Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) (Second Amendment) Regulations, 2008 - 179/2008 - Foreign Exchange Management

Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) (Second Amendment) Regulations, 2008 RESERVE BANK OF INDIA (Foreign Exchange Department) (CENTRAL OFFICE) NOTIFICATION Mumbai, the 22nd August, 2008 Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) (Second Amendment) Regulations, 2008 G.S.R. 896(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 3rd May, 2000), namely:- 1. Short Title Commencement:- (i) These Regulations may be called the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) (Second Amendment) Regulations, 2008. (ii) Save as otherwise provided in these Regulations, the provisions of these Regulations shall come into force from the date of their publication in the Official Gazette. 2. Amendment of Regulation 2 - 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) (hereinafter referred to as 'the principal Regulations'), in Regulation 2, (A) for clause (ii), the following clause shall be substituted and shall be deemed to have been substituted with effect from the 1st day of May 2007, namely:- "(ii) 'Capital' means equity shares, preference shares and convertible debentures (B) after clause (iia), the following new clause shall be inserted and shall be deemed to have been inserted with effect from 1st day of May 2007, namely:- "(iib) 'preference shares' mean compulsorily and mandatorily convertible preference shares." (C) after clause (iib) as so inserted, the following new clause shall be inserted and shall be deemed to have been inserted with effect from the 8th day of June, 2007, namely:- "(iic)" "debenture" means compulsorily and mandatorily convertible debenture". 3. Amendment of Regulation 5 In the principal Regulations, in Regulation 5, for sub-regulation 6 the following new sub-regulation shall be substituted and shall be deemed to have been substituted with effect from the 31st day of December 2007, namely;- "6. A registered Foreign Institutional Investor (FII) having valid approval under, the Foreign Exchange Regulation Act, 1973 or under the Foreign Exchange Management' Act, 1999 may trade in all exchange traded derivative contract approved by RBI/SEBI subject to limits and margin requirement prescribed by RBI/SEBI as well as the stipulations regarding collateral securities as directed by the Reserve Bank from time to time". 4. Amendment of Regulation 6B In the principal Regulation for Regulation 6B, the following shall be substituted namely:- "6B. A company issuing rights shares or bonus shares in terms of these Regulations shall report to the Reserve Bank in form FC-GPR as stipulated in Paragraph 9 (1)(B) of Schedule 1 to these Regulations." 5. Amendment of Regulation 10 In the principal Regulations, in Regulation 10, in sub-Regulation A, after clause (b), before the Explanation, the following new clause shall be inserted and shall be deemed to have been inserted with effect from 10th day of February, 2006 namely:- "(c) any security by way of sale, shall make an application to the Reserve Bank for its approval if, (i) the activity of the Indian company, whose securities are being transferred, falls outside the Automatic Route, and the approval of the FIPB has been obtained for the said transfer; (ii) the activity of the Indian company whose securities are being transferred, falls under the financial services sector; (iii) the transfer falls within the purview of the provisions of SEBI (Substantial Acquisition of Shares and Takeovers) Regulation 1997;and (iv) the transfer is to take place at a price which falls outside the pricing guidelines specified by Reserve Bank, from time to time" 6. Amendment of Schedule 1 In the principal Regulations, in Schedule 1, i) in paragraph 1, (a) for sub-paragraph (2), the following shall be substituted, namely:- "(2) If the person purchasing the shares under this Scheme proposes to be a collaborator or proposes acquire the entire shareholding of a new Indian company, he should obtain prior permission of Central Government if he has, as on January 12, 2005, an existing joint venture or technology transfer/trademark agreement in the same field as that of such Indian company." (b) after sub-paragraph (2) the following provision shall be inserted and shall be deemed to have been inserted with effect from the 12th day of January 2005, [1] namely:- "Provided that no prior permission of Central Government shall be required for investments to be made by Venture Capital Funds