Regulation 16 - Transfer by way of sale of shares of a JV/WOS outside India - Foreign Exchange Management (Transfer or Issue of Any Foreign Security) Regulations, 2004

16. Transfer by way of sale of shares of a JV/WOS outside India 2 [(1) An Indian Party may transfer, by way of sale to another Indian Party which complies with the provisions of Regulation 6 above, or to a person resident outside India, any share or security held by it in a JV or WOS outside India subject to the following conditions: I. the sale does not result in any write off of the investment made; II. the sale is to be effected through a stock exchange where the shares of the overseas JV/ WOS are listed; III. if the shares are not listed on the stock exchange and the shares are disinvested by a private arrangement, the share price is not less than the value certified by a Chartered Accountant / Certified Public Accountant as the fair value of the shares based on the latest audited financial statements of the JV / WOS; IV. the Indian Party does not have any outstanding dues by way of dividend, technical know-how fees, royalty, consultancy, commission or other entitlements and / or export proceeds from the JV or WOS; V. the overseas concern has been in operation for at least one full year and the Annual Performance Report together with the audited accounts for that year has been submitted to the Reserve Bank; VI. the Indian party is not under investigation by CBI / DoE / SEBI / IRDA or any other regulatory authority in India. (1A) (i) In the following cases, an Indian Party may disinvest, if the amount to be repatriated on disinvestment is less than the amount of the original investment: 1. where the JV / WOS is listed in the overseas stock exchange; 2. where the Indian Party is listed on a stock exchange in India and has a net worth of not less than ₹ 100 crore; 3. where the Indian Party is an unlisted company and the investment in the overseas venture does not exceed USD 10 million and 4. where the Indian Party is a listed company having a net worth of less than ₹ 100 crore but investment in an overseas JV/WOS does not exceed USD 10 million. (ii) Such disinvestments shall be subject to the conditions listed in clause (ii) to (vi) of sub-regulation (1) of Regulation 16.] (2) Sale proceeds of shares/securities shall be repatriated to India immediately on receipt thereof and in any case not later than 90 days from the date of sale of the shares/securities and documentary evidence to this effect shall be submitted to the Regional office of the Reserve Bank through the designated authorized dealer. (3) An Indian party, which does not satisfy the criteria specified at sub regulation (1) above, shall apply to the Reserve Bank for permission to transfer by way of sale of shares of a JV/WOS outside India which may be granted subject to such conditions as the Reserve Bank may consider appropriate. ************************** Note : 1. Has been inserted vide Notification No. G.S.R. 13(E) dated 9/10/2007 (w. e. f. the 27th day of March 2006) 2. Substituted vide Notification No. 277/2013-RB dated May 08, 2013, w.e.f. June 29, 2011, before it was read as, (1) An Indian party may transfer by way of sale to another Indian party who complies with the provisions of Regulation 6 above, or to a person resident outside India, any share or security held by him in a Joint Venture or Wholly Owned Subsidiary outside India 1 without prior approval of the Reserve Bank, in the undernoted categories: (i) in cases where the JV / WOS is listed in the overseas stock exchange; (ii) in cases where the Indian promoter company is listed on a stock exchange in India and has a net worth of not less than ₹ 100 crore; (iii) where the Indian promoter is an unlisted company and the investment in overseas venture does not exceed USD 10 million. Provided that (i) The sale does not result in any write-off of the investment made; (ii) the sale is effected through a stock exchange where the shares of the overseas Joint Venture or Wholly Owned Subsidiary are listed; (iii) if the shares are not listed on the stock exchange, and the shares are disinvested by a private arrangement, the share price is not less than the value certified by a Chartered Accountant /Certified Public Accountant as the fair value of the shares based on the latest audited financial statements of the Joint Venture or Wholly Owned Subsidiary: (iv)The Indian party does not have any outstanding dues by way of dividend, technical know-how fees, royalty, consultancy, commission or other entitlements, and/or export proceeds from the Joint Venture or Wholly Owned Subsidiary; (v)The overseas concern has been in operation for at least one full year and the Annual Performance Report together with the audited accounts for that year has been submitted to the Reserve Bank; (vi)The Indian party is not under investigation by CBI/ED/SEBI/IRDA or any other regulatory authority in India.