SCHEDULE 01 - Purchase by a person resident outside India of equity/preference/convertible preference shares and convertible debentures issued by an Indian company - SCHEDULE I - 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These rules have been superseded vide New Regulations New Regulations of 2017 SCHEDULE I [See Regulation (5) (1)] Foreign Direct Investment Scheme Purchase by a person resident outside India of 51 [shares or convertible debentures or warrants] issued by an Indian company 11 [ 32 [ 1. A person resident outside India referred to in clauses (i), (ii) and (iii) of sub-regulation (1) of Regulation 5 , may purchase 59 [shares or convertible debentures or warrants ] issued by an Indian company up to the extent and subject to the terms and conditions set out in this Schedule. ]] 13 [ 27 [***] 14 []. 2. Automatic Route of Reserve Bank for Issue of shares by an Indian company 15 [(1) An Indian company, 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 the transferee during post-issue transfer of shares beyond the issue price of the share, cannot be taken into account while calculating minimum capitalization requirement. c. Sectoral cap i.e. the maximum amount which can be invested by foreign investors in an entity, unless provided otherwise, is composite and includes all types of foreign investments, direct and indirect, regardless of whether the said investments have been made under Schedule 1, 2, 2(A), 3, 6, 8, 9 and 10 of FEMA (Transfer or Issue of Security by Persons Resident Outside India) Regulations, 2000. FCCBs and DRs having underlying of instruments which can be issued under Schedule 5, being in the nature of debt, shall not be treated as foreign investment. However, any equity holding by a person resident outside India resulting from conversion of any debt instrument under any arrangement shall be reckoned as foreign investment under the composite cap. Sectoral cap is as per table appended below. d. Total foreign investment, direct and/or indirect, in an entity will not exceed the sectoral/statutory cap. e. Foreign investment in sectors under Government approval route resulting in transfer of ownership and/or control of Indian entities from resident Indian citizens to non-resident entities will be subject to Government approval. Foreign investment in sectors under automatic route but with conditionalities, resulting in transfer of ownership and/or control of Indian entities from resident Indian citizens to non-resident entities, will be subject to compliance of such conditionalities. f. Notwithstanding anything contained in paragraphs (a), (b) and (e) above, portfolio investment upto aggregate foreign investment level of 49% or sectoral/statutory cap, whichever is lower, will not be subject to either Government approval or compliance of sectoral conditions, as the case may be, if such investment does not result in transfer of ownership and/or control of Indian entities from resident Indian citizens to non-resident entities. Other foreign investments will be subject to conditions of Government approval and compliance of sectoral conditions as laid down in the FDI policy. g. The onus of compliance with the sectoral/statutory caps on foreign investment and attendant conditions, if any, shall be on the company receiving foreign investment.] 70 [***] Explanation : 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.] 31 [ (3) Any Industrial undertaking, with or without Foreign Direct Investment, which is not an MSE, having an industrial license under the provisions of the Industries (Development Regulation) Act, 1951 for manufacturing items reserved for manufacture in the MSE sector may issue shares to persons resident outside India referred to in paragraph 1, to the extent of 24 per cent of its paid-up capital. Issue of shares in excess of 24 per cent of paid-up capital shall require prior approval of the Foreign Investment Promotion Board of the Government of India and shall be in compliance with the terms and conditions of such approval. ] 30A [Explanation.-For the purposes of sub-paragraphs (2) and (3) above, in terms of the provisions of the Micro, Small and Medium Enterprises Development Act, (i) in the case of the enterprises engaged in the manufacture or production of goods pertaining to any industry specified in the first schedule to the industries (Development and regulation) Act, 1951, a micro enterprise means where the investment in plant and machinery does not exceed twenty five lakh rupees; a small enterprise means where the investment in plant and machinery is more than twenty five lakh rupees but does not exceed five crore rupees; (ii) in the case of the enterprises engaged in providing or rendering services, a micro enterprise means where the investment in equipment does not exceed ten lakh rupees; a small enterprise means where the investment in equipment is more than ten lakh rupees but does not exceed two crore rupees.] 