PAPER COMPANIES HELP FOREIGNERS BUY LAND IN GOA This news is more than somewhat disturbing,
A new dimension to this whole business it does bring. Whatever way one looks at it, It is neither moral nor legit, And calls for immediate curbing - Shanti Dhoot RE: Message: 2 of 26 May 2008 From: Vidyadhar Gadgil <[EMAIL PROTECTED]> Subject: [Goanet] PAPER COMPANIES HELP FOREIGNERS BUY LAND IN TINY GOA Message-ID: <[EMAIL PROTECTED]> PAPER COMPANIES HELP FOREIGNERS BUY LAND IN TINY GOA Pamela D'Mello Panaji, Apr 10: It earned the headlines, but is hardly likely to save Goa's land. This small state's headline-grabbing new law, enacted in March-end 2008, banning sale of land and properties to foreigners has not made a whit of difference to foreigners wanting a rustic property here. "Why don't you visit our office. There are laws about foreigners buying property. But you can form a company, register it under Indian law and hold the property in that company's name," says the British-owned Goa Property Sales firm which operates three offices in Goa. "We'll do all the paper work, if you buy from us," is the sales pitch of the British firm. Like others from here, it is one of those that has sought to cash in on the craze for a holiday-home in what was a rustic state till not long ago. Forming paper-companies has been a popular route here to hold basically residential property by foreign buyers seeking to circumvent FEMA (Foreign Exchange Management Act) and Reserve Bank of India guidelines governing foreigners buying property. These allow only long term business visa holder residents to hold Indian property. Goa's administration had thrown a couple of obstacles after it found that many were slipping through FEMA's ambiguity and exploiting loopholes with local legal help. Property seekers and sellers though pursued another route, using companies to ostensibly buy and hold Indian property. Figures at the Goa Registrar of Companies office, checked by The Asian Age, bear this out. In 2001, the ROC registered a total of 129 companies, in 2002 it was 114, in 2003 it was 189. Subsequently, the numbers jumped considerably to 397 (2004), 655 (2005), 647 (2006) and 565 (in 2007). "In the last three years, it's mainly foreigners who are coming to register companies," an official at the ROC said, not willing to be quoted. Most of the companies, ROC officials say are in the tourism and travel sector, which permit 100% foreign direct investment, besides being suited to Goa. Hotels with names like "Gary and Helen Retreat Pvt Ltd", "Double Dutch Hotel" and "Cornfield Resorts" have been registered with the aid of lawyers, chartered accountants and company secretaries. It's hard to distinguish the legit from the fake. "It these are all genuine hotels there would probably not be an inch of beach left," an official commented. At least 70% of the companies being registered in Goa would fall in the gray area of "paper" companies, those in the know here suggest. Aside from the company holding the property, it also allows its "directors" to claim long stay business visas at Indian embassies. Visa regimes have already been shortened and tightened to discourage long stayers in Goa. This channel, dispenses with Reserve Bank of India permissions. Registration of companies is online; two people is all that is required and the company could well be dormant for several years, with no questions asked. All that is required is the paperwork for an annual general body meeting and a balance sheet, one chartered accountant told The Asian Age. Other developers have been selling properties to foreigners based on five year renewable leases -- a proposition acceptable to some foreign buyers who find apartment rates insignificantly cheap compared to prices back home. This, together with the buying of second holiday homes by urban Indian has led to disquiet in Goa, with the last few weeks seeing a series of protests against mega-apartment projects coming up in diverse village areas like Aldona, Carmona, Siridao, Benaulim and Soccoro. Though the five-year-renewable leases to foreigners route guarantees no long term freehold rights over land, many from abroad are willing to risk it. Agreement to sale deeds are still going ahead, though the registry has been closed to individual sales since 2006 and the central enforcement directorate are investigating over 400 direct purchases. "You don't need to register a deed. It could be drawn up and not registered, provided there is handing over of possession and parties are willing to trust each other", say the chartered accountant. A few reputed builders still find foreign clients based on this argument. Aware of this scam, Goa chief minister Digamber Kamat has threatened to have a committee enquire into the status of such companies. The new Goa law intends to declare sale and purchase of land to foreigners "against public policy", by a gazetted notification. This will buttress existing FEMA and RBI guidelines that currently prohibit such purchases.(ends)
