one ques mg have you got ur ISP license ?
I mean this bcoz your name is not there in any of the documents
http://www.dot.gov.in/internet%20services/2010/ISP%20licences%20as%20on%2031.07.10.doc
http://www.dot.gov.in/internet%20services/2010/Staus%20of%20pending%20applications%20for%20grant%20of%20ISP%20Licence%20as%20on%2031.07.10.doc
one is for who have licenses and the other for who have applied as of july 2010
Even on the day those documents were published, they are dreadfully out of date (there are several license holders that I know of who should be holding 'A' licenses but are still listed as 'B'), but our license is also not currently under the name of Hayai Pvt Ltd.
One more thing this is the excerpt from
DOT website regarding ISP licensing rules:
Department of Telecommunications- Internet Service Provider
A company registered under Company Act 1956 and having maximum foreign equity of 74% (even 100% foreign equity permitted for licences without Internet Gateway) could apply for ISP Licence. The applicant company was required to pay processing fee of Rs 6000/- only, however, there was no entry fee for grant of ISP licence. No licence fee was levied on the ISPs till 31st October, 2003. A token licence fee of Re.1/- per annum is payable w.e.f. 1st November, 2003.
So according to this you should have any problem as 100% FDI is permitted according to this.
That information is also out of date. The Internet License dated from 24 August 2007 says in paragraph 1.1:
TERMS AND CONDITIONS
Part-I GENERAL CONDITIONS
1. Ownership of the LICENSEE Company:
1.1
The LICENSEE shall ensure that the total foreign equity in the paid up
capital of the LICENSEE Company does not, at any time during the
entire Licence period, exceed 74% of the total equity. The details of
the Indian & Foreign promoters/shareholders with their respective
equity holdings in the LICENSEE Company as disclosed on the date of
signing of the Licence agreement, are as follows:
Sl.
No.
1.
2.
Name of Shareholders
Indian/
Foreign
Percent of
Equity held
1.2 Both direct and indirect foreign investment in the licensee company
shall be counted for the purpose of FDI ceiling. Foreign Investment
shall include investment by Foreign Institutional Investors (FIIs), Non-
resident Indians (NRIs), Foreign Currency Convertible Bonds (FCCBs),
American Depository Receipts (ADRs), Global Depository Receipts
(GDRs) and convertible preference shares held by foreign entity.
Indirect foreign investment shall mean foreign investment in the
company/ companies holding shares of the licensee company and their
holding company/companies or legal entity (such as mutual funds,
trusts) on proportionate basis. Shares of the licensee company held by
Indian public sector banks and Indian public sector financial institutions
will be treated as `Indian holding’. In any case, the `Indian’
shareholding will not be less than 26 percent.
FDI and Shareholdings are slightly different, but we clear the FDI requirements by miles, as only a fraction of the investment has come from outside of India.
But when I was forming the company, my lawyers informed me that the maximum shareholding I can have is 49% since I was not yet registered with FIPB at the time, and this was something that had both the licensors and lawyers confused for a time, as I had originally planned to hold 60% of shares.
This is written in the actual license agreement:
7. Foreign Direct Investment (FDI):
(i) FDI ceiling in the Licensee Company shall be 74%.
(ii) Both direct and indirect foreign investment in the licensee company shall be counted for the purpose of FDI ceiling. Foreign Investment shall include investment by Foreign Institutional Investors (FIIs), Non-resident Indians (NRIs), Foreign Currency Convertible Bonds (FCCBs), American Depository Receipts (ADRs), Global Depository Receipts (GDRs) and convertible preference shares held by foreign entity. Indirect foreign investment shall mean foreign investment in the company/ companies holding shares of the licensee company and their holding company/companies or legal entity (such as mutual funds, trusts) on proportionate basis. Shares of the licensee company held by Indian public sector banks and Indian public sector financial institutions will be treated as `Indian holding’. In any case, the `Indian’ shareholding will not be less than 26 percent.
(iii) FDI up to 49 percent will continue to be on the automatic route. FDI in the licensee company/Indian promoters/investment companies including their holding companies, shall require approval of the Foreign Investment Promotion Board (FIPB) if it has a bearing on the overall ceiling of 74 percent. While approving the investment proposals, FIPB shall take note that investment is not coming from countries of concern and/or unfriendly entities.
(iv) The investment approval by FIPB shall envisage the conditionality that Company would adhere to licence Agreement.
(v) FDI shall be subject to laws of India and not the laws of the foreign country/countries.
For the record, the processing fee is now Rs15k, and a bank guarantee of 20 lakhs has to be provided (for Category A) before signing the agreement (it used to be far more, so we got lucky)... and we still have to give the DoT 6% of our Annual Revenue... but that's been the least of our worries!!
