TMI BlogMaster Circular on Foreign Investment in IndiaX X X X Extracts X X X X X X X X Extracts X X X X ..... Yours faithfully, (Rudra Narayan Kar) Chief General Manager-in-Charge INDEX Part I Foreign Investments in India Schematic Representation Section - I: Foreign Direct Investment 1. Foreign Direct Investment in India 2. Entry routes for investments in India 3. Eligibility for Investment in India 4. Type of instruments 5. Pricing guidelines 6. Mode of Payment 7. Foreign Investment limits, Prohibited Sectors and investment in MSEs 8. Modes of Investment under Foreign Direct Investment Scheme. 8.A. Issuance of fresh shares by the company 8.B Acquisition by way of transfer of existing shares by person resident outside India 8.C. Issue of Rights / Bonus shares 8.D. Issue of shares under Employees Stock Option Scheme (ESOPs) 8.E Conversion of ECB / Lumpsum Fee / Royalty / Import of capital goods by SEZs in to Equity/ Import payables / Pre incorporation expenses 8.F. Issue of shares by Indian Companies under ADR / GDR 8.G. FDI through issue / transferof participating interest / right ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Investment by non-residents other than NRIs / PIO 4. Restictions Annex - 1 Annex - 2 Annex - 3 Annex- 4 Annex - 5 Annex - 6 Annex - 7 Annex - 8 Annex - 9-I Annex 9-II Annex - 10 Annex -11 Annex -12 Section - I: Foreign Direct Investment 1. Foreign Direct Investment in India Foreign Direct Investment (FDI) in India is : undertaken in accordance with the FDI Policy which is formulated and announced by the Government of India. The Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of India issues a Consolidated FDI Policy Circular on an yearly basis on March 31 of each year (since 2010) elaborating the policy and the process in respect of FDI in India. The latest Consolidated FDI Policy Circular dated April 5, 2013 is available in public domain and can be downloaded from the website of Ministry of Commerce and Industry, Department of Industrial Policy and Promotion http://www.dipp.nic.in/English/Policies/FDI_Circular_01_2013 governed by the provisions of the Foreign Exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reign exchange through normal banking channels. (iii) Overseas Corporate Bodies (OCBs) have been de-recognised as a class of investors in India with effect from September 16, 2003. Erstwhile OCBs which are incorporated outside India and are not under adverse notice of the Reserve Bank can make fresh investments under the FDI Scheme as incorporated non-resident entities, with the prior approval of the Government of India, if the investment is through the Government Route; and with the prior approval of the Reserve Bank, if the investment is through the Automatic Route. However, before making any fresh FDI under the FDI scheme, an erstwhile OCB should through their AD bank, take a one time certification from RBI that it is not in the adverse list being maintained with the Reserve Bank of India. ADs should also ensure that OCBs do not maintain any account other than NRO current account in line with the instructions as per A.P. (DIR Series) Circular No. 14 dated September 16, 2003. Further, this NRO account should not be used for any fresh investments in India. Any fresh request for opening of NRO current account for liquidating previous investment held on non-repatriation basis s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be done by a Committee consisting of Development Commissioner and the appropriate Customs officials. Right Shares: The price of shares offered on rights basis by the Indian company to non-resident shareholders shall be: In the case of shares of a company listed on a recognised stock exchange in India, at a price as determined by the company. In the case of shares of a company not listed on a recognised stock exchange in India, at a price which is not less than the price at which the offer on right basis is made to the resident shareholders. Acquisition / transfer of existing shares (private arrangement) . The acquisition of existing shares from Resident to Non-resident (i.e. to incorporated non-resident entity other than erstwhile OCB, foreign national, NRI, FII) would be at a:-; (a) negotiated price for shares of companies listed on a recognized stock exchange in India which shall not be less than the price at which the preferential allotment of shares can be made under the SEBI guidelines, as applicable, provided the same is determined for such duration as specified therein, preceding the relevant date, which shall be the date of purchase or sale of sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n shall be refunded. Further, the Reserve Bank may on an application made to it and for sufficient reasons, permit an Indian Company to refund / allot shares for the amount of consideration received towards issue of security if such amount is outstanding beyond the period of 180 days from the date of receipt. 