Vi seeks govt clarification about FDI from Hong Kong, others

Even as Vodafone Idea is looking to bring in fresh funds from new investors it has sought clarity on whether investments from Hong Kong will require prior government approval. While the government has allowed 100 per cent of foreign direct investments in the telecom sector to happen through the automatic route, countries that share a land border with India are required to get their investments approved by the government first.

Vodafone Idea, in a submission to the Telecom Regulatory Authority of India, has sought an explicit list of countries that will be considered as sharing a land border with India, “For example, it is not clear whether Hong Kong is considered as a land border country for the purposes of the above provision.” Voda Idea said.

As per the telecom licence, an entity of a country, which shares land border with India or where the beneficial owner of an investment into India is situated in or is a citizen of any such country, can invest only under the Government route

Vi has sought clarification whether the term ‘entity of a country’ is determined on the basis of the location of the office or the ownership of the investment or both.

Telecom licence rules stipulate that In the event of the transfer of ownership of any existing or future FDI in an entity in India, directly or indirectly, resulting in the beneficial ownership falling within the country specific restriction then such subsequent change in beneficial ownership will also require Government approval.

Vodafone Idea has asought clarity on the definition of ‘beneficial ownership’ under telecom licence. While The Companies Act, 2013, prescribes a threshold of 10 per cent ownership for determining beneficial holding, the Prevention of Money Laundering Act, 2002 (PMLA), prescribes a threshold of 25 per cent ownership. “However, no such threshold has been mentioned in the licence. Therefore, it would be desirable if this aspect is also clarified,” the operator said.

Vodafone Idea board recently approved a ₹14,500 crore fundraising plan. Out of this ₹4,500 crore is slated to come from promoters of Vodafone Group and Aditya Birla Group via preferential equity allotment. The remaining ₹10,000 crore will come through a mixture of debt and equity, for which Vi needs to continue its fundraising endeavours from abroad. The Hindu BusinessLine