December 5, 2009: FDI applicants must furnish three years audited financial statements to FIPB: Revenue Department

The Revenue Department, which scrutinises all foreign investments from the tax angle, has asked the Foreign Investment Promotion Board (FIPB) to ensure that FDI applicants furnish three years audited financial statements of the investor. Such disclosures will be useful to determine the source of funds as also to assess the ability of the actual and the immediate investor to make such investments.

In a letter to the FIPB recently, the Revenue Department noted while examining the proposals, the investee companies are reluctant to offer critical details such as the profit and loss account and the
balance-sheet.

Last year, the Department had pointed out that FDI applications should specifically contain the name and address of the investor, details of the parent company, a clear relationship between the parent and the investing entity, and details about the shareholders and director of variouscompanies that figure in the corporate structure.

Also, it emphasised on details of source of funds proposed to be invested along with details of the flow of funds from original to the investee firm. 

Observing that its suggestions on expansion of check-list had not been made implemented yet, the Department has asked FIPB to expedite the process.