7. Foreign Investment limits, Prohibited Sectors and investment in MSEs a) Foreign Investment Limits The details of the entry route applicable and the maximum permissible foreign investment / sectoral cap in an Indian Company are determined by the sector in which it is operating. The details of the entry route applicable along with the sectoral cap for foreign investment in various sectors are given in Annex -1. b) Investments in Micro and Small Enterprise (MSE) A company which is reckoned as Micro and Small Enterprise (MSE) (earlier Small Scale Industrial Unit) in terms of the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, including an Export Oriented Unit or a Unit in Free Trade Zone or in Export Processing Zone or in a Software Technology Park or in an Electronic Hardware Technology Park, and which is not engaged in any activity/sector me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etc. (c) Business of Chit funds (d) Nidhi company (e) Trading in Transferable Development Rights (TDRs) (f) Real Estate Business or Construction of Farm Houses (g) Manufacturing of Cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes (h) Activities / sectors not open to private sector investment e.g. Atomic Energy and Railway Transport (other than Mass Rapid Transport Systems). Note: Foreign technology collaboration in any form including licensing for franchise, trademark, brand name, management contract is also prohibited for Lottery Business and Gambling and Betting activities. 8. Modes of Investment under Foreign Direct Investment Scheme. Foreign Direct Investment in India can be made through the following modes: 8.A. Issuance of fresh shares by the company An Indian company may issue fresh shares /convertible debentures under the FDI Scheme to a person resident outside India (who is eligible for investment in India) subject to compliance with the extant FDI policy and the FEMA Regulation. B. Acquisition by way of transfer of existing shares by person resident in or outside India Foreign investors can also invest in Indian ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a merchant banker registered with SEBI. 8.B.II Transfer of shares/convertible debentures from Resident to Person Resident outside India A person resident in India can transfer by way of sale, shares / convertible debentures (including transfer of subscriber's shares), of an Indian company under private arrangement to a person resident outside India, subject to the following along with pricing, reporting and other guidelines given in Annex - 3. a) where the transfer of shares requires the prior approval of the FIPB as per extant FDI policy provided that; i) the requisite FIPB approval has been obtained; and ii) the transfer of share adheres with the pricing guidelines and documentation requirements as specified by the Reserve Bank of India from time to time. b) where SEBI (SAST) guidelines are attracted, subject to adherence with the pricing guidelines and documentation requirements as specified by the Reserve Bank of India from time to time. c) where the pricing guidelines under FEMA,1999 are not met provided that: i) the resultant FDI is in compliance with the extant FDI policy and FEMA regulations in terms of sectoral caps, conditionalities (such as minimum c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Further, in case approval is granted for the transaction, the same should be reported in Form FC-TRS to the AD Category I bank, within 60 days from the date of receipt of the full and final amount of consideration. (ii) A person resident in India, who intends to transfer any security, by way of gift to a person resident outside India, has to obtain prior approval from the Reserve Bank. While forwarding the application to the Reserve Bank for approval for transfer of shares by way of gift, the documents mentioned in Annex - 4 should be enclosed. The Reserve Bank considers the following factors while processing such applications: a) The proposed transferee is eligible to hold such security under Schedules 1, 4 and 5 of Notification No. FEMA 20/2000-RB dated May 3, 2000 , as amended from time to time. b) The gift does not exceed 5 per cent of the paid-up capital of the Indian company / each series of debentures / each mutual fund scheme. c) The applicable sectoral cap limit in the Indian company is not breached. d) The transferor (donor) and the proposed transferee (donee) are close relatives as defined in Section 6 of the Companies Act, 1956 , as amended from time to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... portion, subject to the condition that the overall issue of shares to non-residents in the total paid-up capital of the company does not exceed the sectoral cap. 8.D. Issue of shares under Employees Stock Option Scheme (ESOPs) An Indian Company may issue shares under ESOPs to its employees or employees of its joint venture or wholly owned subsidiary abroad who are resident outside India, other than to the citizens of Pakistan. Citizens of Bangladesh can invest with the prior approval of the FIPB. The face value of the shares to be allotted under the scheme to the non-resident employees should not exceed 5 per cent of the paid-up capital of the issuing company. Shares under ESOPs can be issued directly or through a Trust subject to the condition that the scheme has been drawn in terms of the relevant regulations issued by the SEBI. 8.E. Conversion of ECB / Lumpsum Fee / Royalty / Import of capital goods by units in SEZs in to Equity/ Import payables / Pre incorporation expenses (i) Indian companies have been granted general permission for conversion of External Commercial Borrowings (ECB) into shares / convertible debentures , subject to the following conditions and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ital goods into FDI being made within 180 days from the date of shipment of goods. (v) Issue of equity shares against Pre-operative / pre incorporation expenses (including payment of rent etc.) is allowed under the Government route, subject to compliance with the following conditions : a) Submission of FIRC for remittance of funds by the overseas promoters for the expenditure incurred. b) Verification and certification of the pre-incorporation / pre-operative expenses by the statutory auditor. c) Payments being made by the foreign investor to the company directly or through the bank account opened by the foreign investor, as provided under FEMA regulations. (as amended vide AP DIR Circular No. 104 dated May 17, 2013 ). d) The applications, complete in all respects, for capitalisation being made within the period of 180 days from the date of incorporation of the company. General conditions for issue of equity shares against Import of capital goods / machinery/ equipment and Pre-operative / pre incorporation expenses: (a) All requests for conversion should be accompanied by a special resolution of the company; (b) Government s approval would be subject to pric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Indian company can invest the funds in:- Deposits with or Certificate of Deposit or other instruments offered by banks who have been rated by Standard and Poor, Fitch or Moody's, etc. and such rating not being less than the rating stipulated by the Reserve Bank from time to time for the purpose; Deposits with branch/es of Indian Authorised Dealers outside India; and Treasury bills and other monetary instruments with a maturity or unexpired maturity of one year or less. v) There are no end-use restrictions except for a ban on deployment / investment of such funds in real estate or the stock market. There is no monetary limit up to which an Indian company can raise ADRs / GDRs. vi) The ADR / GDR proceeds can be utilised for first stage acquisition of shares in the disinvestment process of Public Sector Undertakings / Enterprises and also in the mandatory second stage offer to the public in view of their strategic importance. vii) Voting rights on shares issued under the Scheme shall be as per the provisions of Companies Act, 1956 and in a manner in which restrictions on voting rights imposed on ADR/GDR issues shall be consistent with the Company Law provisions. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as FDI transactions. Transfer of participating interest/ rights will be reported as other category under Para 7 of revised Form FC-TRS and issuance of participating interest/ rights will be reported as other category of instruments under Para 4 of Form FC-GPR 9. Foreign Currency Account and Escrow Account a) Indian companies which are eligible to issue shares to persons resident outside India under the FDI Scheme will be allowed to retain the share subscription amount in a Foreign Currency Account for bonafide business purpose only with the prior approval of the Reserve Bank. b) AD Category I banks have been given general permission to open and maintain non-interest bearing Escrow account in Indian Rupees in India on behalf of residents and non-residents, towards payment of share purchase consideration and / or provide Escrow facilities for keeping securities to facilitate FDI transactions. It has also been decided to permit SEBI authorised Depository Participant, to open and maintain, without approval of the Reserve Bank, Escrow account for securities. The Escrow account would also be subject to the terms and conditions as stipulated in A.P. (DIR Series) Circ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is in accordance with the provisions of the Companies Act, 1956 . In case of winding up otherwise than by a court, an auditor's certificate to the effect that there is no legal proceedings pending in any court in India against the applicant or the company under liquidation and there is no legal impediment in permitting the remittance. 13. Pledge of Shares a) A person being a promoter of a company registered in India (borrowing company), which has raised external commercial borrowings, may pledge the shares of the borrowing company or that of its associate resident companies for the purpose of securing the ECB raised by the borrowing company, provided that a no objection for the same is obtained from a bank which is an authorised dealer. The authorized dealer, shall issue the no objection for such a pledge after having satisfied itself that the external commercial borrowing is in line with the extant FEMA regulations for ECBs and that : i). the loan agreement has been signed by both the lender and the borrower, ii) there exists a security clause in the Loan Agreement requiring the borrower to create charge on financial securities, and iii) the borrower has obtained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entures issued by Indian companies under the Portfolio Investment Scheme (PIS). (iii) NRIs are eligible to purchase shares and convertible debentures issued by Indian companies under PIS, if they have been permitted by the designated branch of any AD Category - I bank (which has been authorised by the Reserve Bank to administer the PIS). (iii) SEBI approved sub accounts of FIIs (sub accounts) have general permission to invest under the PIS. (iv) OCBs are not permitted to invest under the PIS with effect from November 29, 2001, in India. Further, the OCBs which have already made investments under the PIS are allowed to continue holding such shares / convertible debentures till such time these are sold on the stock exchange. 2. Investment in listed Indian companies A. FIIs (a) An Individual FII/ SEBI approved sub accounts of FIIs can invest up to a maximum of 10 per cent of the total paid-up capital or 10 per cent of the paid-up value of each series of convertible debentures issued by the Indian company. The 10 per cent limit would include shares held by SEBI registered FII/ SEBI approved sub accounts of FII under the PIS (by way of purchases made through a register ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion activities, or Real estate business* or construction of farm houses, or Trading in Transferable Development Rights (TDRs). * Real estate business" does not include construction of housing / commercial premises, educational institutions, recreational facilities, city and regional level infrastructure, townships 3. Accounts with AD Category I banks A. FIIs FIIs/sub-accounts can open a non-interest bearing Foreign Currency Account and / or a single non-interest bearing Special Non-Resident Rupee Account (SNRR A/c) with an AD Category I bank, for the purpose of investment under the PIS. They can transfer sums from the Foreign Currency Account to the single SNRR A/c for making genuine investments in securities in terms of the SEBI (FII) Regulations,1995 , as amended from time to time. The sums may be transferred from Foreign Currency Account to SNRR A/c at the prevailing market rate and the AD Category - I bank may transfer repatriable proceeds (after payment of tax) from the SNRR A/c to the Foreign Currency account. The SNRR A/c may be credited with the sale proceeds of shares / debentures, dated Government securities, Treasury Bills, etc. Such credits a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate account and submit them to the Reserve Bank as and when required. B. NRIS NRIs are allowed to invest in Exchange Traded Derivative Contracts approved by SEBI from time to time out of Rupee funds held in India on non-repatriation basis, subject to the limits prescribed by SEBI. Such investments will not be eligible for repatriation benefits. 