Regulation 6 - Acquisition through a rights issue or a bonus issue - Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2017

6. Acquisition through a rights issue or a bonus issue A person resident outside India and having investment in an Indian company may make investment in capital instruments (other than share warrants) issued by such company as a rights issue or a bonus issue provided that: (1) The offer made by the Indian company is in compliance with the provisions of the Companies Act, 2013; (2) Such issue shall not result in a breach of the sectoral cap applicable to the company; (3) The shareholding on the basis of which the rights issue or the bonus issue has been made must have been acquired and held as per the provisions of these Regulations; (4) In case of a listed Indian company, the rights issue to persons resident outside India shall be at a price determined by the company; (5) In case of an unlisted Indian company, the rights issue to persons resident outside India shall not be at a price less than the price offered to persons resident in India. (6) Such investment made through rights issue or bonus issue shall be subject to the conditions as are applicable at the time of such issue. (7) The amount of consideration shall be paid as inward remittance from abroad through banking channels or out of funds held in NRE/ FCNR(B) account maintained in accordance with the Foreign Exchange Management (Deposit) Regulations, 2016. Note: Where the original investment has been made on a non-repatriation basis, the amount of consideration may also be paid by debit to the NRO account maintained in accordance with the Foreign Exchange Management (Deposit) Regulations, 2016 Provided an individual who is a person resident outside India exercising a right which was issued when he/ she was a person resident in India shall hold the capital instruments (other than share warrants) so acquired on exercising the option on a non-repatriation basis. Explanation: The above conditions shall also be applicable in case a person resident outside India makes investment in capital instruments (other than share warrants) issued by an Indian company as a rights issue that are renounced by the person to whom it was offered.