fyi
---------------------- Forwarded by Donna Lowry/HOU/ECT on 06/09/2000 04:44 
PM ---------------------------


Lauren Hagerty@ENRON_DEVELOPMENT
06/09/2000 01:56 PM
To: Donna Lowry@ECT
cc:  
Subject: Genesys : Sale of Shares : RBI approvall

FYI.  It would seem we still have a lot of ground to cover on selling Genesys.
---------------------- Forwarded by Lauren Hagerty/ENRON_DEVELOPMENT on 
06/09/2000 01:55 PM ---------------------------


Chandran Bhaskar
06/09/2000 12:15 AM
To: Rahul Basu/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
cc: Sandeep Katwala/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Raj 
Thapar/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Gopalakrishnan 
Subramaniam/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Veena 
Srinivasan/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Lauren 
Hagerty/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT 

Subject: Genesys : Sale of Shares : RBI approvall

Dear Rahul,

Your mail on the above subject refers.

As regards to the approvals to be followed in sale of the Genesys shares by 
Enron Distribution Ventures MHC Ltd., Mauritius, i list below the following:

(A) Approvals required:
Per section 10 B (1) the FEMA Regulations effective 1 June 2000, transfer by 
way of sale by a person resident outside India of the shares / debentures 
held by him to person resident in India will require prior permission of RBI. 
Veena, your activity chart shows that Form TS 1 is to be filed after the sale 
is effected, money received and at the time of remittance of sale proceeds. 
Since, the Act prescribes prior approval, we should sell only after receipt 
of RBI approval and not before.
The requisite form to be filed for seeking approval is Form TS1. 
If we are effecting the sale through a private arrangement , the application 
should be supported with the average quotation of the share price ( average 
of daily high and low) for one week proceeding the date of application, duly 
certified by a Chartered Accountant. If the sale proposed to be effected on 
the floor of the exchange to the general public at the prevailing market 
price, the Chartered Accountant's certification is not required. Since, we 
intend selling at the floor, this certification is not required.

(B) Thinly Traded:
I refer to Veena's query on whether Genesys shares are thinly traded. Per 
section 10 - Explanation i) the share will be treated as thinly traded if the 
annualised trading turnover in that share, on a main stock exchanges in 
India, during the six  calendar months preceding the month in which the 
application is made, is less than 2%( by number of shares) of the listed 
stock.
Though we can take a view that Genesys shares are listed for trading only 
from 5 June 2000, it is to be noted that the new shares issued to (a) the 
erstwhile Genesys shareholders are issued as a result of the scheme of 
amalgamation approved by the High Court, Mumbai & (b)  the applicants of the 
private placement ( incl. Enron) and the new amalgamated company, Genesys 
International Corporation Limited, whose previous name was Aeke Trading and 
Investments Limited, was a listed Company at the Mumbai Stock Exchange. 
Hence, it is advisable to check whether the shares of AEKE were thinly traded 
or not. FYI, the Paid - Up Equity of AEKE prior to the Amalgamation was 
2,40,000 Equity Shares of Rs. 10/- each aggregating Rs. 24,00,000/-. We can 
apply the test as explained above on the AEKE shares prior to Genesys 
amalgamation just to satisfy ourselves that it was not thinly traded.
It is better to check this provision. 

(C) Formalities for remittance:
Per section 11of the FEMA Regulations, remittance of sale proceeds shall be 
made by a authorised dealer upon:
satisfying himself that the security was held by the seller on repatriation 
basis ( we need to submit the Foreign Collaboration Approval Letter No. 3/9 
SIA/NFC 99 NRI to the AD)
submission of the contract note of the Broker effecting the sale and 
submission of a No Objection Certificate/ tax clearance certificate.

(D) Income Tax - NoC / TCC:
I understand from Veena that there is a current thinking that through a 
Chartered Accountants Certificate stating the double taxation treaty, we need 
not obtain the NoC of the IT. In my view, since the regulation stipulates an 
NoC / TCC from the IT Department, i doubt whether it is doable without a BoC 
/ TCC of the IT. 
In the past, this was followed and with an Undertaking from the Company, 
supported with a Chartered Accountants Certificate,confirming there are no 
tax implications in the underlying transaction, one could remit the funds 
without a NoC/TCC from IT. But, given a very specific statement u/s 11 of the 
FEMA Regulations and the same being introduced only from 1 June and hasn't 
been time tested, i doubt whether the Authorised Dealer will accept our view 
and effect fund transfer with an Undertaking and CA Certification. 
In my view, NoC would be a pre requisite. 

