Regulation 7 - Issue and acquisition of shares after merger or de-merger or amalgamation of Indian companies - 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These rules have been superseded vide New Regulations New Regulations of 2017 7. Issue and acquisition of shares after merger or de-merger or amalgamation of Indian companies :- (1) Where a Scheme of merger or amalgamation of two or more Indian companies or a reconstruction by way of de-merger or otherwise of an Indian company, has been approved by a Court in India, the transferee company or, as the case may be, the new company may issue shares to the shareholders of the transferor company resident outside India , subject to the following conditions, namely: (a) the percentage of shareholding of persons resident outside India in the transferee or new company does not exceed the percentage specified in the approval granted by the Central Government or the Reserve Bank, or specified in these Regulations:- Provided that where the percentage is likely to exceed the percentage specified in the approval or the Regulations, the transferor company or the transferee or new company may, after obtaining an approval from the Central Government, apply to the Reserve Bank for its approval under these Regulations. (b) the transferor company or the transferee or new company shall not engage in agriculture, plantation or real estate business or trading in TDRs; and (c) the transferee or the new company files a report within 30 days with the Reserve Bank giving full details of the shares held by persons resident outside India in the transferor and the transferee or the new company, before and after the merger/amalgamation/reconstruction, and also furnishes a confirmation that all the terms and conditions stipulated in the scheme approved by the Court have been complied with. 1 [(2) Where a Scheme of Arrangement for an Indian company has been approved by a Court in India, the Indian company may issue non-convertible redeemable preference shares or debentures out of its general reserves by way of distribution as bonus to the shareholders resident outside India, subject to the following conditions, namely: (a) the original acquisition of shares / convertible debentures (including non-convertible/ optionally convertible / partially convertible preference shares issued as on and up to April 30, 2007 and optionally convertible / partially convertible debentures issued up to June 7, 2007 under Foreign Direct Investment Scheme and treated as eligible (FDI) compliant instruments under the then applicable guidelines) of the Indian company by non-resident shareholders entitling them to hold non-convertible redeemable preference shares or debentures is in accordance with these Regulations and the conditions specified in the relevant Schedule; (b) in accordance with the provisions of the Companies Act, as applicable and the terms and conditions, if any, stipulated in the scheme approved by the Court in India have been complied with; (c) the Indian company or transferee company or a new company has a No objection certificate from Income Tax authority ; and (d) the Indian company shall not engage in any activity/sector mentioned in Annex A to Schedule 1 to these Regulations.] ---------------- Notes: 1. Inserted vide Notification No. FEMA. 291/2013-RB dated October 04, 2013