SCHEDULE 9 - Regulation 5(2B) - Terms and conditions for opening of Escrow Account - Foreign Exchange Management (Deposit) Regulations, 2000

1 [SCHEDULE 9 (See Sub Regulation (2B) of Regulation 5) Terms and conditions for opening of Escrow Account 1. The Escrow account in INR would be maintained only with an AD Category-I bank in India as Escrow agent. The Escrow account may be opened jointly and severally. Further, securities kept/linked with such Escrow accounts may be linked with demat account maintained with SEBI authorised Depository Participants as Escrow agents. 2. The account shall be non-interest bearing. 3. No fund or non-fund based facilities would be permitted against the balances in the Escrow account. 4. Permitted credits: (i) Receipt of foreign inward remittance as consideration towards issue or transfer of shares through normal banking channels; or (ii) Receipt of rupee consideration through the normal banking channels from India by the resident acquirers of shares who proposes to acquire them from non-resident holders by way of transfer. 5. Permitted debits: (i) Remittance of consideration for issue of shares or transfer of shares directly into the bank accounts of the beneficiary (issuer in India or transferor of shares in India or abroad); or (ii) Remittance of consideration for refund to the initial remitter of funds in case of failure/non-materialization of the FDI transaction for which the Escrow account was opened. 6. The underlying FDI transaction for which the Escrow account is opened should be compliant with extant FEMA provisions. Further, for the purposes of FDI reporting, date of transfer of funds into the bank account of the issuer or transferor of shares, shall be the relevant date of remittance. 7. Where the transaction is governed by SEBI guidelines/regulations, operation of the Escrow accounts shall also be in accordance with the relevant SEBI regulations. 8. Balance in the Escrow account, if any, may be repatriated at the then prevailing exchange rate (i.e., the exchange rate risk will be borne by the person, resident outside India acquiring the shares), after all the formalities in respect of the said acquisition are completed. In cases, where proposed acquisition/transfer does not materialise, the AD Category-I bank may allow repatriation/refund of the entire amount lying to the credit of the Escrow account on being satisfied with the bona fides of such remittances. 9. The Escrow account shall remain operational for a maximum period of six months only and the account shall be closed immediately after completing the requirements as outlined above or on completion of six months from the date of opening of such account, whichever is earlier. In case the Escrow account is required to be maintained beyond six months, specific permission from the Reserve Bank has to be sought. 10. Requirement of compliance with KYC guidelines issued by the Reserve Bank/SEBI shall rest with the AD Category-I bank/SEBI authorised Depository Participants. 11. The terms of the Escrow account shall be laid down strictly in the Escrow agreement, Share purchase agreement, conditions of issue of shares, etc. ] ----------------- Notes:- 1. Inserted vide Notification No. FEMA 228/2012-RB, Dated 11-4-2012