Monetary Requirements for VNO Operators of Unified License

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Monetary Requirements for VNO Operators of Unified License

Suppose you want your business's Unified License for VNO operators, i.e., the Virtual Network Operator. In that case, the VNO Licensee must strictly observe the Department of Telecommunications' regulations. This article has discussed some of these monetary regulations issued by the DoT Authority.

FDI in a Unified License VNO Operator

FDI Limit

The VNO license holder can accept FDIs upto 100% with 49% ownership but under an automatic route. The Authority permits FDI beyond 49% through the FIPB route only. But such investments are subject to observance of licensing as well as security conditions by the Company and its investors.

Total FDI Computation

The applicant must count both direct and indirect foreign direct investment to calculate total its total FDI.

FDI Policy

The VNO Company/Investment Companies, including its holding companies, must comply with the extant FDI policy provisions of the Central Government. While approving foreign investment proposals, the Central Government can consider other security concerns.

FDI Competent Laws

The incoming FDI must be subject to the laws of India. They are not justiciable to the laws of foreign countries. The Unified Licensee must comply with the relevant FDI policy provisions of the Central Government. The Unified Licensee must issue such modifications to the FDI policy periodically.

FDI Terminology

The following words must have the same meaning defined by the DIPP (Department of Investment & Industrial Policy) in its FDI Policy:

• FDI
• Foreign Equity
• Investment Companies
• FIPB and more

Capital Requirement for VNO Unified License Company

The Unified Licensee must declare both the Indian & Foreign equity structure as well as direct and indirect structures in the Company. Also, they must submit a compliance report regarding the FDI norms as well as security conditions.

Furthermore, the Telecom VNO Licensor must make the necessary declarations on January 1 and July 1 of every year. A Company Secretary or a Statutory Auditor must certify the underlying equity structure. It must also be countersigned by the duly authorized Director of the VNO Licensed Company.

Shareholding Arrangement in a Unified License Company

The Unified Licensee must ensure that any changes in the shareholding arrangement must be subject to the statutory permissions under Indian laws. The DoT puts no restriction on the number of VNO licensees per service area of jurisdiction.

The DoT allows the Unified Licensees to have Unified License Agreements with more than one NSO for the rest of services other than the underlying Internet Access Service. Such services need the following:

• Numbering of the Customer
• Unique Identity of the customer

For WAS (Wireline Access Services) through EPABX, the Licensor allows connectivity of different NSOs at distinct EPABX. But, the DoT does not permit connectivity with more than one NSO at a particular EPABX.

In VNO operators, the restriction provisions of equity cross-holding is applicable between the following:

• VNO or its promoter(s)
• NSO (other than VNO's parent NSO) or its promoter(s)
• VNO or its promoter(s) & another VNO or its promoter(s)
• Each of these is authorized to provide internet access service using the NSO's access spectrum in the same service area.

UL-VNO Nomenclature

The VNO Licensee can change its name as per the Indian Companies Act of 2013. But this can be accomplished upon intimation to the Licensor. Also, the Licensee must submit the certified copy to the Registrar of Companies of the Name Change certificate. The submission must be within 30 days from the date of issue to the RoC.

Paid-up Equity Structure in a UL-VNO Arrangement

The VNO Licensee must maintain a minimum paid-up equity capital as the sum of the Paid-Up Equity Capital required for every telecom service the Unified License holder opted for. The minimum paid-up equity capital required to acquire UL-VNO authorization is Rs. 10 crores only.

Networth Requirement of a Unified License Company

The Unified License Company must maintain a Net worth which is the sum of the required net worth for each VNO-related telecom service. The combined Networth under the VNO license for acquiring the requisite authorization is Rs. 10 crores only.

Networth Determination

For UL-VNO Category B License, if the applicant is a legal entity but not a registered company, then an appointed or hired Chartered Accountant/Cost Accountant must certify the net worth of the VNO license company. The VNO Licensee must not count the Net Worth of the following to determine its Company's Net Worth:

• Promoters
• Equity Holders

Currency Conversion in Net Worth Determination

While counting the Company's net worth, the VNO Licensee must not convert the Foreign Currency into Indian Rupees. The currency conversion must happen at the prevailing rate as the RBI prescribes on application reception.

For more information on the Unified VNO License, connect with the VNO License Consultants at Registrationwala.

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