Regulation 5 - Permission for purchase of shares by certain persons resident outside India - Foreign Exchange Management (Transfer or Issue Of Security By A Person Resident Outside India) Regulations, 2000

These rules have been superseded vide New Regulations New Regulations of 2017 5. Permission for purchase of shares by certain persons resident outside India:- (1) 28 [(i) A person resident outside India (other than a citizen of Bangladesh or Pakistan) or an entity incorporated outside India (other than an entity in Bangladesh or Pakistan), may purchase shares or convertible debentures or warrants of an Indian company under Foreign Direct Investment Scheme, subject to the terms and conditions specified in Schedule 1. Explanation: Shares or convertible debentures containing an optionality clause but without any option/right to exit at an assured price shall be reckoned as eligible instruments to be issued to a person resident outside India by an Indian company subject to the terms and conditions as specified in Schedule I.] 9 [(ii) Notwithstanding anything contained in sub-regulation (i) above, a person who is a citizen of Bangladesh or an entity incorporated in Bangladesh may, with the prior approval of the Foreign Investment Promotion Board of the Government of India, purchase 29 [shares or convertible debentures or warrants] of an Indian company under Foreign Direct Investment Scheme, subject to the terms and conditions specified in Schedule 1.] 14 [ (iii) Further, notwithstanding anything contained in clause (i) of the sub-regulation (1) above, a person who is a citizen of Pakistan or an entity incorporated in Pakistan may, with the prior approval of the Foreign Investment Promotion Board of the Government of India, purchase 30 [shares or convertible debentures or warrants] of an Indian company under Foreign Direct Investment Scheme, subject to the terms and conditions specified in Schedule 1. Provided further that notwithstanding anything contained in Schedule 1, the Indian company, receiving such foreign direct investment, is not engaged or shall not engage in sectors/activities pertaining to defence, space and atomic energy and sectors/activities prohibited for foreign investment. ] (2) A registered Foreign Institutional Investor (FII) may purchase 31 [shares or convertible debentures or warrants] of an Indian company under the Portfolio Investment Scheme, subject to the terms and conditions specified in Schedule 2., 13 [ and the limits and margin requirements prescribed by RBI/SEBI as well as the stipulations regarding collateral securities as specified by the Reserve Bank from time to time. ] 20 [ A registered FII including SEBI approved sub-accounts of the FIIs, after registering as RFPI shall not be eligible to invest as FII. However, all investments made by FII in accordance with the regulations prior to registration as RFPI shall continue to be valid and taken into account for computation of aggregate limit. ] 2 [(***)] 15 [***] 21 [(2A) A registered Foreign Portfolio Investor (RFPI) may purchase shares or convertible debentures of an Indian company under the Foreign Portfolio Investment (FPI) Scheme subject to the terms and conditions specified in Schedule 2A and the limits and margin requirements prescribed by RBI/ SEBI as well as the stipulations regarding collateral securities as specified by the Reserve Bank from time to time.] 33 [(3) (i) A Non- Resident Indian (NRI) may acquire securities or units on a Stock Exchange in India on repatriation basis under the Portfolio Investment Scheme, subject to the terms and conditions specified in Schedule 3. (ii) A Non- Resident Indian (NRI) may acquire securities or units on a non-repatriation basis, subject to the terms and conditions specified in Schedule 4.] 10 [(4) A non-resident Indian or a registered FII or a Foreign Central Bank 17 ['or a QFI 22 [or a RFPI] or any other person resident outside India included in Schedule 5] may purchase securities, other than shares or convertible debentures of an Indian company, subject to the terms and conditions specified in Schedule 5.] 34 [ (5) A Foreign Venture Capital Investor registered with SEBI may make investment in the manner and subject to the terms and conditions specified in Schedule 6. ] 4 [(***)] 11 [(6) A registered Foreign Institutional Investor (FII) having valid approval under, the Foreign Exchange Regulation Act, 1973 or under the Foreign Exchange Management' Act, 1999 may trade in all exchange traded derivative contract approved by RBI/SEBI subject to limits and margin requirement prescribed by RBI/SEBI as well as the stipulations regarding collateral securities as directed by the Reserve Bank from time to time.] 23 [(6A) a RFPI may trade in all exchange traded derivative contracts approved by RBI/SEBI subject to the limits and margin requirement prescribed by RBI/SEBI as well as the stipulations regarding collateral securities as directed by the Reserve Bank from time to time] 6 [(7) A Non-Resident Indian (NRI) may invest in exchange traded derivative contracts approved by SEBI from time to time out of INR funds held in India on non-repatriable basis subject to the limits prescribed by SEBI. Such investments will not be eligible for repatriation benefits.] 