7 [(4) An Indian company, otherwise eligible to issue shares under this Schedule may issue equity/preference shares, subject to pricing guidelines as given in paragraph 5 of this Schedule, to a person resident outside India, (i) being a provider of technology/technical know-how, against Royalty/Lumpsum fees due for payment; (ii) against External Commercial Borrowing (ECB) (other than import dues deemed as ECB or Trade Credit as per RBI Guidelines): 28[ (iii) against import of capital goods by units in SEZs, subject to the valuation by a Committee consisting of Development Commissioner and the appropriate Customs officials. ] 65 [ (iv) against any other funds payable by the investee company, remittance of which does not require prior permission 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 requires Government approval may issue shares to a non-resident through swap of shares only with approval of the Government.] 73 [(5). A wholly owned subsidiary set up in India by a non-resident entity, operating in a sector where 100 per cent foreign investment is allowed in the automatic route and there are no FDI linked conditionalities, may issue equity shares or preference shares or convertible debentures or warrants to the said non-resident entity against pre-incorporation/ preoperative expenses incurred by the said non-resident entity up to a limit of five per cent of its capital or USD 500,000 whichever is less, subject to the conditions laid down below. a. Within thirty days from the date of issue of equity shares or preference shares or convertible debentures or warrants but not later than one year from the date of incorporation or such time as Reserve Bank of India or Government of India permits, the Indian company shall report the transaction in the Form FC-GPR to the Reserve Bank. b. The valuation of the equity shares or preference shares or convertible debentures or warrants shall be subject to the provisions of Paragraph 5 of Schedule 1 of these Regulations. c. A certificate issued by the statutory auditor of the Indian company that the amount of pre-incorporation/preoperative expenses against which equity shares or preference shares or convertible debentures or warrants have been issued has been utilized for the purpose for which it was received should be submitted with the FC-GPR form. Explanation: Pre-incorporation/pre-operative expenses shall include amounts remitted to Investee Company s account, to the investor s account in India if it exists, to any consultant, attorney or to any other material/service provider for expenditure relating to incorporation or necessary for commencement of operations.] 17 [3. Issue of shares by a company requiring the Government approval 29 [ An Indian company intending to issue shares to a person resident outside India in accordance with these Regulations directly against foreign inward remittance (or by debit to NRE account/FCNR account) or against consideration other than inward remittance i.e., against royalty/lump sum fee due for payment/import of capital goods by units in SEZs/ECBs (excluding those deemed as ECBs) shall obtain prior approval of the Foreign Investment-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 accordance with the SEBI guidelines, as applicable, where the shares of the company is listed on any recognised stock exchange in India; 49 [b. the valuation of shares done as per any internationally accepted pricing methodology for valuation of shares on arm s length basis, duly certified by a Chartered Accountant or a SEBI registered Merchant Banker where the shares of the company are not listed on any recognised stock exchange in India; and] 50 [***] ] 21 [5A. ***] 35 [ 5B. Notwithstanding anything contained in paragraph 5 above, where shares in an Indian company are issued to a person resident outside India in compliance with the provisions of the Companies Act, 1956 , by way of subscription to Memorandum of Association, such investments may be made at face value subject to eligibility to invest under this Schedule. ] 67 [6. ***] 7. Rate of Dividend on Preference Shares The rate of dividend on preference shares or convertible preference shares issued under these Regulations shall not exceed 300 basis points over the Prime Lending Rate of State Bank of India prevailing as on the date of the Board meeting of the company in which issue of such shares is recommended. 52 [ 8 Mode of payment for shares issued to person resident outside India A company in India issuing shares or convertible debentures or warrants under this Schedule to a person resident outside India shall receive the amount of consideration for such shares or convertible debentures or warrants- by inward remittance through normal banking channels, or by debit to NRE/FCNR (B) account of the person concerned maintained with an authorised dealer/authorized bank, or by debit to a non-interest bearing Escrow account (in Indian Rupees) maintained in India with an AD bank in accordance with Foreign Exchange Management ( Deposit ) Regulations, 2000, Explanation: Conversion of Royalty/Lump sum fee due for payment or conversion of ECB, import of capital goods by units in Special Economic Zones, as given elsewhere in the Schedule, shall be treated as consideration for issue of shares within the meaning of this paragraph. Provided that if the shares or convertible debentures or warrants are not issued within 180 days from the date of receipt of