registered with. SEBI; investment by multinational., financial institutions; or where in the existing joint-venture investment by either of the parties is less than 3% or where the existing joint Venture/ collaboration is defunct or sick or for transfer of shares of an Indian company engaged in Information Technology sector or in the mining sector, if the existing joint- venture or technology transfer/trade mark agreement of the person to Whom the shares are to be transferred are also in the information Technology sector or in the mining sector or in the mining sector for same area/mineral". (ii) in paragraph 2, for sub-paragraph (1) the following shall be substituted and shall be deemed to have been substituted with effect from the 10th day February 2006, namely:- "(1) An Indian company, not engaged in any activity/sector mentioned in Annex A to this schedule, may issue shares or convertible debentures to a person resident outside India, subject to the limits prescribed in Annex B to this schedule, in accordance with the Entry Routes specified therein and the provisions of Foreign Direct Investment Policy, as notified by the Ministry of Commerce industry, Government of India, from time to time. Provided that the shares or convertible debenture are not being issued by the Indian company with a view to acquire existing shares of any Indian company. Explanation: A company which proposes to embark on expansion programme to undertake activities or manufacture items included in Annex B to this Schedule may issue shares or debentures out of fresh capital proposed to be issued by it for the purpose of financing expansion programme, up to the extent indicated in Annex B, subject to compliance with the provisions of this paragraph." [2] iii) in paragraph 2, sub-paragraph (2) shall be omitted. iv) in paragraph 2, sub-paragraphs (3), (4) and (5) shall be renumbered as sub-paragraphs (2), (3) and (4) respectively. v) for paragraph 3, the following shall be substituted, namely:- "3. Issue of shares by a company requiring the Government approval An Indian company intending to issue shares to a person resident outside India in accordance with these Regulations shall obtain prior approval of the Foreign Investment Promotion Board of Government of India if the company; (a) is engaged or proposes to engage, in arty activity given in Annex A (A) to this schedule; or (b) falls under the FIPB route as stipulated under the column "Entry Route" in Annex B to this schedule; or (c) proposes to issue shares to a person resident outside India against considerations other than inward remittance i.e. against royalty/lumpsum fee due for payment; or (d) proposes to issue shares to a person resident outside India, on or after 28th day of November 2003, against External Commercial Borrowings (ECBs) {excluding those deemed as ECBs} received in convertible foreign currency. [3] vi) in paragraph 4, (i) in sub-paragraph (2), for the words " form specified in Annexure C", the words "Form DR" shall be substituted. (ii) in sub-paragraph (3), for the words "form specified in Annexure D", the words "Form DR-Quarterly" shall be substituted. (vii) for paragraph 4B, the following new paragraph shall be substituted namely: "4B An Indian company may sponsor an Issue of ADRs/GDRs with an overseas depository against Shares held by its shareholder at a price to be determined under the provisions of the Scheme for Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) Scheme 1993 and guidelines issued by the Government of India and the reporting requirements as directed by Reserve Bank, from time to time.' (viii) paragraph 5A shall be omitted. (ix) for paragraph 6, the following new paragraph shall be substituted, namely "6. Issue price of ADRs/GDRs The pricing of ADRs/GDRs to be issued to a person resident outside India shall be determined under the provisions of the Scheme for Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993 and guidelines issued by the Government of India from time to time." (x) in paragraph 9, (i) in sub-paragraph (1), (a) in clause (A), for the word "report", the word "report in form specified in Annex C to this schedule" shall be substituted (b) in clause (B) for sub-clause (d) for the words and figure" In accordance with paragraph 9,"the words and figure" in accordance with paragraph 8" shall be substituted. (ii) after clause (B), at the end, the following new clause (C) shall be inserted, namely:- "C) the amount of consideration received by Indian company as advance against equity shall be reported to the Regional Office of the Reserve Bank under whose jurisdiction the Registered Office of the Company operates in the form specified in 'Annex C "within 30 days of receipt thereof," (xi) for Annexure A and Annexure B, "Annex A" and 'Annex B' respectively to these regulations shall be substituted. (xii) Annexure C and Annexure D shall be renamed as "Form DR" and "Form DR-Quarterly", respectively. (xiii) Annexure E shall be omitted. (xiv) for 'Form FC-GPR', "Annex D " to these regulations shall be substituted. 