Opening of Escrow / Special Accounts by Non-Resident Corporates for open offers / delisting / exit offers - FEMA - 062

Opening of Escrow / Special Accounts by Non-Resident Corporates for open offers / delisting / exit offers RBI/2006-2007/413 A. P. (DIR Series) Circular No. 62 May 24, 2007 To, All Category - I Authorised Dealer banks Madam / Sir, Opening of Escrow / Special Accounts by Non-Resident Corporates for open offers / delisting / exit offers Attention of Authorised Dealer Category - I (AD Category - I) banks is invited to Regulation 10 A (b) of Notification No. FEMA 20/2000-RB dated 3rd May, 2000 [Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000] read with Regulation 3 of Notification No. FEMA 5/2000-RB dated 3rd May 2000, as amended from time to time. In terms of these Regulations, opening of Escrow account and Special account for transfer of shares / convertible debentures of an Indian company through open offer / delisting / exit offer in accordance with the provisions of SEBI [Substantial Acquisition of Shares and Takeovers (SAST)] Regulations, 1997 or any other applicable SEBI Regulations requires prior approval of the Reserve Bank. 2. As announced in the Annual Policy Statement for the year 2007-08 (para 146 (ii) (i)), with a view to provide operational flexibility to non-resident acquirers, it has been decided to permit AD Category - I banks to open Escrow account and Special account in such cases. Accordingly, AD Category - I banks are permitted to open Escrow account and Special account on behalf of non-resident corporates, without prior approval of the Reserve Bank, for acquisition / transfer of shares / convertible debentures through open offers / delisting / exit offers, subject to the relevant SEBI (SAST) Regulations or any other applicable SEBI Regulations / provisions of the Companies Act, 1956 and to the terms and conditions specified in the Annex. 3. Necessary amendments to Notification No. FEMA 5/2000-RB dated 3rd May 2000 [Foreign Exchange Management (Deposit) Regulations, 2000] are being notified separately. 4. AD Category - I banks may bring the contents of the circular to the notice of their constituents and customers concerned. 5. The directions contained in this circular have been issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and is without prejudice to permissions / approvals, if any, required under any other law. Yours faithfully, (Salim Gangadharan) Chief General Manager