FCR Bill 2006 – Request for Reconsidering Some Issues

(vi) a company within the meaning of the Companies Act 1956, (1 of 1956), and more than one-half of the nominal value of its share capital is held, either singly or in the aggregate, by one or more of the following, namely:–

(A) the Government of a foreign country or territory;

(B) the citizens of a foreign country or territory;

(C) corporations incorporated in a foreign country or territory;

(D) trusts, societies or other associations of individuals (whether incorporated or not), formed or registered in a foreign country or territory;

(E) foreign company;

2(1)(g) “foreign company” means any company or association of body of individuals incorporated outside India and includes –

(ii) a company which is a subsidiary of a foreign company”

(ii)                The turnover and income of such companies is generated in India and hence donations being given by such a company would be out of funds generated within India.

(iii)               A recipient of donations from such a company may not even realize that it is a foreign company and would violate the law by treating the donation as from an Indian source rather from a foreign source.

(iv)              Donations from such companies are not detrimental to national interests since such companies are interested to do business in India, pay Indian taxes, provide employment to Indian nationals and would always like to increase their business in India.

(v)                The limit of Rs. one crore has been taken to reflect that the Indian company is operating and conducting business within India.

(a) shall utilise such contribution for the purposes for which the contribution has been received:

Provided that any foreign contribution or any income arising out of it shall not be used for speculative business;

(b) shall not defray as far as possible such sum, not exceeding fifty per cent of such contribution, received in a financial year, to meet administrative expenses:

Provided that administrative expenses exceeding fifty per cent of such contribution may be defrayed with prior approval of the Central Government.

(2) The Central Government may prescribe the elements which shall be included in the administrative expenses and the manner in which the administrative expenses referred to in sub-section (1) shall be calculated.

2.       Sec 8(1)(b) and 8(2) be deleted.

1. Sec 8(1)(a): (i) At times an association may have to utilize the funds for another project on an emergency basis e.g. natural calamity, delay in receipt of funds from the donor, which are then reimbursed by a donor.

(ii) At times grants are received towards the end of the year but the programme is an ongoing one, which if stopped would lead to a disruption in the programme.

(iii) donor requires that the donee first implement the programme and the donor then gives a reimbursement grant.

1. Sec 8(1)(b) and 8(2): (i) Use of funds should be left to a decision between the donor and the donee.

(ii) Administrative expenses are not detrimental to national interest or for matters connected therewith or incidental thereto.

(iii) A decision on what is administration will always be a matter that is very subjective, e.g. salaries to doctors in a hospital, salaries to teachers in a school, telephone expenses during natural calamities etc.

(a) shall utilise such contribution for the purposes for which the contribution has been received:

Provide   that any foreign contribution or any income arising out of it shall not be used for speculative business;

2.       The words “speculative business” is not defined.

3.      When one law specifies the mode of investment then another law should adhere to that law so that there is uniformity.

has not indulged in activities aimed at conversion through inducement or force, either directly or indirectly, from one religious faith to another;

(ii) The word “indirectly” be deleted.

(ii)                The word “inducement” could mean providing of drinking water to persons; building houses for the disaster affected people, providing medical relief to the poor, downtrodden or infected; providing clothes / sarees; providing education free of cost or at a concession can all be termed as inducement. This clause itself will defeat the very principle for which funds are sought i.e. work having “having a definite cultural, economic, educational or social programme.

(iii)               The word ‘indirectly’ has also not been defined. Some persons may falsely be put up to claim to be acting on behalf of the concerned person so as to get the person into trouble or some people can be interpreted to be deemed to be acting on behalf of the concerned person and the person will find it difficult to immediately contest such insinuations.

(iv)              Clause of (iii) of the same section deals with creation of communal tension or disharmony in any district or part of the country and hence for there is an adequate safeguard for the Government to act upon.

16(3) “The Central Government shall renew the certificate subject to such terms and conditions as it may deem fit and grant a certificate of renewal for a period of five years:

Provide that the Central Government may refuse to renew the certificate in case where a person has violated any of the provisions of this Act or rules made thereunder.”

11 (2) If an application referred to in sub-section (1) is not disposed of within ninety days from the date of receipt of such application, the permission prayed for in such application shall, on the expiry of the said period of ninety days, be deemed to have been granted by the Central Government:

PROVIDED that, where in relation to an application, the Central Government has informed the applicant the special difficulties by reason of which his application cannot be disposed of within the said period of ninety days, such application shall not, until the expiry of a further period of thirty days, be deemed to have been granted by the Central Government.

2. If a time frame is not specified then applications can remain pending, which is not correct.

12(5) The certificate granted under sub-section (3) shall be valid for a period of five years and the prior permission shall be valid for the specific purpose or specific amount of foreign contribution proposed to be received, as the case may be.

2. Renewal of Certificate

16(3) The Central Government shall renew the certificate subject to such terms and conditions as it may deem fit and grant a certificate of renewal for a period of five years:

Provided that the Central Government may refuse to renew the certificate in case where a person has violated any of the provisions of this Act or rules made thereunder.

(i)                  Sections 23 to 27 of the proposed Bill empower the government to inspect accounts, records of any recipient.

(ii)                Section 13 empowers the Government to suspend the certificate of registration of the recipient.

(iii)               Section 14 empowers the Government to cancel the certificate of registration of the recipient.

(iv)              Section 18 requires every recipient to provide intimation to the Government of foreign contribution received and utilized.

3.       Renewal is an administration requirement whereas effective MONITORING is more useful to the government, which is possible through the above mentioned proposed sections.

4.       Section 12(3) ends by stating the following:

“the Central Government may register such person and grant him a certificate or give him prior permission, as the case may be, subject to such terms and conditions as may be prescribed.”

Under this proposed section there is scope for prescribing conditions.

5.       The Government will be able to utilize its time more effectively by monitoring 20% of the registered associations each year i.e. 100% in five years rather than spending time in granting renewal of registration every five years.

(2) Every person receiving foreign contribution shall submit a copy of a statement indicating therein the particulars of foreign contribution received duly certified by officer of the bank or authorised person in foreign exchange and furnish the same to the Central Government along with the intimation under sub-section (1).

2.       An audited statement of account duly certified by a Chartered Accountant is universally accepted by the government, and all institutions.

3.       Section 17(2) of the proposed Bill already requires the following:

“(2) Every bank or authorised person in foreign exchange shall report to such authority as may be specified —

(a) the amount of foreign remittance;

(b) the source and manner in which the foreign remittance was received; and

(c) other particulars,

in such form and manner as may be prescribed.”

And hence proposed section 18(2) should be deleted.

2. Repeal and Saving

54(2)(b) any organisation of a political nature, not being a political party, to whom the prior permission was granted under section 5 of the repealed Act, shall continue to be the organisation of a political nature, not being a political party, under clause (f) of sub-section (1) section 3 of this Act, till such permission is withdrawn by the Central Government;