5. Collateral for FIIs a) Derivative Segment: FIIs are allowed to offer foreign sovereign securities with AAA rating, government securities and corporate bonds as collateral to the recognised Stock Exchanges in India in addition to cash for their transactions in derivatives segment of the market. SEBI approved clearing corporations of stock exchanges and their clearing members are allowed to undertake the following transactions subject to the guidelines issued from time to time by SEBI in this regard: a. to open and maintain demat accounts with foreign depositories and to acquire, hold, pledge and transfer the foreign sovereign securities, offered as collateral by FIIs; b. to remit the proceeds arising from corporate action, if any, on such foreign sovereign securities; and c. to liquidate such foreign sovereign se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... take delivery of the shares purchased and give delivery of shares sold. Short Selling is not permitted. 7. Private placement with FIIs SEBI registered FIIs have been permitted to purchase shares / convertible debentures of an Indian company through offer/private placement, subject to total FII investment viz. PIS FDI (private placement / offer) being within the individual FII/sub account investment limit 10 per cent and all FIIs/sub-accounts put together - 24 per cent of the paid-up capital of the Indian company or to the sectoral limits, as applicable. Indian company is permitted to issue such shares provided that: a) in the case of public offer, the price of shares to be issued is not less than the price at which shares are issued to residents; and b) in the case of issue by private placement, the issue price should be determined as per the pricing guidelines stipulated under the FDI scheme. 8. Transfer of shares acquired under PIS under private arrangement Shares purchased by NRIs and FIIs on the stock exchange under PIS cannot be transferred by way of sale under private arrangement or by way of gift to a person resident in India or outside India without prior ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aches the overall ceiling / sectoral cap / statutory limit, the Reserve Bank places the company in the Ban List and advises all designated bank branches to stop purchases on behalf of their FIIs/ NRIs/ PIO clients. Once a company is placed in the Ban List, no FII / NRI can purchase the shares of the company under the PIS. The Reserve Bank also informs the general public about the 'caution and the `stop purchase in the companies through a press release and an updated list regarding the same is placed on the RBI website 13. Issue of Irrevocable Payment Commitment (IPCs) to Stock Exchanges on behalf of FIIs To facilitate the settlement process of the FIIs trades under the portfolio route, custodian banks were permitted to issue Irrevocable Payment Commitments (IPCs) in favour of the Stock Exchanges / Clearing Corporations of the Stock Exchanges, on behalf of their FII clients for purchase of shares under the Portfolio Investment Scheme (PIS). 14. Investment by Qualified Foreign Investors (QFIs) in listed equity shares Qualified Foreign Investors, who meet the following definition are allowed to make investments in all eligible securities for QFIs: (i) Definition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isted Indian company in accordance with the SEBI (Buyback) Regulations, 1998. (iii) Mode of payment / repatriation For QFI investments in eligible securities, a single non- interest bearing Rupee Account would be maintained with an AD Category- I bank in India. The account shall be funded by inward remittance through normal banking channel and by credit of the sale/redemption/buyback proceeds (net of taxes) and on account of interest payment / dividend on the eligible securities for QFIs. The funds in this account shall be utilized for purchase of eligible securities for QFIs or for remittance (net of taxes) outside India. The single non- interest bearing Rupee Account would be operated by QDP on behalf of QFI. (iv) Demat accounts - QFIs would be allowed to open a dedicated demat account with a QDP in India for investment in equity shares under the scheme. Each QFI shall maintain a single demat account with a QDP for all investments in eligible securities for QFIs in India. (v) Limits - The individual and aggregate investment limits for investment by QFIs in equity shares of listed Indian companies shall be 5% and 10% respectively of the