TMI BlogPurchase by a person resident outside India of equity/preference/convertible preference shares and convertible debentures issued by an Indian company - SCHEDULE IX X X X Extracts X X X X X X X X Extracts X X X X ..... mpany, not engaged in any activity/sector mentioned in Annex A to this schedule, may issue 60 [shares or convertible debentures or warrants] to a person resident outside India, subject to the limits prescribed in Annex B to this schedule, in accordance with the Entry Routes specified therein and the provisions of Foreign Direct Investment Policy, as notified by the Ministry of Commerce industry, Government of India, from time to time. 68 [Provided that a. In the sectors/activities mentioned in the Annex B to the Schedule, foreign investment upto the limit indicated against each sector/activity is allowed subject to the conditions of the extant policy on specified sectors and applicable laws/regulations; security and other conditionalities. In sectors/activities not listed therein, foreign investment is permitted upto 100% on the automatic route, subject to applicable laws/regulations; security and other conditionalities. b. Wherever there is a requirement of minimum capitalization it shall include share premium received along with the face value of the share, only when it is received by the company upon issue of the shares to the non-resident investor. Amount paid by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n : A company which proposes to embark on expansion programme to undertake activities or manufacture items included in Annex B to this Schedule may issue 61A [shares or convertible debentures or warrants] out of fresh capital proposed to be issued by it for the purpose of financing expansion programme, up to the extent indicated in Annex B, subject to compliance with the provisions of this paragraph.] [16] (old 2)**** 30 [ (2) A company which is an Micro and Small Enterprise (MSE) (earlier Small Scale Industrial Unit) including an Export Oriented Unit or a Unit in a Free Trade Zone or in an Export Processing Zone or in a Software Technology Part or in an Electronic Hardware Technology Park, and which is not engaged in any activity/sector mentioned in Annex A to this schedule may issue 62 [shares or convertible debentures or warrants ] to a person resident outside India referred to in paragraph 1, subject to the limits prescribed in Annex B to this schedule, in accordance with the Entry Routes specified therein and the provision of Foreign Direct Investment Policy, as notified by the Ministry of Commerce Industry, Government of India, from time to time. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ermission of the Government of India or Reserve Bank of India under FEMA ,1999 or any rules/ regulations framed or directions issued thereunder, provided that: i. The equity shares shall be issued in accordance with the extant FDI guidelines on sectoral caps, pricing guidelines etc. as amended by Reserve Bank of India, from time to time; ii. The issue of equity shares under this provision shall be subject to tax laws as applicable to the funds payable and the conversion to equity should be net of applicable taxes.] Provided , that the foreign equity in the company after the conversion of Royalty/Lumpsum fee/ECB into equity is within the sectoral cap notified, if any.] 71 [(v) by way of swap of shares, provided the company in which the investment is made is engaged in an automatic route sector, subject to the condition that irrespective of the amount, valuation of the shares involved in the swap arrangement will have to be made by a Merchant Banker registered with SEBI or an Investment Banker outside India registered with the appropriate regulatory authority in the home country. Note: A company engaged in a sector where foreign investment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estment-Promotion Board (FIPB) of Government of India, if the Indian company ; (a) is engaged or proposes to engage, in any activity specified in Annex A to this Schedule ;or (b) proposes to issue shares to a person resident outside India beyond sectoral limits or the activity of the Indian company falls under the FIPB route, as stipulated in Annex B to this Schedule ; or 72 [ (c) ***] (d) proposes to issue shares to a person resident outside India against import of capital goods/machinery/equipment ( 34 ['excluding second-hand machinery]) subject to compliance with the conditions specified by the Government of India and the Reserve Bank from time to time; or (e) proposes to issue shares to a person resident outside India against preoperative/pre-incorporation expenses (including payments of rent etc.), subject to compliance with the conditions specified by the Government of India and the Reserve Bank from time to time. ]] 66 [Para 4 4A and 4B deleted] 26 [5. Issue price Price of shares issued to persons resident outside India under this Schedule, shall not be less than- (a) the price worked out in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of consideration so received shall be refunded to the person concerned by outward remittance through normal banking channels or by credit to his NRE / FCNR (B) account, as the case may be; Provided further that the Reserve Bank, may on application made to it and for sufficient reasons permit an Indian company to refund the amount of consideration received towards issue of security, if such amount of consideration is outstanding beyond a period of 180 days from the date of receipt. Explanation: In case of partly paid equity shares, the period of 180 days shall be reckoned from the date of receipt of each call payment.] 