18 [(7A) A QFI may purchase equity shares of an Indian company subject to the terms and conditions specified in Schedule 8.] 24 [However, a QFI may continue to buy, sell or otherwise deal in securities for a period of one year from the date of commencement of Securities Exchange Board of India (SEBI) (Foreign Portfolio Investors) Regulations, 2014, or until it obtains a certificate of registration as foreign portfolio investor, whichever is earlier. Further, a QFI after registering as a RFPI, shall not be eligible to invest as QFI. However, all investments made by QFI, in accordance with the regulations prior to registration as RFPI shall continue to be valid and taken into account for computation of aggregate limit] 19 [ Explanation : For the purposes of 25 [sub-regulations (1) to (7A)] above, no class of investor referred to in those sub-regulations shall make investment, directly or indirectly, in any security, issued by an Indian company which is engaged or proposes to engage in any of the activities in which foreign investment is prohibited under sub-regulation (b) of Regulation 4 of the Foreign Exchange Management (Permissible Capital Account Transactions) Regulations, 2000 , as amended from time to time] 12 [ (8) A registered Foreign Institutional Investor (FII) including SEBI approved sub-accounts of the FIIs, registered with SEBI 26 [a RFPI registered in accordance with the provisions of Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2014] or a Non-Resident Indian (NRI) may purchase, hold or sell Indian Depository Receipts (IDRs) of eligible companies resident outside India and issued in the Indian capital market, subject to the terms and conditions specified in Para 2 of Schedule 7. ] 35 [ (9) A person resident outside India (other than a citizen of Pakistan or Bangladesh) or an entity incorporated outside India (other than an entity in Pakistan or Bangladesh), not being a Foreign Portfolio Investor or Foreign Institutional Investor or Foreign Venture Capital Investor registered in accordance with SEBI guidelines, may contribute foreign capital either by way of capital contribution or by way of acquisition / transfer of profit shares in the capital structure of an LLP under Foreign Direct Investment, subject to the terms and conditions as specified in Schedule 9 ] 32 [(10) A person resident outside India (other than an individual who is citizen of or any other entity which is registered/incorporated in Pakistan or Bangladesh), including an Registered Foreign Portfolio Investor (RFPI) or a non-resident Indian (NRI) may acquire, purchase, hold, sell or transfer units of an Investment Vehicle, in the manner and subject to the terms and conditions specified in Schedule 11.] ------------------- Note : 1. Sub-regulation (5) has been added vide Notification No. 032/2000 dated 26/12/2000 2. Proviso has been added vide Notification No. 035/2001 date 16/2/2001 , as Provided that the FII shall not purchase shares or convertible debentures of an Indian company which is engaged in the print media sector. Now, deleted by Notification No. 138/2005 dated 22/7/2005 3. Proviso has been added vide Notification No. 035/2001 date 16/2/2001 as Provided that the NRI/OCB shall not purchase shares or convertible debentures of an Indian company which is engaged in the print media sector. Now, deleted by Notification No. 138/2005 dated 22/7/2005 4. Proviso has been added vide Notification No. 035/2001 date 16/2/2001 , as Provided that the Foreign Venture Capital Investor shall not purchase shares or convertible debentures of an Indian company which is engaged in the print media sector. Now, deleted by Notification No. 138/2005 dated 22/7/2005 5. Sub-regulation (3), has been substituted vide Notification No. 046/2001 dated 29/11/2001 6. Has been inserted vide Notification No. 085/2003 dated 17/1/2003 ] 7. For the words 'or an entity outside India, whether incorporated or not,' the words 'or an entity incorporated outside India,' has been substituted vide Notification No. 100/2003 dated 3/10/2003 8. Has been inserted vide Notification No. 149/2006-RB dated 9/6/2006 9. Sub-regulation (1), has been re-numbered as clause (i) of sub-regulation (1) thereof and after clause (i) so re-numbered, clause (ii) has been inserted, vide Notification No. 167/2007 dated 23/10/2007 10. Has been substituted vide Notification No. 166/2007 dated 17/10/2007 before it was read as, A non-resident Indian [****] or a registered FII may purchase securities, other than shares or convertible debentures of an Indian company, subject to the terms and conditions specified in Schedule 5. 