The Foreign Investment Promotion Board (FIPB), the government body that approves foreign direct investments (FDI) has rejected four foreign direct investments FDI proposals and deferred one in its last meeting held on June 14, because there was no clarity about sources of funds and beneficiaries of investments.
FIPB rejected proposals of Multi-Commodity Exchange of India (MCX), SNAP Networks, Alliance Insurance Brokers and Mauritius-based Highdell Investment for non-disclosure of beneficial ownership. Meanwhile, FIPB deferred a decision on Rs. 2,000-crore Jet-Etihad deal, the largest foreign investment in the Indian aviation sector, and sought clarity on control and ownership.
The Multi-Commodity Exchange of India (MCX) had in June sought FIPB nod for investment made into the company in 2008 by Alexandra Mauritius Limited, a subsidiary of Alexandra Global Master Fund, a company resident in British Virgin Island. FIBP rejected its proposal after taking note of the fact that those details of ultimate beneficiaries and sources of funds were unknown. The department of revenue even noted that the investment made in MCX is not reflected in the financial statement of Alexandra Mauritius.
In most cases, the authorities fail to trace the investor. So, finance ministry, which houses the FIPB, has been working on new disclosure norms on source of funds and beneficial ownership to eliminate any suspicious investment at the first stage itself.
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