Spotline Software Solutions Pvt. Ltd.

In the RESERVE BANK OF INDIA Foreign Exchange Department 6, Sansad Marg New Delhi - 110001 Present Md. Shakir Hasan Assistant General Manager Date: January 3, 2020 CA No. NDL 519/2019 In the matter of Spotline Software Solutions Private Limited 674, Aggrawal Cyber Plaza-II, 6th Floor, Netaji Subhash Place, Pitampura Delhi - 110034 (Applicant)

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 August 8, 2019 (received at Reserve Bank of India, New Delhi on August 13, 2019) for compounding of contraventions of the provisions of the Foreign Exchange Management Act, 1999 (hereinafter referred to as FEMA) and the regulations issued thereunder. The contraventions sought to be compounded are those of (i) issue of shares to person resident outside India prior to receipt of the amount of consideration, and (ii) delay in refund of excess share application money, in terms of paragraphs 2(2) and 2(3) respectively of Schedule 1 to Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017 notified vide Notification No. FEMA 20(R)/2017-RB dated November 7, 2017 (hereinafter referred to as FEMA 20(R)/2017-RB), as then applicable.

Spotline Software Solutions Private Limited CA No. NDL 519/2019

2. The relevant facts of the case are as follows: (a) The applicant company, incorporated on June 18, 2018, is engaged in software consultancy and managing all back office work like accounting and human resource related work offered by the outsourcing business. (b)The applicant issued 99,999 equity shares on July 8, 2018 to the subscriber to its Memorandum of Association, M/s Spotline, Inc., U.S.A. The consideration for the said shares amounting to ₹9,99,990/- was received on March 29, 2019, 8 months and 21 days after the issue of shares, in contravention of paragraph 2(2) of Schedule 1 to FEMA 20(R)/2017-RB, as then applicable. Whereas, in terms of paragraph 2(2) of Schedule 1 to FEMA 20(R)/2017-RB, an Indian company accepting FDI has to receive the share application money from the non-resident investor prior to the issue of shares, and shares have to be issued within sixty days from the date of receipt of the consideration. (c) The applicant had received share application money amounting to ₹10,31,308.80 on March 29, 2019 and issued shares for a consideration of ₹9,99,990/- as detailed in paragraph 2(b) above. The excess amount of ₹31,318.80 was refunded to M/s Spotline, Inc., U.S.A., on August 7, 2019, with a delay of 1 month and 26 days beyond the prescribed period, in contravention of paragraph 2(3) of Schedule 1 to FEMA 20(R)/2017-RB, as then applicable. Whereas, in terms of paragraph 2(3) of Schedule 1 to FEMA 20(R)/2017-RB, where capital instruments are not issued within sixty days from the date of receipt of the consideration the same shall be refunded to the person concerned by outward remittance through banking channels or by credit to his NRE/ FCNR(B) accounts, as the case may be, within fifteen days from the date of completion of sixty days. (d) Thus, there are contraventions of paragraphs 2(2) and 2(3) of Schedule 1 to FEMA 20(R)/ 2017-RB, 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 Satish Gupta, Chartered Accountant, appeared for personal hearing on January 2, 2020 on behalf of the applicant. The representative of the applicant admitted the contraventions committed by the applicant for which compounding has been sought. During the personal hearing, he submitted that the contraventions were Spotline Software Solutions Private Limited CA No. NDL 519/2019 without any malafide or wilful intention but were mainly due to lack of awareness of legal provisions. He 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.

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 2(2) of Schedule 1 to FEMA 20(R)/2017-RB, as then applicable, on account of issue of shares to person resident outside India prior to receipt of the amount of consideration as detailed in paragraph 2(b) above. The contravention relates to an amount of ₹9,99,990/- (Rupees Nine Lakh Ninety Nine Thousand Nine Hundred and Ninety only) and the period of contravention is 8 months and 21 days. (b) Paragraph 2(3) of Schedule 1 to FEMA 20(R)/2017-RB, as then applicable, on account of delay in refund of excess share application money as detailed in paragraph 2(c) above. The contravention relates to an amount of ₹31,318.80 (Rupees Thirty One Thousand Three Hundred Eighteen and Paise Eighty only) and the period of delay is 1 month and 26 days.

5. It has been declared in the compounding application dated August 8, 2019 that the particulars given by the applicant in the application are true and correct to the best of their knowledge and belief. It has also been declared in the declaration dated August 8, 2019 furnished with the 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. 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.

Spotline Software Solutions Private Limited CA No. NDL 519/2019

6. In terms of Section 13 of 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. After considering the submissions made by the applicant and the entire facts and circumstances of the case I am persuaded to compound the contraventions in line with the Guidance Note on Computation Matrix prescribed as part of Master Direction – Compounding of Contraventions framed in accordance with the Foreign Exchange (Compounding Proceedings) Rules, 2000. Accordingly, it stands to reason that payment of an amount of ₹55,532/- (Rupees Fifty Five Thousand Five Hundred and Thirty Two only) will meet the ends of justice in the circumstances of this case.

7. Accordingly, I compound the admitted contraventions of paragraphs 2(2) and 2(3) of Schedule 1 to FEMA 20(R)/2017-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 ₹55,532/- (Rupees Fifty Five Thousand Five Hundred and Thirty Two 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 3rd day of January 2020.

Sd/- (Md. Shakir Hasan) Assistant General Manager