the inward remittance or date of NRE / FCNR (B) /Escrow account, the amount 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 specified by Reserve Bank from time to time] along with a copy/ies of Foreign Inward Remittance Certificate/s (FIRC), Know Your Customer (KYC) report on the non-resident investor and details of the Government approval, if any. 56 [Explanation: An Indian company issuing partly paid equity shares, shall furnish a report not later than 30 days from the date of receipt of each call payment.] (B) not later than 30 days from 57 [the date of issue of shares or convertible debentures or warrants], 43 [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 accenting 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 Regulators; and (d) the company has all original certificates issued by authorised dealers in India evidencing receipt of amount of consideration in accordance with paragraph 8 of this Schedule; (ii) a certificate from SEBI registered Merchant Banker or Chartered Accountant indicating the manner of arriving at the price of the shares issued to the persons resident outside India: [Provided that, in addition to above, the company shall report the conversion of ECB into equity, in ECB-2 Return of the respective month in case of full conversion of ECB. In case of partial conversion of ECB, the converted portion shall be reported in form FG-GPR to the Regional Office concerned of Reserve Bank and non-converted portion in Form ECB-2] ] 58 [ Explanation: An Indian company issuing partly paid shares shall file a report in form FC-GPR to the extent they become paid up. ] 40 [ (2) All Indian companies which have received Foreign Direct Investment in the previous year(s) including the current year shall submit to the Reserve Bank of India, on or before the 15th day of July of each year, 47 [a report titled Annual Return on Foreign Liabilites and Assets as specified by the Reserve Bank from time to time]. 48 [(3) ***]] 41 [10 . Reporting of transfer of shares of Indian company.- (i) In case of transfer of 63 [shares or convertible debentures or warrants] of an Indian company 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 remittance receiving bank and the KYC report shall be submitted by the customer to the AD bank for carrying out the transaction along with the form FC-TRS. (v) In case prior approval of the Reserve Bank is granted for transfer of shares or convertible debentures, from a resident to the non-resident on deferred payment of consideration, the same shall be reported in form FC-TRS, duly certified by the AD bank, within 60 days from the date of receipt of the full and final amount of consideration. ] 42 [11.] Permission for retaining share subscription money received from persons resident outside India in a foreign currency account Reserve Bank may, on an application made to it and on being satisfied that it is necessary so to do, permit an Indian company issuing shares to persons resident outside India under this Schedule, to retain the subscription amount in a foreign currency account, subject to such terms and conditions as it may stipulate. *********** Notes:- 1 Has been inserted vide Notification No. 041/2001 dated 2/3/2001 2 The words 'as applicable' has been inserted; vide Notification No. 094/2003 dated 18/6/2003 3. Has been inserted vide Notification No. Supra 4. Has been added vide Notification No. Supra 5. Has been deleted vide Notification No. Supra 6. Has been substituted vide Notification No. 118/2004 dated 16/6/2004 , before it was read as, deposits with or Certificate of Deposits or other instruments of banks who have been rated not less than A1+ by Standard and Poor or P1 by Moody's for short term obligations, 7. Has been added vide Notification No. 125/2004 dated 27/11/2004 Further renumbered vide Notification No. 179/2008 dated 22/08/2008 , 8. Words has been added vide Notification No. Supra 9. Has been added vide Notification No. Supra 10. Proviso has been added vide Notification No. Supra 11. Has been substituted vide Notification No. 167/2007 dated 23/10/2007 , before 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 substituted vide Notification No. 179/2008 dated 22/08/2008 w.e.f 10-02-2006, before substitution it was read as: (1) An Indian company which is not engaged in any activity, or in manufacturing of item included in Annexure 'A' to this Schedule, may issue shares or convertible debentures to a person resident outside India, referred to in paragraph 1 upto the extent specified in Annexure B, subject to compliance with the provisions of the Industrial Policy and Procedures as notified by Secretariat for Industrial Assistance (SIA) in the Ministry of Commerce and Industry, Govt. of India, from time to time. Provided that: i. the activity of the issuer company does not require an industrial licence under the provisions of the Industries (Development Regulation) Act, 1951 or under the locational policy notified by Government of India under the Industrial Policy of 1991 as amended from time to time. ii. the shares or convertible debentures are not being issued by the Indian company with a view to acquiring existing shares of any Indian company. Explanation : A company which proposes to embark on expansion programme to undertake activities or manufacture items included in Annexure B to this schedule may issue shares or debentures out of fresh capital proposed to be issued by it for the purpose of financing expansion programme , upto the extent indicated in Annexure B, subject to compliance with the provisions of this paragraph. 