7. Amendment of Schedule 4 In the principal Regulations, in Schedule 4, in paragraph 2, for the provisos, the followings provisos shall be substituted, namely:- "Provided that the person to whom the shares are being transferred, shall obtain prior permission of the Central Government to acquire the shares if he has, as on 12th day of January 2005, an existing joint venture or technology transfer/trademark agreement in the same field as that of the company of which the shares or convertible debentures to be acquired by him. Provided further that no prior permission of Central Government shall be required for: (a) transfer of shares to multinational financial institutions such as Asian Development Bank (ADB), International Finance Corporation (IFC), Commonwealth Development Corporation (CDC),. Deutsche Entwicktungs Gescelscchaft (DEG). (b) transfer of shares of an Indian company engaged in Information Technology sector or in the mining sector, if the existing joint venture or technology transfer/trade mark agreement of the person to whom the shares are to be transferred are also in the Information Technology sector or in the mining sector for same area/mineral. (C) investment to be made by Venture Capital: Funds registered with SEBI; investments by multinational financial institutions or where in the existing joint-venture investment by either of the parties is less than 3%; or where the existing joint venture/collaboration is defunct or sick." 8. Amendments of Schedule 5 In the principal Regulations, in Schedule 5, (i) for paragraph 1, the following new paragraph . shall be substituted, namely:- 1. Permission to Foreign Institutional Investors for purchase of securities- A registered, Foreign Institutional. Investor may purchase on repatriation basis, dated Government securities/treasury bills, listed non-convertible. debentures/bonds; commercial paper issued by an Indian company and units of domestic mutual funds, Security Receipts issued by Asset Reconstruction Companies and Perpetual Debt instruments eligible for inclusion as Tier I capital and Debt capital instruments as upper Tier II capital issued banks in India to augment their capital (the definitions of Tier I capital and Tier, II capital Will be the same as clarified by Reserve Bank, Department of Banking Operations and Development and modified from time to time); subject to the limits prescribed by RBI and SEBI from time to time; either direct from the issuer of such securities or through a registered stock broker on a recognised Stock Exchange in India: Provided that; (i) the FII shall restrict allocation of its total investment between equity and debt instruments (including dated Government Securities and Treasury Bills in the Indian capital market) in the ratio of 70:30; (ii) if the FII desires to invest up to 100 per cent in dated Government Securities including Treasury Bills, listed nonconvertible debentures/ bonds issued by an Indian company, it shall form a 100% debt fund and get such fund registered with SEBI; (iii) The total holding by, a single FII in each tranche of scheme of Security Receipts shall not exceed 10 per cent of the issue and the total holdings of all FIIs put together shall not exceed 49 percent of the paid up value of each tranche of scheme of Security Receipts issued by the Asset Reconstruction Companies; and (iv) The investment by all FIIs in Perpetual Debt instruments (Tier I) should not exceed an aggregate ceiling of 49 per cent of each issue, and investment by individual FII should not exceed the limit of 10 per cent of each issue. The investment by FIIs in Debt capital instruments (Tier II) shall be within the limits stipulated by SEBI for Fit investment in corporate debt. Provided further that FIIs may offer such securities as permitted by the Reserve Bank from time to time as collateral to the recognized Stock Exchanges in India for their transactions in exchange traded derivative contracts as specified in sub-Regulation 6." (ii) in paragraph 2, for sub-paragraph (1) the following