA 20/2000-RB dated May 3, 2000, as then applicable. Contravention of Para 9(1)(A) of Schedule 1 to Notification No. FEMA 20/2000-RB dated May 3, 2000 Sr. No. Date of receipt Amount (in INR) Date of reporting 1. 22.01.2007 5673000.00 20.03.2007 2. 22.08.2008 19384300.00 16.01.2018 3. 23.08.2008 25220000.00 04.03.2013 4. 19.07.2010 5960808.00 25.08.2010 5. 04.08.2010 4225900.00 16.09.2010 6. 03.09.2010 7672719.00 07.02.2012 7. 29.09.2010 7800100.00 07.02.2012 8. 02.07.2012 1393050.00 31.08.2012 9. 18.07.2012 8438720.00 31.08.2012 10. 25.03.2013 4874275.00 04.07.2013 11. 23.04.2013 4923269.00 04.07.2013 12. 23.08.2013 11113026.00 26.09.2013 13. 15.10.2013 41666025.00 27.11.2013 14. 17.01.2014 16653196.00 07.07.2016 15. 28.02.2014 33915290.00 17.09.2014 16. 28.03.2014 13165780.00 17.09.2014 17. 28.03.2014 19748990.00 17.09.2014 18. 30.04.2014 20746870.00 17.09.2014 19. 04.06.2014 5637183.00 17.09.2014 20. 08.05.2015 21427408.00 07.07.2016 21. 08.02.2017 2146318.00 03.11.2017 Total 28,17,86,227.00 Whereas, in terms of Paragraph 9(1)(A) of Schedule 1 to FEMA 20/2000-RB, an Indian company issuing shares or convertible debentures in accordance with these Regulations should report to 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 had reported the allotment of shares on six occasions with delay ranging from 3 months and 11 days to 5 years, 4 months and 19 days beyond the OMP India Private Limited CA No. NDL 315/2018 prescribed period, as detailed below, in contravention of paragraph 9(1)(B) of Schedule 1 to Notification No. FEMA 20/2000-RB dated May 3, 2000, as then applicable. Contravention of Para 9(1)(B) of Schedule 1 to Notification No. FEMA 20/2000-RB dated May 3, 2000 Sr. Date of No. of Shares Amount (in Date of No. Allotment Allotted INR) reporting 1 22.01.2007 10000 100000.00 10.07.2012 2 05.03.2007 636900 6369000.00 20.09.2007 3 07.01.2011 406063 40606300.00 13.01.2012 4 05.09.2011 948490 94849000.00 16.01.2012 5 01.04.2017 25250 2146250.00 05.10.2017 6 06.07.2015 252087 21427395.00 09.07.2018 Total 16,54,97,945.00 Whereas, in terms of Paragraph 9(1)(B) of Schedule 1 to FEMA 20/2000-RB, an Indian company issuing shares in accordance with these Regulations has to submit to Reserve Bank a report in Form FC-GPR along with documents prescribed therein, within 30 days from the date of issue of shares to a person resident outside India.

(d) A foreign inward remittance of ₹56,73,000/- was received by the company on January 22, 2007 from its foreign investor M/s OMP SRL, Italy, and out of this fund 10,000 MOA shares worth ₹1,00,000/- were issued to the investor on January 22, 2007. The balance amount of ₹55,73,000/- was utilized for issue of 6,36,900 equity shares on March 5, 2007 for a consideration amount of ₹63,69,000/-. The deficit amount of ₹7,96,000/- (₹63,69,000/- minus ₹55,73,000/-) was received only on March 25, 2013, i.e., with a delay of 6 years and 20 days after allotment of shares on March 5, 2007 in contravention of paragraph 8 of Schedule 1 to Notification No. FEMA 20/ 2000-RB dated May 3, 2000, as then applicable. Further, the company allotted shares on four more occasions with delay ranging from 1 day to 9 years, 2 months and 16 days beyond the prescribed period of 180 days from the date of receipt of inward remittances, as detailed below, in contravention of paragraph 8 of Schedule 1 to Notification No. FEMA 20/2000-RB dated May 3, 2000, as then applicable. The allotment of shares beyond 180 days were with the prior approval of the Reserve Bank of India in two cases mentioned at Sr.

No. 2 and 3 below while the other three cases (Sr. Nos. 1, 4, & 5) were without the prior approval of the Reserve Bank of India.