16. Has been omitted vide Notification No. 179/2008 dated 22/08/2008 , before omission it was read as, (2) A trading company incorporated in India may issue shares or convertible debentures to the extent of 51 per cent of its capital, to persons resident outside India referred to paragraph 1, subject to the condition that remittance of dividend to the shareholders outside India is made only after the company has secured registration as an Export/Trading/Star Trading /Super Trading House from the Directorate General of Foreign Trade, Ministry of Commerce, Government of India, New Delhi. Further, paragraph (3), (4) and (5) renumbered as (2), (3) and (4) respectively. 17. Has been substituted vide Notification No. 179/2008 dated 22/08/2008 , before substitution it was read as, 3. Issue of shares by a company 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 , before it was inserted vide Notification No. 041/2001 dated 2/3/2001 as, (4B) i) An Indian company may sponsor an issue of ADRs/GDRs with an overseas depository against shares held by its shareholders at a price to be determined by the Lead Manager. ii) The proceeds of the issue shall be repatriated to India within a period of one month. iii) The sponsoring company shall comply with the provisions of the Scheme for Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993 and guidelines issued thereunder by the Central Government from time to time; iv) the sponsoring company shall furnish full details of such issue in a form specified in Annexure C to the Foreign Investment Division, Exchange Control Department, Reserve Bank of India, Central Office, Mumbai within 30 days from the date of closure of the issue. 21. Has been omitted vide Notification No. 179/2008 dated 22/08/2008 , before omission it was read as, 3 [5A. Issue price of ADRs/GDRsPrice of ADRs/GDRs to be issued to a person resident outside India may be decided by the Indian company- a. where the issue is on public offer basis, in consultation with the Lead Manager to the issue; and b. in other cases , as provided in paragraph 5 above.] 22. Substituted vide Notification No. 179/2008 dated 22/08/2008 , before substitution it was read as, [6. Dividend Balancing Where a company is engaged in any of the industries in the consumer goods sector, specified in Annexure E, or in any other activity where the condition of dividend balancing has been stipulated in terms of the provisions of Industrial Policy and Procedures notified by Secretariat for Industrial Assistance, the cumulative outflow of foreign exchange on account of payment of dividend over a period of seven years from the date of commencement of commercial production to investors outside India shall not exceed cumulative amount of export earning of the company during those years. Provided that a) the restriction under this paragraph shall not apply i) in respect of shares held in such a company by International Finance Corporation (IFC), the Deustche Entwicklungs Gescelschaft (DEG), the Commonwealth Development Corporation (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 recognised stock exchange in India, and b) fair valuation of shares done by a chartered accountant as per the guidelines issued by the erstwhile Controller of Capital Issues, in all other cases. 27. Omitted vide Notification No. FEMA 229/2012-RB, Dated 23-4-2012 , before it was read as:- (2) If the person purchasing the shares under this Scheme proposes to be a collaborator or proposes acquire the entire shareholding of a new Indian company, he should obtain prior permission of Central Government if he has, as on January 12, 2005, an existing joint venture or technology transfer/trademark agreement in the same field as that of such Indian company. Provided that no prior permission of Central Government shall be required for investments to be made by Venture Capital Funds registered with. SEBI; investment by multinational., financial institutions; or where in the existing joint-venture investment by either of the parties is less than 3% or where the existing joint Venture/ collaboration is defunct or sick or for transfer of shares of an Indian company engaged in Information Technology sector or in the mining sector, if the existing joint- venture or technology transfer/trade mark agreement of the person to Whom the shares are to be transferred are also in the information Technology sector or in the mining sector or in the mining sector for same area/mineral 28. Inserted vide Notification No. FEMA 229/2012-RB, Dated 23-4-2012 29. Substituted vide Notification No. FEMA 229/2012-RB, Dated 23-4-2012 before it was read as;- An Indian company intending to issue shares to a person resident outside India in accordance with these Regulations shall obtain prior approval of the Foreign Investment Promotion