shall be substituted and shall be deemed to have been substituted with effect from the 25th day of January 2006, namely:- "1A. A Non-resident Indian may, without limit, purchase on repatriation basis, (i) Government dated securities (other than bearer securities) or treasury bills or units of domestic mutual funds; ii) bonds issued by a public sector undertaking (PSU) in India; iii) shares in Public Sector Enterprises being disinvested by the Government of India, provided the purchase is in accordance with the terms and conditions stipulated in the notice inviting bids. 1B. A Non-resident Indian may purchase on repatriation basis perpetual debt instruments eligible for inclusion as Tier I capital and Debt capital instruments as upper Tier II capital issued by banks in India to augment their capital, as stipulated by Reserve Bank from time to time. The investments by all NRIs in Perpetual Debt instruments (Tier I) should not exceed an aggregate ceiling of 24 per cent of each issue and investments by a single NRI should not exceed 5 percent of each issue. Investment by NRIs in Debt capital instruments (Tier II) shall be in accordance with the extant policy for investment by NRIs in other debt instruments. ' [No. FEMA l79/2008-RB] SALIM GANGADHARAN, Chief General Manager Foot Note: The Principal Regulations were published in the Official Gazette vide G.S.R.No. 406 (E) dated May 8, 2000 in Part II, Section 3, sub-section (i) and subsequently amended as under: G.S.R.No. 158(E) dated 02.03.2001 G.S.R.No. 175(E) dated 13.03.2001 G.S.R.No. 182(E) dated 14.03.2001 G.S.R.No. 4(E) dated 02.01.2002 G.S.R.No. 574(E) dated 19.08.2002 G.S.R.No. 223(E) dated 18.03.2003 G.S.R.No. 225(E) dated 18.03.2003 G.S.R.No. 558(E) dated 22.07.2003 G.S.R.No. 835{E) dated 23.10.2003 G.S.R.No. 899(E) dated 22.11.2003 G.S.R.No. 12(E) dated 07.01.2004 G.S.R.No. 278(E) dated 23.04.2004 G.S.R.No. 454(E) dated 16.07.2004 G.S.R.No. 625(E) dated 21.09.2004 G.S.R.No 799(E) dated 08.12.2004 G.S.R.No. 201(E) dated 01.04.2005 G S R No 202(E) dated 01.04. 2005 G.S.R.No. 504(E) dated 25.07.2005 G.S.R.No. 505(E) dated 25.07.2005 G.S.R.No. 513(E) dated 29.07.2005 G.S.R.No. 738(E) dated 22.12.2005 G.S.R.No. 29(E) dated 19.01.2006 G.S.R.No. 413(E) dated 11.07.2006 G.S.R.No. 712(E) dated 14.11.2007 G.S.R.No. 713(E) dated 14.11.2007 G.S.R.No. 737(E) dated 29.11.2007 G.S.R.No. 575(E) dated 05.08.2008 Annex A (See paragraph 2 of schedule 1) (A) All Activities/Sectors would require prior approval of the Government of India for FDI in the following circumstances: (i) where provisions of Press Note 1 (2005 Series) issued by the Government of India are attracted: (ii) where more than 24 per cent foreign equity is proposed to be inducted for manufacture of items reserved for the Small Scale sector. (B) Sectors prohibited for FDI i. Retail Trading (except single brand product retailing) ii. Atomic Energy iii. Lottery Business iv. Gambling and Betting v. Business of chit fund vi. Nidhi Company vii. Trading in Transferable Development Rights (TDRs). viii. Activities/sector not opened to private sector investment Annex B (See paragraph 2 of schedule 1) Sector-specific policy for foreign investment In the following sectors/activities, FDI up to the limit indicated below is allowed subject to other conditions as indicated. In Sectors/Activities not listed below FDI is permitted up to 100 per cent on the automatic route subject to sector rules/regulations applicable. Sr. No. Sector/Activity FDI Cap /Equity Entry Route Other conditions AGRICULTURE 1. Floriculture, Horticulture, Development of Seeds, Animal Husbandry, Pisciculture, Aquaculture Cultivation of Vegetables Mushrooms under controlled conditions and services related to agro and allied sectors. NB: Besides the above, FDI is not allowed in any other agricultural sector/activity 100% Automatic -- 2. Tea Sector, including tea plantation NB: Besides the above, FDI is not allowed in any other plantation sector/activity 100% FIPB Subject to divestment of 26% equity in favour of Indian partner / Indian public within 5 years and prior approval of State Government concerned in case of any change in future land use. INDUSTRY MINING 3. Mining covering exploration and mining of diamonds precious stones; gold, silver and minerals. 100% Automatic Subject to Mines Minerals (Development Regulation) Act, 1957 (www.mines.nic.in) Press Note 18 (1998) and Press Note 1 (2005) are not applicable for setting up 100% owned subsidiaries in so far as the mining sector is concerned Subject to declaration from the applicant that he has no existing joint venture for the same area and / or the particular mineral. 