39 [9. Reporting of issuance of shares of Indian company.-(1) An Indian company issuing 53 [shares or convertible debentures or warrants] in accordance with these Regulations shall submit through AD bank to the Regional Office concerned of the Reserve Bank under whose jurisdiction the Registered office of the company operates, (A) not later than 30 days from the date of receipt of the amount of consideration received by Indian company for issue of 54 [shares or convertible debentures or warrants], 55 [report in Advance Reporting Form as specifie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany by way of sale from a person resident in India to a person resident outside India or vice versa, the transferor/transferee, resident in India, shall submit to the AD bank 44 [a report in the form FC-TRS , as specified by the Reserve Bank from time to time.], within 60 days from the date of receipt or payment of the amount of consideration. The onus of submission of the form FC-TRS within the specified time shall be on the transferor/transferee, resident in India. (ii) 45 [***] (iii) The IBD/FED/nodal branch of the AD bank shall submit a consolidated monthly statement in respect of all such transactions reported by its branches, to the Reserve Bank in the form and manner stipulated by Reserve Bank, Foreign Exchange Department, Central Office, from time to time. (iv) The sale consideration in respect of 64 [shares or convertible debentures or warrants ] remitted into India through normal banking channels, shall be subjected to a KYC check by the remittance receiving AD bank at the time of receipt of funds, in case, the remittance receiving AD bank is different from the AD bank handling the transfer transaction, the KYC check shall be carried out by the remittan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e it was read as, A person resident outside India referred to in sub-regulation (1) of Regulation 5, may purchase shares or convertible debentures issued by an Indian company up to the extent and subject to the terms and conditions set out in this schedule. 12. Has been inserted vide Notification No. 170/2007 dated 13/11/2007 13. Has been substituted vide Notification No. 179/2008 dated 22/08/2008 , before substitution it was read as, 2. If the person purchasing the shares under this Scheme proposes to be collaborator or proposes to acquire the entire share holding of a new Indian company, he should obtain a prior permission of Central Government if he has a previous venture or tie-up in India through investment in shares or debentures or a technical collaboration or a trade mark agreement or investment by whatever name called in the same field or allied field in which the Indian company issuing the shares is engaged. 14 Has been inserted vide Notification No. 179/2008 dated 22/08/2008 w.e.f 12-01-2005 15. Has been substitu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany requiring the Government approval - A company which is engaged or proposes to engage in any activity specified in Annexure 'A' or which proposes to issue shares to a person resident outside India beyond the sectoral limits stipulated in Annexure 'B' 8 [either directly or by conversion of ECB/Royalty/Lumpsum fee] or which is otherwise not eligible to issue shares to a person resident outside India, may issue shares to a person resident outside India referred to in paragraph 1, provided it has secured prior approval of Secretariat for Industrial Assistance or, as the case may be of the Foreign Investment Promotion Board of the Government of India and the terms and conditions of such an approval are complied with. 18. Has been substituted vide Notification No. 179/2008 dated 22/08/2008 , before it was read as, form specified in Annexure C 19. Has been substituted vide Notification No. 179/2008 dated 22/08/2008 , before it was read as, form specified in Annexure D 20. Has been substituted vide Notification No. 179/2008 dated 22/08/2008 , befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion (CDC) and Asian Development Bank (ADB). ii) to a company that has completed a period of seven years from the date of commencement of commercial production,] 4 [iii) to obligations arising out of dividends declared/remitted after 14th July 2000 i.e. the date on which conditions of dividend balancing was withdrawn] 5 b) deleted] 23. Has been substituted vide Notification No. 179/2008 dated 22/08/2008 earlier it was read as, report 24. Has been substituted vide Notification No. 179/2008 dated 22/08/2008 earlier it was read as, in accordance with paragraph 9 25. Has been Inserted vide Notification No. 179/2008 dated 22/08/2008 26. Substituted vide notification no. 205/2010 RB dated 7-4-2010 , before it was read as, 5. Issue price Price of shares issued to persons resident outside India under this Schedule, shall not be less than a) the price worked out in accordance with the SEBI guidelines 2 [ as applicable], where the issuing company is listed on any rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India, on or after 28th day of November 2003, against External Commercial Borrowings (ECBs) {excluding those deemed as ECBs} received in convertible foreign currency. 