Board of Government of India if the company; (a) is engaged or proposes to engage, in arty activity given in Annex A (A) to this schedule; or (b) falls under the FIPB route as stipulated under the column Entry Route in Annex B to this schedule; or (c) proposes to issue shares to a person resident outside India against considerations other than inward remittance i.e. against royalty/lumpsum fee due for payment; or (d) proposes to issue shares to a person resident outside 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 vide Notification No. FEMA 230/2012-RB, Dated 29-5-2012 , before it was read as:- Notwithstanding anything contained in clause (3) 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 may issue shares or convertible debentures to a person resident outside India referred to in paragraph 1 in excess of 24 per cent provided it complies with the ceilings specified in Annexure B. 32. Substituted vide Notification No. FEMA 244/2012-RB, dated 22-10-2012 , before it was read as;- A person resident outside India referred to in clauses (i) and (ii) of 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. 33. Substituted vide Notification No. FEMA.266/2013-RB Dated March 05, 2013, before it was read as, a report in form FC-GPR 34. Substitu ted vide Notification No. FEMA. 242/2012-RB Dated 19-10-2012 w.e.f. 10th day of April 2012, before it was read as, 'including second-hand machinery' 35. Inserted vide Notification No. FEMA. 242/2012-RB Dated 19-10-2012 w.e.f. 26th day of September 2012 36. Inserted vide Notification No. FEMA. 242/2012-RB Dated 19-10-2012 w.e.f. 2nd day of May 2011 37. Inserted vide Notification No. FEMA. 242/2012-RB Dated 19-10-2012 w.e.f. 1st day of April, 2003 38. Substituted vide Notification No. FEMA. 242/2012-RB Dated 19-10-2012 w.e.f. 2nd day of May, 2011, before it was read as, debit to NRE/FCNR(B) account 39. Substituted vide Notification No. FEMA. 242/2012-RB Dated 19-10-2012 w.e.f. 30th day of May 2008, before it was read as, 9. Report by the Indian company (1) An Indian company issuing shares or convertible debentures in accordance with these Regulations shall submit to Reserve Bank, A. not later than 30 days from the date of receipt of the amount of consideration, a 23 [report in 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 receipt of amount of consideration 24 [in accordance with paragraph 8]; ii) a certificate from Statutory Auditors or Chartered Accountant indicating the manner of arriving at the price of the shares issued to the persons resident outside India. 10 Provided that, in addition to above, the company shall report the conversion of ECB into equity, in ECB 2 Return of the respective month in case of full conversion of ECB. In case of partial conversion of ECB, the converted portion shall be reported in Form FC-GPR to the concerned Regional Office of the Reserve Bank and non-converted portion in Form ECB -2. 25 [C) the amount of consideration received by Indian company as advance against equity shall be reported to the Regional Office of the Reserve Bank under whose jurisdiction the Registered Office of the Company operates in the form specified in 'Annex C within 30 days of receipt thereof.] 40. Inserted vide Notification No. FEMA. 242/2012-RB Dated 19-10-2012 w.e.f. 15th day of March 2011 41. Inserted vide Notification No. FEMA. 242/2012-RB Dated 19-10-2012 w.e.f. 22nd day of April 2009. 42. Renumbered as 11 , vide Notification No. FEMA. 242/2012-RB Dated 19-10-2012 before it was read as 10 43. Substituted vide Notification No. FEMA.266/2013-RB Dated March 05, 2013, before it was read as, a report in form FC-GPR 44. Substituted vide Notification No. FEMA.266/2013-RB Dated March 05, 2013, before it was read as, a report in the form FC-TRS specified in Annex F to this Schedule . 45. Deleted vide Notification No. FEMA.266/2013-RB Dated March 05, 2013, before it was read as, (ii) Reserve Bank may, by notification, modify from time to time the Form FC-TRS specified in Annex F to this Schedule. 46. Substituted vide Notification No. FEMA. 278/2013-RB dated : June 07, 2013 Before it was read as, Provided that the shares or convertible debenture are not being issued by the Indian company with a view to acquire existing shares of any Indian company. 47. 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 guidelines laid down by the Reserve Bank from time to time, where the issue of shares is on preferential allotment 51. Substituted vide Notification No. FEMA. 308/2014-RB, dated June 30, 2014 , before it was read as, equity/preference/convertible preference shares and convertible debentures 52. Substituted vide Notification No. FEMA. 308/2014-RB, dated June 30, 2014 , before it was read as, 8. Mode of payment for shares issued to persons resident outside India A company in India issuing shares or convertible debentures under this Schedule to a person resident outside India shall receive the amount of consideration for such shares- i) by inward remittance through normal banking channels, or ii) by debit to NRE/FCNR account of the person concerned maintained with an authorised dealer/authorised bank. 36. [(iii) by debit, to a non-interest bearing Escrow account (in Indian Rupees) maintained in India with an AD bank in accordance with Foreign Exchange Management (Deposit) Regulations, 2000. ] 9 [ Explanation : Conversion of Rayalty/Lumpsum fee due for payment or conversion of ECB, as given elsewhere in this Schedule, 37 [import payables of capital goods by units in Special Economic Zones] shall be treated as consideration for issue of shares within the meaning of this paragraph.] 