Regulation 8 - Investment in a foreign security by swap or exchange of shares of an Indian company - Foreign Exchange Management (Transfer or Issue of Any Foreign Security) Regulations, 2004

8. Investment in a foreign security by swap or exchange of shares of an Indian company 1 Omitted ******************** Note : 1. Has been omitted vide Notification No. G.S.R. 13(E) dated 9/10/2007 (w. e. f. the 20th day of April, 2007) before it was read as, "(1) An Indian Party may acquire shares of a foreign company, engaged in bonafide business activity, in exchange of ADRs/GDRs issued to the latter in accordance with the scheme for issue of Foreign Currency Convertible Bonds and Ordinary Shares (through Depository Receipt Mechanism) Scheme, 1993, and the guidelines issued thereunder from time to time by the Central Government; Provided that a. the Indian Party has already made an ADR and / or GDR issue and that such ADRs/GDRs are currently listed on any stock exchange outside India; such investment by the Indian Party does not exceed amount equivalent to 10 times the export earnings of the Indian Party during the preceding financial year as reflected in its audited balance-sheet, inclusive of all investments made under Regulations in Part I. b. the ADR and/or GDR issue for the purpose of acquisition is backed by underlying fresh equity shares issued by the Indian Party; c. the total holding in the Indian Party by persons resident outside India in the expanded capital base, after the new ADR and/or GDR issue, does not exceed the sectoral cap prescribed under the relevant regulations for such investment; d. the valuation of the shares of the foreign company is made, - (i)as per the recommendations of the Investment Banker if the shares are not listed on any stock exchange; or (ii) based on the current market capitalization of the foreign company arrived at on the basis of monthly average price on any stock exchange abroad for the three months preceding the month in which the acquisition is committed and over and above, the premium, if any, as recommended by the Investment Banker in its due diligence report in other cases. (2) Within 30 days from the date of issue of ADRs and/or GDRs in exchange for acquisition of shares of the foreign company under sub-regulation (1), the Indian Party shall submit a report in form ODG to the Reserve Bank."