30. Substituted vide Notification No. FEMA 230/2012-RB, Dated 29-5-2012 , and further corrected vide Corrigendum notification dated 10-9-2013 . before it was read as:- (2) A company which is a small scale industrial unit and which is not engaged in any activity or in manufacture of items included in Annexure A, may issue shares or convertible debentures to a person referred to in paragraph 1, to the extent of 24% of its paid-up capital; Provided that such a company may issue shares in excess of 24% of its paid up capital if (a) it has given up its small scale status; (b) it is not engaged or does not propose to engage in manufacture of items reserved for small scale sector, and (c) it complies with the ceilings specified in Annexure B. 30A. Inserted vide Corrigendum notification dated 10-9-2013 31. Substituted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n form specified in Annex C to this schedule] indicating: i) Name and address of the foreign investors ii) Date of receipt of funds and their rupee equivalent iii) Name and address of the authorised dealer through whom the funds have been received, and iv) Details of the Government approval, if any. B. not later than 30 days from the date of issue of shares, 33 [a report in the form FC-GPR as specified by the Reserve Bank from time to time] together with, i) a certificate from the Company Secretary of the company accepting investment from persons resident outside India certifying that a) all the requirements of the Companies Act, 1956 have been complied with; b) terms and conditions of the Government approval, if any, have been complied with; c) the company is eligible to issue shares under these Regulations; and d) the company has all original certificates issued by authorised dealers in India evidencing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Substituted vide NOTIFICATION 307/2014-RB, Mumbai, the 26th May, 2014 , before it was read as, a report titled Annual Return on Foreign Liabilites and Assets in the form specifed in Annex E to this Schedule . 48. Deleted vide NOTIFICATION 307/2014-RB, Mumbai, the 26th May, 2014 , before it was read as, (3) Reserve Bank may, by notification, modify from time to time, the format of report titled Annual Return on Foreign Liabilities and Assets specified in Annex E to this Schedule. 49. Substituted vide Notification No. FEMA.306/2014 -RB dated May 23, 2014 , before it was read as, (b) the fair valuation of shares done by a SEBI registered Category-I Merchant Banker or a Chartered Accountant as per the discounted free cash flow method, where the shares of the company is not listed on any recognised stock exchange in India; and 50. Omitted vide Notification No. FEMA.306/2014 -RB dated May 23, 2014 , before it was read as, (c) the price as applicable to transfer of shares from resident to non-resident as per the pricing guidel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vide Notification No. FEMA. 308/2014-RB, dated June 30, 2014 , before it was read as, shares or convertible debentures 55. Substituted vide Notification No. FEMA. 308/2014-RB, dated June 30, 2014 , before it was read as, a report in form specified as Annex C to this Schedule . And the existing Annex C hereto shall be deleted. 56. Inserted vide Notification No. FEMA. 308/2014-RB, dated June 30, 2014 57. Substituted vide Notification No. FEMA. 308/2014-RB, dated June 30, 2014 , before it was read as, the date of issue of shares 58. Inserted vide Notification No. FEMA. 308/2014-RB, dated June 30, 2014 59. Substituted vide Notification No. FEMA. 308/2014-RB, dated June 30, 2014 , before it was read as, shares or convertible debentures 60. Substituted vide Notification No. FEMA. 308/2014-RB, dated June 30, 2014 , before it was read as, shares or convertible debentures 61. Substituted vide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs shall furnish a quarterly return in the 19 [Form DR-Quarterly] to Reserve Bank within fifteen days of the close of the calendar quarter. 4. Pending repatriation or utilisation of foreign exchange resources raised in terms of clause (1) the Indian company may invest the foreign currency funds in - 6 [(a) deposits with or Certificate of Deposit or other instruments offered by banks who have been rated by Standard and Poor, Fitch, IBCA or Moody's etc. and such rating not being less than the rating stipulated by Reserve Bank from time to time for the purpose.] b) deposits with branch outside India of an authorised dealer in India, and c) treasury bills and other monetary instruments with a maturity or un-expired maturity of the instrument of one year or less. 1 [4A. Purchase of shares by a registered broker A registered broker in India may purchase shares of an Indian Company on behalf of a person resident outside India, for the purpose of converting the shares so purchased into ADRs/GDRs, Provided that i) the shares are purchased on a recognized stock ex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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