Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Seventeenth Amendment) Regulations, 2014. - 330/RB-2014 - Foreign Exchange Management

RESERVE BANK OF INDIA (Foreign Exchange Department) (Central Office) NOTIFICATION No. FEMA. 330/RB-2014 Mumbai, the 15 th December, 2014 GSR 914(E) - In exercise of the powers conferred by clause (b) of sub-section (3) of Section 6 and Section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999), the Reserve Bank of India hereby makes the following amendments in the Foreign Exchange Management (Transfer or issue of security by a person resident outside India) Regulations, 2000 ( Notification No. FEMA.20/2000-RB, dated May 3, 2000 ), (hereinafter referred to as the principal Regulations') namely : 1. Short Title Commencement (a) These Regulations may be called the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Seventeenth Amendment) Regulations, 2014. (b) They shall come into force from December 15, 2014. 2. Amendment of the Regulations In the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations 2000 , ( Notification No. FEMA. 20/2000-RB, dated 3rd May, 2000 ), I. In Regulation 2 : (a) after clause (iic), the following new clause shall be inserted, namely: (iicc) 'Domestic Custodian' means a custodian of securities, an Indian depository, a depository participant, or a bank and having permission from SEBI to provide services as custodian. (b) after clause (iid), the following clause shall be inserted, namely: (iidd) 'Depository Receipt' means a foreign currency denominated instrument, whether listed on an international exchange or not, issued by a foreign depository in a permissible jurisdiction on the back of eligible securities issued or transferred to that foreign depository and deposited with a domestic custodian and includes 'global depository receipt' as defined in section 2(44) of the Companies Act, 2013. II. For the existing Regulation 13 the following shall be substituted: 13. Issue of Depository Receipts. 13A. An eligible person may issue or transfer eligible securities to a foreign depository for the purpose of issuance of depository receipts in terms of Depository Receipts Scheme, 2014, subject to the terms and conditions specified in Schedule 10. 13B. An eligible company resident outside India may issue IDRs through a Domestic Depository, to persons resident in India and outside India, subject to the terms and conditions specified in Para 1 of Schedule 7. III. In Regulation 14 , in sub-regulation 5, in clause (vi) for the words under Schedules 1, 2, 3, 6 and 8 , the words, under Schedules 1, 2, 3, 6, 8 and 10 shall be substituted. Amendment to Schedule 1 3. In the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000 ( Notification No. FEMA. 20/2000-RB, dated 3rd May, 2000 ), in Schedule 1, (a) paragraph 4, 4A and 4B shall be deleted. (b) paragraph 6 shall be deleted. (c) in Annex B, in entry No. 7.5 for the words, American Depository Receipts (ADRs), Global Depository Receipts (GDRs) , the words Depository Receipts issued under Schedule 10 of these Regulations with equity shares or compulsorily and mandatorily convertible preference shares or compulsory and mandatorily convertible debentures or warrant or any other security in which foreign direct investment can be made in terms of Schedule 1 of the principal Regulations, as underlying shall be substituted. (d) in Annex B, in entry No. F.2.2 , for the words GDR/ADR , the words Depository Receipts issued under Schedule 10 of these Regulations with equity shares or compulsorily and mandatorily convertible preference shares or compulsory and mandatorily convertible debentures or warrant or any other security in which foreign direct investment can be made in terms of Schedule 1 of the principal Regulations, as underlying shall be substituted. 4. After the existing Schedule 9 , new Schedule 10 shall be inserted. SCHEDULE 10 [See Regulation (13A)] Issue/transfer of eligible securities to a foreign depository for the purpose of issuance of depository receipts by eligible person(s) I. Issue/Transfer of eligible securities (a) Securities in which a person resident outside India is allowed to invest under Schedules 1, 2, 2A, 3, 5 and 8 of these Regulations shall be eligible securities for issue of Depository Receipts in terms of Depository Receipts Scheme, 2014 (DR Scheme 2014). (b) A person will be eligible to issue or transfer eligible securities to a foreign depository for the purpose of issuance of depository receipts as provided in DR Scheme, 2014. (c) A domestic custodian may purchase eligible securities on behalf of a person resident outside India, for the purpose of converting the securities so purchased into depository receipts in terms of, DR Scheme, 2014. (d) The aggregate of eligible securities which may be issued or transferred to foreign depositories, along with eligible securities already held by persons resident outside India, shall not exceed the limit on foreign holding of such eligible securities under the extant Foreign Exchange Management regulations, as amended from time to time. (e) The eligible securities shall be issued/transferred to a foreign depository for the purpose of issue of depository receipts in accordance with the DR Scheme, 2014 and guidelines issued by Central Government thereunder from time to time. II. Pricing of eligible Securities The eligible securities shall not be issued or transferred to a foreign depository for the purpose of issuing depository receipts at a price less that the price applicable to a corresponding mode of issue or transfer of such securities to domestic investors under FEMA, 1999 as amended from time to time. III. Reporting Requirements The issue of depository receipts as per DR Scheme, 2014 shall be reported to the Reserve Bank by the domestic custodian in such formats and in such manner as may be prescribed by the Reserve Bank from time to time. IV. Depository Receipts issued under the Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993 shall be deemed to have been issued under the corresponding provisions of DR Scheme, 2014 and have to comply with the provisions laid out in this Schedule. B. P. KANUNGO, Prl. Chief General Manager