paid up capital of an In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recognized stock exchange in India and which is not engaged in an activity under the negative list specified by SEBI. A VCF is defined as a fund established in the form of a trust, a company including a body corporate and registered under the Securities and Exchange Board of India (Venture Capital Fund) Regulations, 1996 which has a dedicated pool of capital raised in a manner specified under the said Regulations and which invests in Venture Capital Undertakings in accordance with the said Regulations. (iii) FVCIs can purchase equity / equity linked instruments / debt / debt instruments, debentures of an IVCU or of a VCF or in units of schemes / funds set up by a VCF through initial public offer or private placement or by way of private arrangement or purchase from third party. Further, FVCIs would also be allowed to invest in securities on a recognized stock exchange subject to the provisions of the SEBI (FVCI) Regulations,2000, as amended from time to time. (iv) At the time of granting approval, the Reserve Bank permits the FVCI to open a non-interest bearing Foreign Currency Account and/or a non-interest bearing Special Non-Resident Rupee Account with a designated branch o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and shares in Public Sector Enterprises being disinvested by the Government of India, provided the purchase is in accordance with the terms and conditions stipulated in the notice inviting bids. 2. Indian Depository Receipts (IDR) Indian Depository Receipts (IDRs) can be issued by non resident companies in India subject to and under the terms and conditions of Companies (Issue of Depository Receipts) Rules, 2004 and subsequent amendment made thereto and the SEBI (ICDR) Regulations, 2000, as amended from time to time. These IDRs can be issued in India through Domestic Depository to residents in India as well as SEBI registered FIIs and NRIs. In case of raising of funds through issuances of IDRs by financial / banking companies having presence in India, either through a branch or subsidiary, the approval of the sectoral regulator(s) should be obtained before the issuance of IDRs. a) The FEMA Regulations shall not be applicable to persons resident in India as defined under Section 2(v) of FEMA,1999 , for investing in IDRs and subsequent transfer arising out of transaction on a recognized stock exchange in India. b) Foreign Institutional Investors (FIIs) including SEBI app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing shares. iv. The FEMA provisions shall not apply to the holding of the underlying shares, on redemption of IDRs by the FIIs including SEBI approved sub-accounts of the FIIs and NRIs. f) The proceeds of the issue of IDRs shall be immediately repatriated outside India by the eligible companies issuing such IDRs. The IDRs issued should be denominated in Indian Rupees. 3. Purchase of other securities by FIIs, QFIs and Long Term Investors FIIs, QFIs and Long Term Investors can buy on repatriation basis dated Government securities / treasury bills, listed non-convertible debentures / bonds , commercial papers issued by Indian companies and units of domestic mutual funds, to be listed NCDs/ bonds only if listing of such NCDs/bonds is committed to be done within 15 days of such investment, Security receipts issued by Asset Reconstruction Companies and Perpetual Debt Instruments eligible for inclusion in as Tier I capital (as defined by DBOD, RBI) and Debt capital instruments as upper Tier II Capital (as defined by DBOD, RBI) issued by banks in India to augment their capital either directly from the issuer of such securities or through a registered stock broker on a recognized ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ier II capital), issued by banks in India and denominated in Indian Rupees, subject to the following conditions: Investment by all FIIs in Rupee denominated Perpetual Debt instruments (Tier I) should not exceed an aggregate ceiling of 49 per cent of each issue, and investment by individual FII should not exceed the limit of 10 per cent of each issue. Investments by all NRIs in Rupee denominated Perpetual Debt instruments (Tier I) should not exceed an aggregate ceiling of 24 per cent of each issue and investments by a single NRI should not exceed 5 percent of each issue. Investment by FIIs in Rupee denominated Debt Capital instruments (Tier II) shall be within the limits stipulated by SEBI for FII investment in corporate debt instruments. Investment by NRIs in Rupee denominated Debt Capital instruments (Tier II) shall be in accordance with the extant policy for investment by NRIs in other debt instruments. (ii) The issuing banks are required to ensure compliance with the conditions stipulated above at the time of issue. They are also required to comply with the guidelines issued by the Department of Banking Operations and Development (DBOD), Reserve Bank of India, fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cent of their assets (either in debt or equity or both) in the infrastructure sector under the USD 3 billion sub-limit for investment in mutual funds related to infrastructure. 