4. Coal Lignite mining for captive consumption by power projects and iron steel, cement production and other eligible activities permitted under the Coal Mines (Nationalisation)Act, 1973. 100% Automatic Subject to provisional of Coal Mines (Nationalization) Act, 1973. (www.coal.nic.in) 5. Mining and mineral separation of titanium bearing minerals and ores, its value addition and integrated activities, NB: FDI will not be allowed in mining 0f "prescribed substances" listed in government of India notification No. S.O. 6 1(E) dated 18.1.2006 issued by the Department of Atomic Energy. 100% FIPB Subject to sectoral Regulations and the Mines and Minerals (Development Regulation) Act, 1957 and the following conditions- i. value addition facilities are set up within India along with transfer of technology; ii. disposal of tailings during the mineral separation shall be carried out in accordance with Regulations framed by the Atomic Energy Regulatory Board such as Atomic Energy (Radiation Protection) Rules, 2004 and the Atomic Energy (Safe Disposal of Radioactive Wastes) Rules. 1987. MANUFACTURING 6. Alcohol Distillation Brewing 100% Automatic Subject to license b appropriate authority 7. Cigars Cigarettes Manufacture 100% FIPB Subject to industrial license under the Industries (Development Regulation) Act, 1951. 8. Coffee Rubber processing warehousing 100% Automatic -- 9. Defence production 26% FIPB Subject to licensing under Industries (Development Regulation) Act 1951 and guidelines on the FDI in production of arms ammunition. 10. Hazardous chemicals, viz., hydrocyanic acid and its derivatives, phosgene its derivatives, and isocyanates and diisocyarntes of hydrocarbon 100% Automatic Subject to industrial license under Industries (Development Regulation) Act 1951 and other sectoral Regulation. 11. Industrial explosives Manufacture 100% Automatic Subject to industrial license under Industries (Development Regulation) Act 1951 and Regulations under Explosives Act,1898 POWER 12. Power including generation (except Atomic energy); transmission, distribution and Power trading. 100% Automatic Subject to provision of the Electricity Act, 2003 (www.powermin.nic.in) SERVICES CIVIL AVIATION SECTOR 13. Airports- a. Greenfield projects 100% Automatic Subject to sectoral Regulations notified by Ministry of Civil Aviation (www.civilaviation.nic.in) b. Existing projects 100% FIPB beyond 74% Subject to sectoral Regulations notified by Ministry of Civil Aviation (www civilaviation.nic.in) 14. Air Transport Services including Domestic Scheduled Passenger Airlines; Non-Schedules Airlines; Chartered Airlines; Cargo Airlines; Helicopter and Seaplane Services a. Scheduled Transport Services/Domestic Scheduled Passenger Airlines 49%- FDI; 100%- for NRIs investment. Automatic Subject to no director indirect participation by foreign airlines and sectoral Regulations. airlines, b. Non-Scheduled Air Transport Service/Non-Scheduled airlines, Chartered airlines, Cargo airlines 74%- FDI 100%- for NRIS investment Automatic Subject to no direct or indirect participation by foreign airlines in Non Scheduled and Chartered airlines. Foreign airlines, are allowed to participate in the equity of companies operating Cargo airlines. Also subject to sectoral Regulations. (www civilaviation.nic.in) c. Helicopter Services/Seaplane services requiring DGCA approval 100% Automatic Foreign airlines are allowed to participate in the equity of companies operating Helicopter and seaplane services. Also subject to sectoral Regulations. (www civilaviation.nic.in) 15. Other service under Civil Aviation Sector a. Ground Handling Services 74%- FDI 100%- for NRIs investment Automatic Subject to sectoral Regulations and security clearance. b. Maintenance and Repair organizations; flying training institutes; and technical training institutions 100% Automatic -- 16. Asset Reconstruction Companies 49% (only FDI) FIPB Where any individual investment exceeds 10% of the equity, provisions of Section 3(3)(f )of Securitization and Reconstruction of Financial Assets and Enforcement of security Interest Act, 2002 should be complied with (www.finmin.nic.in) 17. Banking - Private sector 74% (FDI+FII) within this limit, FII investment not to exceed 49% Automatic Subject to guidelines for setting up branches/subsidiaries of foreign banks issued by RBI. (www.rbi.org.in) 18. Broadcasting a. FM Radio FDI +FII investment up to 20% FIPB Subject to guidelines notified by Ministry of Information Broadcasting (www.mib.nic.in) b. Cable network 49% (FDI +FII) FIPB Subject to Cable Television Network Rules (1994), notified by Ministry of information Broadcasting (www.mib.nic.in) c. Direct-To-Home 49% (FDI +FII) Within this limit, FDI component not to exceed 20% FIPB Subject to guidelines issue by Ministry of Information Broadcasting.