OMP India Private Limited CA No. NDL 315/2018 Contravention of Para 8 of Schedule 1 to Notification No. FEMA 20/2000- RB dated May 3, 2000 Sr. No. Date of receipt Amount ( in INR) Date of allotment 1. 25.03.2013 796000.00 05.03.2007 2. 22.08.2008 19384300.00 04.05.2018 3. 23.08.2008 25220000.00 04.05.2018 4. 23.08.2013 11113026.00 24.02.2014 5. 21.10.2014 15654277.00 20.04.2015 Total 7,21,67,603.00 Whereas, in terms of paragraph 8 of Schedule 1 to FEMA 20/2000-RB dated May 3, 2000, as then applicable, an Indian company has to issue shares/ convertible debentures/ warrants within 180 days from the date of receipt of the inward remittance or date of debit to NRE/FCNR(B) account, as the case may be. In case the capital instruments are not issued within 180 days, the amount of consideration so received shall be refunded to the person concerned by outward remittance through normal banking channels or by credit to his NRE/ FCNR(B) account, as the case may be. Provided further that the Reserve Bank may, on an application made to it and for sufficient reasons, permit an Indian company to refund the amount of consideration received towards issue of security, if such amount of consideration is outstanding beyond a period of 180 days from the date of receipt. (e) Thus, there are contraventions of paragraphs 9(1)(A), 9(1)(B) and 8 of Schedule 1 to FEMA Notification No. 20 /2000-RB dated May 3, 2000, as then applicable.

3. The applicant was given an opportunity for personal hearing for further submission in person and/or by producing documents, if any, in support of the application. Shri Gianfranco Atzeri, CEO & Director of the company and Shri Deepender Kumar Agarwal, Chartered Accountant appeared for personal hearing on February 21, 2019 on behalf of the applicant. The representatives of the applicant admitted the contraventions committed by the company for which compounding has been sought. During the personal hearing, they submitted that delays were without any malafide or wilful intention but were mainly due to oversight of FEMA provisions. They requested for a lenient view in the matter. The application for compounding is, therefore, being considered on the basis of averments made in the application as well as other documents and submissions made during the personal hearing.

OMP India Private Limited CA No. NDL 315/2018 4. I have given my careful consideration to the documents on record and submissions made by the applicant during the personal hearing. Accordingly, I hold that the applicant has contravened the following FEMA provisions: (a) Paragraph 9(1)(A) of Schedule 1 to FEMA 20/2000-RB, due to delay in reporting of foreign inward remittances received towards subscription of shares as detailed in paragraph 2(b) above. The contraventions relate to an amount of ₹28,17,86,227/- (Rupees Twenty Eight Crore Seventeen Lakh Eighty Six Thousand Two Hundred Twenty Seven only) and the period of delay ranges from 4 days to 9 years, 3 months and 26 days. (b) Paragraph 9(1)(B) of Schedule 1 to FEMA 20/2000-RB, due to delay in filing of Forms FC-GPR to the Reserve Bank after issue of shares to persons resident outside India as detailed in paragraph 2(c) above. The contraventions relate to an amount of ₹16,54,97,945/- (Rupees Sixteen Crore Fifty Four Lakh Ninety Seven Thousand Nine Hundred Forty Five only) and the period of delay ranges from 3 months and 11 days to 5 years, 4 months and 19 days. (c) Paragraph 8 of Schedule 1 to FEMA 20/000-RB, due to receipt of the amount of consideration after the allotment of shares as also due to delay in allotment of shares beyond 180 days of the receipt of the amount of consideration from persons resident outside India as detailed in paragraph 2(d) above. The contraventions relate to a total amount of ₹7,21,67,603/- (Rupees Seven Crore Twenty One Lakh Sixty Seven Thousand Six Hundred and Three only) and the period of delay ranges from 1 day to 9 years, 2 months and 16 days.

5. It has been declared in the compounding application dated September 21, 2018 that the particulars given by the applicant in the application are true and correct to the best of their knowledge and belief. It has been declared in the undertaking dated February 6, 2019 furnished by the Director of the company as part of compounding application 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 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

OMP India Private Limited CA No. NDL 315/2018 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 contraventions are to be compounded and I consider that an amount of ₹16,99,677/- (Rupees Sixteen Lakh Ninety Nine Thousand Six Hundred and Seventy Seven only) will meet the ends of justice.

7. Accordingly, I compound the admitted contraventions of paragraphs 9(1)(A), 9(1)(B) and 8 of Schedule 1 to FEMA 20/2000-RB, as then applicable, by the applicant based on the facts detailed above in terms of the Foreign Exchange (Compounding Proceedings) Rules, 2000, on payment of an amount of ₹16,99,677/- (Rupees Sixteen Lakh Ninety Nine Thousand Six Hundred and Seventy Seven only) which shall be deposited by the applicant with the Reserve Bank of India, Foreign Exchange Department, 6, Sansad Marg, New Delhi - 110001 by a demand draft drawn in favour of the “Reserve Bank of India” and payable at New Delhi within a period of 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 accordingly.

Dated this the 22nd day of February 2019.

Sd/- (Anupam Sonal) Chief General Manager