Law Minister Dayanand Narvekar said sale of land and property to foreigners in Goa was banned. It made headlines, all over the country. But is it likely to change things? Apparently not.
The new law, enacted in March-end 2008, has not made any difference to foreigners that want to find their own little slice of heaven under the sun here.
In fact, British owned property firms are guiding their countrymen about how to go about buying property legally. As it turns out, the new law can effectively prevent individual foreigners from buying property, as the registrar’s office will refuse to register the sale deeds.
But a foreigner can form a company, register it under Indian law, and hold any non agricultural property in that company’s name. A visit to the office of the Registrar of Companies or any bank in the state capital, Panjim, will show that a very large number of companies owned by foreigners are being registered in Goa, most for the sole purpose of buying property.
The property firm offers to do all the paper work, if the foreigner concerned buys the property from them.
These paper companies can then legally hold residential property, according to the provisions of the Foreign Exchange Management Act (FEMA) and Reserve Bank of India (RBI) guidelines that govern foreigners buying property.
They allow only long term business visa holders to own non-agricultural Indian property. All the road blocks that the Goa administration has set up are turning out to be ineffective, as FEMA’s ambiguity allows companies – even though they are foreign owned – to buy and hold Indian property.
Figures at the Goa Registrar of Companies (RoC) office corroborate this. In 2001, the RoC registered a total of 129 companies. In 2002, it was 114. In 2003, it was 189. Then, the figure jumped to 397 in 2004 and 655 in 2005, plateauing at 647 in 2006 and 565 in 2007. RoC officials private confirm that in the last three years, it is mainly foreigners who are coming to register companies, rather than Indians.
Most of the companies, they say, are in the tourism and travel sector, which permit 100 per cent foreign direct investment (FDI), and being registered in a tourist paradise like Goa, raise no eyebrows at all.
There’s a virtual cottage industry of lawyers, chartered accountants and company secretaries – locals all – who help Britishers set up firms with names like ‘Gary and Helen Retreat Pvt Ltd’, ‘Double Dutch Hotel’ and ‘Cornfield Resorts’. Once you have a registered private limited company, you can buy your dream home and live in it; even run a small or big business if you like. And no law on registration can stop you. All you have to do is engage the part-time services of a chartered accountant and company secretary to create the paperwork required to keep you on the right side of the law, and show ‘compliance’ with all the requirements of the RoC.
This includes creating share certificates (DTP and laser printing), holding meetings of the ‘board of directors’ (writing and filing notices and minutes), getting audited accounts (your CA does the necessary) and holding an annual general meeting of the shareholders (one more minute-writing operation). Simple, isn’t it? And all that Narvekar and ilk can do is to make more populist announcements about the terrible things they are going to do to long-term foreign settlers in Goa.
It appears the arm of the law is not as long as it once seemed.
By Sayeesh Naik
Herald, Sunday, 11 May 2008
Posted By : Sayeesh Naik, Goa, India on 12/05/2008