Regulation 18 - Pledge of Shares of Joint Ventures and Wholly Owned Subsidiaries - Foreign Exchange Management (Transfer or Issue of Any Foreign Security) Regulations, 2004

[ 18. Pledge of Shares of Joint Venture (JV), Wholly Owned Subsidiary (WOS) and Step down Subsidiary (SDS) An Indian Party may create charge, by way of pledge, on the shares of Joint Venture (JV) or Wholly Owned Subsidiary (WOS) or Step Down Subsidiary (SDS) outside India [held directly by the Indian party in JV or WOS and indirectly in SDS] as a security in favour of an Authorized Dealer or a public financial institution in India or an overseas lender, for availing of fund based or non-fund based facility for itself (i.e. the Indian party) or for its JV / WOS / SDS whose shares have been pledged, or for any other JV / WOS / SDS of the Indian party. Provided that (a) The value of the fund based or non-fund based facility is reckoned as financial commitment for the Indian party and the total financial commitment of the Indian party remains within the limit stipulated by the Reserve Bank for overseas direct investments in the JV / WOS from time to time; (b) In case of the facility from an overseas lender, it should be regulated and supervised as a bank; and (c) Subject to the additional terms and conditions prescribed by the Reserve Bank from time to time.] *********************** Note : 1. Has been inserted vide Notification No. G.S.R. 13(E) dated 9/10/2007 (w. e. f. the 20th day of April, 2007) 2. Substituted vide NOTIFICATION No. FEMA/322/RB-2014 , Mumbai, 14 October, 2014 , before it was read as, 18. Pledge of Shares of Joint Ventures and Wholly Owned Subsidiaries An Indian Party may transfer, by way of pledge, shares held in a Joint Venture or Wholly Owned Subsidiary outside India as a security for availing of fund based or non-fund based facilities for itself or for the Joint Venture or Wholly Owned Subsidiary from an authorised dealer or a public financial institution in India 1 or to an overseas lender, provided the lender is regulated and supervised as a bank and the total financial commitment of the Indian Party remains within the limit stipulated by the Reserve Bank for overseas investments in JV/WOS.