11. Has been substituted vide Notification No. 179/2008 dated 22/08/2008 w.e.f. 31-12-2007, before substitution it was read as under [as inserted vide Notification No. 085/2003 dated 17/1/2003 ] A registered Foreign Institutional Investor (FII) having valid approval under FERA, 1973 or under FEMA 1999 may trade in all exchange traded derivative contracts approved by SEBI from time to time subject to the limits as prescribed in by SEBI. 12. Inserted vide Notification No. FEMA 224/2012-RB, DATED 7-3-2012 13. Inserted vide Notification No. FEMA 222/2012-RB, dated 07-03-2012 14. Inserted vide Notification No. FEMA 244/2012-RB, Dated 22-10-2012 15. Deleted vide, before it was read as, Notification No. FEMA. 254/2013-RB January 17, 2013 , before it was read as, 8 [ Provided further that Foreign Institutional Investors shall not invest in the paid up equity capital of Asset Reconstruction Companies] 16. Inserted vide NOTIFICATION 294/2013-RB dated November 12, 2013 17 . Inserted vide Notification No. FEMA. 242/2012-RB Dated 19-10-2012 w.e.f. 9th day of August, 2011 18. Inserted vide Notification No. FEMA. 242/2012-RB Dated 19-10-2012 w.e.f. 13th day of January, 2012 19. Inserted vide Notification No. FEMA. 242/2012-RB Dated 19-10-2012 20. Inserted vide Notification No. FEMA. 297/2014-RB dated March 13, 2014 21. Inserted vide Notification No. FEMA. 297/2014-RB dated March 13, 2014 22. Inserted vide Notification No. FEMA. 297/2014-RB dated March 13, 2014 23. Inserted vide Notification No. FEMA. 297/2014-RB dated March 13, 2014 24. Inserted vide Notification No. FEMA. 297/2014-RB dated March 13, 2014 25. Inserted vide Notification No. FEMA. 297/2014-RB dated March 13, 2014 26. Inserted vide Notification No. FEMA. 297/2014-RB dated March 13, 2014 27. Inserted vide Notification No. FEMA. 298/2014-RB dated March 13, 2014 28. Substituted vide Notification No. FEMA. 308/2014-RB, dated June 30, 2014 , before it was read as, 9 [(i)A person resident outside India (other than a citizen of Bangladesh or Pakistan) 7 [or an entity incorporated outside India,] (other than an entity in Bangladesh or Pakistan) , may purchase shares or convertible debentures of an Indian company under Foreign Direct Investment Scheme, subject to the terms and conditions specified in Schedule 1.] 16 [Further, shares or convertible debentures containing an optionality clause but without any option/right to exit at an assured price shall be reckoned as eligible instruments to be issued to a person resident outside India by an Indian company subject to the terms and conditions as specified in Schedule I .] 29. Substituted vide Notification No. FEMA. 308/2014-RB, dated June 30, 2014 , before it was read as, shares and convertible debentures 30. Substituted vide Notification No. FEMA. 308/2014-RB, dated June 30, 2014 , before it was read as, shares and convertible debentures 31. Substituted vide Notification No. FEMA. 308/2014-RB, dated June 30, 2014 , before it was read as, shares and convertible debentures 32. Inserted vide Not. 355/2015-RB - Dated 16-11-2015 33. Substituted vide Not. 361/2016-RB - Dated 15-2-2016 , before it was read as, 5 [3 (i) A Non-resident Indian (NRI) may purchase shares or convertible debentures of an Indian Company on a Stock Exchange under Portfolio Investment Scheme, subject to the terms and conditions specified in Schedule 3, 3 [(***)] (ii) A non-resident Indian [****] may purchase shares or convertible debentures of an Indian company on non-repatriation basis other than under Portfolio Investment Scheme subject to the terms and conditions specified in Schedule 4, 3 [(***)]] 34. Substituted vide Not. 363/2016-RB - Dated 28-4-2016 before it was read as, 1 [(5) A Foreign Venture Capital Investor registered with SEBI may make investment in a Venture Capital Fund or an Indian Venture Capital Undertaking, in the manner and subject to the terms and conditions specified in Schedule 6.] ' 35. Substituted vide Not. 385/2017-RB - Dated 3-3-2017, before it was read as, 27 [(9) A person resident outside India (other than a citizen of Pakistan or Bangladesh) or an entity incorporated outside India, (other than an entity in Pakistan or Bangladesh), not being a registered Foreign Institutional Investor or Foreign Venture Capital Investor or Qualified Foreign Investor registered with SEBI or Foreign Portfolio Investor registered in accordance with SEBI guidelines, may contribute foreign capital either by way of capital contribution or by way of acquisition/transfer of profit shares in the capital structure of an LLP under Foreign Direct Investment, subject to the terms and conditions as specified in Schedule 9.]