12 [ Provided that if the shares or convertible debentures are not issued within 180 days from the date of receipt of the inward remittance or date of 38 [debit to NRE/FCNR(B)/Escrow account], the amount 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:] 12 [ Provided further that the Reserve Bank may, on an 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 is outstanding beyond a period of 180 days from the date of receipt.] 53. Substituted vide Notification No. FEMA. 308/2014-RB, dated June 30, 2014 , before it was read as, shares or convertible debentures 54. Substituted 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 Notification No. FEMA. 308/2014-RB, dated June 30, 2014 , before it was read as, shares or convertible debentures 61A. Substituted vide Notification No. FEMA. 308/2014-RB, dated June 30, 2014 , before it was read as, shares or debentures 62. Substituted vide Notification No. FEMA. 308/2014-RB, dated June 30, 2014 , before it was read as, shares or convertible debentures 63. Substituted vide Notification No. FEMA. 308/2014-RB, dated June 30, 2014 , before it was read as, shares or convertible debentures 64. Substituted vide Notification No. FEMA. 308/2014-RB, dated June 30, 2014 , before it was read as, shares or convertible debentures 65. Inserted vide NOTIFICATION No. 315/2014-RB Mumbai, the 10 th July, 2014 66. Deleted vide Not. 330/RB-2014 - Dated 15-12-2014 w.e.f. December 15, 2014, before it was read as, 4. Issue of Shares by International offering through ADR and/or GDR 1. An Indian company may issue its Rupee denominated shares to a person resident outside India being a depository for the purpose of issuing Global Depository Receipts (GDRs) and/ or American Depository Receipts (ADRs), Provided the Indian company issuing such shares a) has an approval from the Ministry of Finance, Government of India to issue such ADRs and/or GDRs or is eligible to issue ADRs/ GDRs in terms of the relevant scheme in force or notification issued by the Ministry of Finance, and b) is not otherwise ineligible to issue shares to persons resident outside India in terms of these Regulations, and c) the ADRs/GDRs are issued in accordance with the Scheme for issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993 and guidelines issued by the Central Government thereunder from time to time. 2. The Indian company issuing shares under sub-paragraph (1), shall furnish to the Reserve Bank, full details of such issue in 18 [Form DR], within 30 days from the date of closing of the issue. 3. The Indian company issuing shares against ADRs/GDRs 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 exchange; ii) the Indian company has issued ADRs/GDRs; iii) the shares are purchased with the permission of Custodian of the ADRs/GDRs of the concerned Indian company and are deposited with the Custodian; iv) the number of shares so purchased shall not exceed ADRs/GDRs converted into underlying shares and shall be subject to sectoral caps as applicable; v) the non-resident investor, broker, Custodian and the overseas depository comply with the provisions of the Scheme for Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993 and guidelines issued thereunder by the Central Government from time to time.] 20 [4B Sponsoring an issue of ADRs/GDRs by Indian Company An Indian company may sponsor an Issue of ADRs/GDRs with an overseas depository against Shares held by its shareholder at a price to be determined under the provisions of the Scheme for Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) Scheme 1993 and guidelines issued by the Government of India and the reporting requirements as directed by Reserve Bank, from time to time.] 67. Deleted vide Not. 330/RB-2014 - Dated 15-12-2014 w.e.f. December 15, 2014, before it was read as, 22 [ 6. Issue price of ADRs/GDRs The pricing of ADRs/GDRs to be issued to a person resident outside India shall be determined under the provisions of the Scheme for Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993 and guidelines issued by the Government of India from time to time.] 68. Inserted vide Not. 354/2015-RB - Dated 30-10-2015. 69. Substituted vide Not. 354/2015-RB - Dated 30-10-2015. before it was read as Provided 70. Deleted vide Not. 362/2016-RB - Dated 15-2-2016 46 [ 69 [Provided further] that the 61 [shares or convertible debentures or warrants] are not being issued by the Indian company with a view to acquire existing shares of any Indian company. However, downstream investment by an Indian company receiving Foreign Direct Investment would be permitted to the extent specified in Regulation14.] 71. Inserted vide Not. 362/2016-RB - Dated 15-2-2016 72. Deleted vide Not. 362/2016-RB - Dated 15-2-2016 73. Inserted vide Not. 373/ 2016-RB - Dated 24-10-2016