(www.mib.nic.in) d. Setting up hardware facility such as up-linking HUB, etc 49% (FDI+FII) FIPB Subject to Up-linking Policy notified by Ministry of Information Broadcasting. (www.mib.nic.in) e. Up-linking a News Current Affairs TV Channel 26% (FDI+FII) FIPB Subject to guidelines issued by Ministry of Information Broadcasting (www.mib.nic.in) f. Up-linking a Non-news Current Affairs TV Channel 100% FIPB Subject to guidelines issued by Ministry of Information Broadcasting. (www.mib.nic.in) 19. Commodity Exchanges 49%(FDI FII) FDI -26% FII -23% FIPB FII purchases shall be restricted to secondary market. Subject to regulations specified by concerned Regulators. 20. Construction Development projects, including housing, commercial premises, resorts, educational institutions, recreational facilities, city and regional level infrastructure; townships NB: FD is not. allowed in Real Estate Business 100% Automatic Subject to conditions notified vide Press Note 2 (2005 Series) including: a. Minimum capitalization of US$ 10 million for wholly owned subsidiaries and US$ 5 million for joint venture. The funds would have to be brought within six months of commencement of business of the Company. b. Minimum area to be developed under each project- 10 hectares in case of development of serviced housing plots; and built-up area of 50,000 sq. mts. in case of construction development project: and any of the above in case of a combination project. (Note 1: For investment by NRIs, the condition mentioned in Press Note 2 (2005) are not applicable. Note 2: For investment in SEZs, Hotels Hospitals, conditions mentioned in Press Note 2(2005) are not applicable ] 21. Courier services for carrying packages parcel and other items not come within the ambit of the Indian Post Office Act, 1898. 100% FIPB Subject to existing laws and exclusion of activity 'elating to distribution of letters, which is exclusively reserved for the State. (www.indiapost.gov.in) 22. Infrastructure companies in securities markets namely, stock Exchanges, Depositories and Clearing Corporations 49% (FDI+FII) FDI- 26% FII-23% FIPB FII purchases shall be restricted to secondary market. Subject to regulations specified by concerned Regulators 23. Credit Information Companies 49% (FDI+FII) Within this limit, FII investment not to exceed 24% FIPB Foreign Investment in CIC will be subject to Credit information Companies (Regulation) Act, 2005. Subject to regulation specified by concerned Regulators. 24. Industrial Parks both setting up and in established Industrial Parks. 100% Automatic Conditions in Press No. 2(2005) applicable for construction development projects would not apply provided the Industrial Parks meet with the under mentioned conditions- i. it would comprise of a minimum of 10 units and no single unit shall occupy more than 50% of the allocable area and ii. the minimum percentage of the area to be allocated for Industrial activity shall not be less than 66% of the total allocable area and; 25. Insurance 26% Automatic Subject to licensing by the Insurance Regulatory Development Authority (www.irda.nic.in) 26. Investing companies in infrastructure/services sector (except telecom sector) 100% FIPB Where there is a prescribed cap for foreign investment, only the direct investment will be considered for the prescribed cap and foreign investment in an investing company will not be set off against this cap provided the foreign direct investment in such investing company does not exceed 49% and the management of the investing company is with the Indian owners. 