7. Infrastructure Debt Funds (IDF) In order to accelerate and enhance the flow of long term funds to infrastructure projects for undertaking the Government s ambitious programme of infrastructure development, Union Finance Minister in his budget speech for 2011-12 had announced setting up of Infrastructure Debt Funds (IDFs). Government vide press release dated June 24, 2011 notified the broad structure of the proposed IDFs. The summarized position is given as under: (i) SWFs, Multilateral Agencies, Pension Funds, Insurance Funds and Endowment Funds -registered with SEBI, FIIs, NRIs would be the eligible class non- resident investors which will be investing in IDFs (ii) Eligible non-resident investors are allowed to invest on repatriation basis in (i) Rupee and Foreign currency denominated bonds issued by the IDFs set up as an Indian company and registered as Non-Banking Financial Companies (NBFCs) with the Reserve Bank of India and in (ii) Rupee denominated units issued by IDFs set up as SEBI regi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, through an AD Category - I bank, together with a copy/ies of the FIRC/s evidencing the receipt of the remittance along with the KYC report (enclosed as Annex 7) on the non-resident investor from the overseas bank remitting the amount. The report would be acknowledged by the Regional Office concerned, which will allot a Unique Identification Number (UIN) for the amount reported. (ii) Time frame within which shares have to be issued The equity instruments should be issued within 180 days from the date of receipt of the inward remittance or by debit to the NRE/FCNR (B) /Escrow account of the non-resident investor. In case, the equity instruments are not issued within 180 days from the date of receipt of the inward remittance or date of debit to the NRE/FCNR (B) account, the amount of consideration so received should be refunded immediately to the non-resident investor by outward remittance through normal banking channels or by credit to the NRE/FCNR (B)/Escrow account, as the case may be. Non-compliance with the above provision would be reckoned as a contravention under FEMA and could attract penal provisions. In exceptional cases, refund / allotment of shares for the amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of such transfer of shares shall be reported by the AD branch in the R-returns in the normal course. (ii) Reporting of transfer of shares between residents and non-residents and vice- versa is to be made in Form FC-TRS (enclosed in Annex 9-i). The Form FC-TRS should be submitted to the AD Category I bank, within 60 days from the date of receipt of the amount of consideration. The onus of submission of the Form FC-TRS within the given timeframe would be on the transferor / transferee, resident in India. (iii) The sale consideration in respect of equity instruments purchased by a person resident outside India, remitted into India through normal banking channels, shall be subjected to a KYC check (Annex 9-ii) by the remittance receiving AD Category I bank at the time of receipt of funds. In case, the remittance receiving AD Category I bank is different from the AD Category - I bank handling the transfer transaction, the KYC check should be carried out by the remittance receiving bank and the KYC report be submitted by the customer to the AD Category I bank carrying out the transaction along with the Form FC-TRS. (iv) The AD bank should scrutinise the transacti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e company shall report the converted portion in Form FC-GPR to the Regional Office concerned as well as in Form ECB-2 clearly differentiating the converted portion from the non-converted portion. The words "ECB partially converted to equity" shall be indicated on top of the Form ECB-2. In the subsequent months, the outstanding balance of ECB shall be reported in Form ECB-2 to DSIM. c. The SEZ unit issuing equity as mentioned in para (iii) above, should report the particulars of the shares issued in the Form FC-GPR . 