(E) Bank Account:
Assuming that the NoC is required, there will be a timing difference between 
we receive the sale proceeds and remitting the money to Mauritius after 
obtaining the NoC from IT. It is certainly not advisable to hold the 
instrument without encashing it. Hence, opening of a Bank Account in India to 
encash the instrument  is warranted. I refer to Mike's mail on allowing the 
Broker to hold the funds in a trust account for EDVMHC. In my view, instead 
of the Broker holding the same, the AD himself can hold it on trust for 
EDVMHC. But this needs to checked and properly documented with the Bank ( 
Authorised Dealer) and as well at EDVMHC. From Due Diligence and Compliance 
point of view, i would suggest to take the route of opening of an rupee Bank 
Account than the trust route. 
Since it is not a demated shares, opening of an custodial account is not 
required. This needs to be checked with the authorised dealer.

(F) Application to RBI / TS 1:
I suggest that while making the RBI Application under TS 1, it is advisable 
to state and seek their concurrence or keep them informed as to point E 
above. We could mention in our application to RBI and seek approval as to (a) 
opening of an rupee account or (b) authorising the AD to hold the same in an 
trust account for EDVMHC. RBI while according its approval, will look in to 
the transaction and accord approval for this as well. 
May be, before filing the application with RBI, we could meet with the 
concerned official in Exchange Control Department and walk him through with 
the transaction so that the approval is obtained at the earliest.

(G) Original Funds:
I understand that while making this investment, the funds have not come in 
from EDVMHC, Mauritius or it has come from a Company from Caymon Islands. Tax 
need to confirm whether the money received from Cayco ( though on behalf of 
an Mauritius Company) would qualify for tax benefits.  

(H) Confirmation by Genesys on non Lock-in:
There are no documents available like the Board Resolution while alloting the 
Shares to EDVMHC or the application to Stock Exchange which would specify 
distinctive numbers of the Lock-in Shares nor it is stated in the Information 
Memorandum as whether shares offered under this IM are freely tradable. 
Though the SEBI Guidelines are clear that if the shares do not form part of 
the Promoters Quoto, they are freely tradable, it is advised that we take a 
certificate from Genesys on this. I have spoken this with Rajesh who 
confirmed that such a certificate from Genesys can be otained without any 
difficulty.

Please feel free and do call me for any further assistance from my end.

Regards

Bhaskar
---------------------- Forwarded by Chandran Bhaskar/ENRON_DEVELOPMENT on 
06/09/2000 08:01 AM ---------------------------


Sandeep Katwala
06/07/2000 12:47 PM
To: Chandran Bhaskar/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
cc:  

Subject: Genesys : Sale of Shares : RBI approval

input into Rahul please.
---------------------- Forwarded by Sandeep Katwala/ENRON_DEVELOPMENT on 
06/07/2000 12:36 PM ---------------------------


Rahul Basu
06/07/2000 12:37 PM
To: Gopalakrishnan Subramaniam/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Rajesh 
Agarwal/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Rajesh 
Shekhar/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Sandeep 
Katwala/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Raj 
Thapar/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
cc:  

Subject: Genesys : Sale of Shares : RBI approval

Seems to me from a read of the regulations that we are required 

Clause 10 B (1) to get RBI approval for the transfer on a TS1 form. Please 
note that the TS1 form requires a CA certificate
If we sell on an exchange through a broker, clause 10 B (2) (a) (i) will 
apply. Since the transfer takes place when its recorded on the register held 
by the company, there is time from when the sale order is given to the 
broker. 
Clause 11 (2) provides the conditions by which the AD will repatriate the 
money to Mauritius. Please note the requirement for an IT clearance in clause 
11 (2) (c). Also, it seems from Clause 11 (2) (b) that if we sell through the 
exchange, then approval of RBI under the TS1 is not required for the 
repatriation.

Rahul