4. Reporting of ESOPs for allotment of equity shares The issuing company is required to report the details of issuance of ESOPs to its employees to the Regional Office concerned of the Reserve Bank, in plain paper reporting, within 30 days from the date of issue of ESOPs. Further, at the time of conversion of options into shares the Indian company has to ensure reporting to the Regional Office concerned of the Reserve Bank in form FC-GPR, within 30 days of allotment of such shares. 5. Reporting of ADR/GDR Issues The Indian company issuing ADRs / GDRs has to furnish to the Reserve Bank, full details of such issue in the Form enclosed in Annex -10, within 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions.Accordingly, transfer of participating interest/ rights will be reported as other category under Para 7 of revised Form FC-TRS as given in the Annex-8 and issuance of participating interest/ rights will be reported as other category of instruments under Para 4 of Form FC-GPR as given in the Annex-9. Part II Investment in Partnership Firm / Proprietary Concern 1. Investment in Partnership Firm / Proprietary Concern A Non-Resident Indian (NRI) or a Person of Indian Origin (PIO) resident outside India can invest by way of contribution to the capital of a firm or a proprietary concern in India on non-repatriation basis provided: Amount is invested by inward remittance or out of NRE / FCNR(B) / NRO account maintained with Authorised Dealers / Authorised banks. The firm or proprietary concern is not engaged in any agricultural / plantation or real estate business (i.e. dealing in land and immovable property with a view to earning profit or earning income there from) or print media sector. Amount invested shall not be eligible for repatriation outside India. 2. Investments with repatriation benefits NRIs / PIO may seek prior permission of Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... March 17, 2005 21. No. FEMA.138/2005-RB July 22, 2005 22. No. FEMA.136/2005-RB July 19, 2005 23. No. FEMA.137/2005-RB July 22, 2005 24. No. FEMA.138/2005-RB July 22, 2005 25. No. FEMA.149/2006-RB June 9, 2006 26. No. FEMA.153/2006-RB May 31, 2007 27. No. FEMA.167/2007-RB October 23, 2007 28. No. FEMA.170/2007-RB November 13, 2007 29. No. FEMA.179/2008-RB August 22, 2008 30. No. FEMA.202/2009-RB November 10,2009 31 No. FEMA.205/2010-RB April 7,2010 32. No. FEMA.224/2012-RB March 07, 2012 33. No. FEMA.229/2012-RB April 23, 2012 34. No. FEMA.230/2012-RB May 29, 2012 35. No. FEMA.242/2012-RB October 19, 2012 36. No. FEMA.255/2013-RB January 19, 2013 37. No. FEMA.266/2013-RB March 05, 2013 38. No. FEMA.272/2013-RB March 26, 2103 Circulars Sl.No. Ci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (DIR Series) Circular No. 04 July 29, 2005 34. A.P. (DIR Series) Circular No. 06 August 11, 2005 35. A.P. (DIR Series) Circular No. 07 August 17, 2005 36. A.P. (DIR Series) Circular No. 08 August 25, 2005 37. A. P. (DIR Series) Circular No. 10 August 30, 2005 38. A.P. (DIR Series) Circular No. 11 September 05, 2005 39. A.P. (DIR Series) Circular No.16 November 11, 2005 40. A.P.( DIR Series) Circular No. 24 January 25, 2006 41. A.P.( DIR Series) Circular No. 4 July 28, 2006 42. A.P.( DIR Series) Circular No. 12 November 16, 2006 43. A.P.( DIR Series) Circular No. 25 December 22, 2006 44. A.P.( DIR Series) Circular No. 32 February 8, 2007 45. A.P.( DIR Series) Circular No. 40 April 20, 2007 46. A.P.( DIR Series) Circular No. 62 May 24, 2007 47. A.P.( DIR Series) Circular No. 65 May 31, 2007 48. A.P.( DIR Series) Circular No. 73 June 8, 2007 49 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2012 81. A.P. (DIR Series) Circular No. 94 March 19, 2012 82. A.P. (DIR Series) Circular No. 120 May 8, 2012 83. A.P. (DIR Series) Circular No. 121 May 8, 2012 84. A.P. (DIR Series) Circular No. 127 May 15, 2012 85. A.P. (DIR Series) Circular No. 133 June 20, 2012 86. A.P. (DIR Series) Circular No. 135 June 25, 2012 87. A.P. (DIR Series) Circular No. 137 June 28, 2012 88. A.P. (DIR Series) Circular No. 7 July 16, 2012 89. A.P. (DIR Series) Circular No. 16 August 22, 2012 90. A.P. (DIR Series) Circular No.19 August 28, 2012 91. A.P. (DIR Series) Circular No. 32 September 21, 2012 92. A.P. (DIR Series) Circular No. 36 September 26, 2012 93 A.P. (DIR Series) Circular No. 41 October 10, 2012 94. A.P. (DIR Series) Circular No. 74 January 10, 2013 95. A.P. (DIR Series) Circular No. 80 January 24, 2013 96. A.P. (DIR Series) Circular No. 90 Mar ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