27. Non Banking Finance Companies (i) (ii) (iii) (iv) (v) (vi) (vii) (vii) (ix) (x) (xi) (xii) (xiii) (xiv) (xv) (xvi) (xvii) (xviii) Merchant banking Underwriting Portfolio Management Services Investment Advisory Services Financial Consultancy Stock Broking Asset Management Venture Capital Custodial Services Factoring Credit Rating Agencies Leasing Finance Housing finance Forex Broking Credit card Business Money changing business Micro credit Rural credit 100% Automatic Subject to: a. Minimum capitalization norms for fund based Underwriting NBFCs - US$ 0.5 million to be brought upfront for FDI up to51%; US$ 5 million to be brought upfront for FDI above 51% and up to 75%; and US$ 50 million out of which US$ 7.5 million to be brought upfront and the balance in 24 months, for FDI beyond 75% and up to100%. b. Minimum capitalization norms for non-fund based NBFC activities- US$ 0.5 million. c. Foreign investors can set up 100% operating subsidiaries without the condition to disinvest a minimum of 25% of its equity to Indian entities subject to bringing in US$ 50 million without any restriction on number of operating subsidiaries without bringing additional capital. d. Joint venture operating NBFCs that have 75% or less than 75% foreign investment will also be allowed to set up subsidiaries for undertaking other NBFC activities subject to the subsidiaries also complying with the application minimum capital inflow. e. Compliance with the guidelines of the RBI. 28. Petroleum Natural Gas sector a. Refining 49% in case of PSUs. 100% in case of Private companies FIPB(in case of PSUs) Automatic (in case of private companies) Subject to Sectoral policy and no divestment or dilution of domestic equity in the existing PSUs. (www.petroleum.nic.in) b. Other than Refining and including market study, and formulation; investment /financing; setting up infrastructure for marketing Petroleum Natural Gas sector. 100% Automatic Subject to sectoral Regulations issued by Ministry of Petroleum Natural Gas.(www.petroleum.nic.in) 29. Print Media- a. Publishing of newspaper and periodicals dealing with news and current affairs 26% FIPB Subject to guideline notification by Ministry of Information Broadcasting. (www.mib.nic.in) b. Publishing of scientific magazines/ specialty journals/ periodicals 100% FIPB Subject to guidelines issued by Ministry of Information Broadcasting.(www.mib.nic.in) 30. Telecommunications a. Basic and cellular, Unified Access Services National/, International Long Distance, V-Sat, Public Mobile Radio Trunked Services (PMRTS),Global Mobile Personal Communications Services (GMPCS) and other value added telecom services 74% (Including FDI, FII, NRI FCCBs, ADRs, GDRs, convertible preference shares, and proportionate foreign equity in Indian promoters/ Investing Company) Automatic up to 49% FIPB beyond 49%. Subject to guidelines notified in the Press Note 3(2007 Series) dated April 19, 2007. b. ISP with gateways, radio- paging, end-to-end bandwidth. 74% Automatic up to 49%. FIPB beyond 49%. Subject to licensing and security requirements notified by the Department of Telecommunications. (www.dotindia.com) c. (a) ISP without gateway, (b) infrastructure provider providing dark fibre, right of way, duct space, (c) electronic mail voice mail 100% Automatic up to 49%. FIPB beyond 49% Subject to the condition that such companies shall divest 26% of their equity in favour of Indian public in 5 years companies are listed in other parts of the world. Also subject licensing and security requirements, where required. (www.dotindia.com) d. Manufacture of telecom equipments 100% Automatic Subject to sectoral requirements. (www.dotindia.com) 31. Trading a Wholesale/ carry trading 100% Automatic Subject to guidelines for FDI in trading issues by Department of Industrial Policy Promotion vide Press Note 3 (2006 Series) dated February 10,2006. b. Trading for Exports 100% Automatic -- c. Trading of items sourced from small scale 100% FIPB -- d. Test marketing of such items for which a company has approval for manufacture 100% FIPB Subject to the condition that the test marketing approval will be for a period of two years and investment in setting up manufacturing facilities con simultaneously with test marketing. e. Single Brand Product retailing 51% FIPB -- 32. Satellites - Establishment and operation 74% FIPB Subject to sectoral guidelines issued by Department of Space / ISRO. (www.isro.org) 33. Special Economic Zones and Free Trade Warehousing, Zones covering setting up of these Zones and setting up units in the Zones 100% Automatic Subject to Special Economic Zones Act, 2005 and the Foreign Trade Policy. (www.sezindia.nic.in) 34. Drugs Pharmaceutical including those Involving recombinant DNA technology 100% Automatic N.B.: All the above sector/activities mentioned in Annex B above, are governed by the respective Press Notes/ Releases issued by the Government of India, from time to time. Annex-C Report by the Indian company receiving amount of consideration for issue of shares as per Foreign Direct Investment Scheme: (To be filed by the company through its Authorised Dealer Category I bank not later than 30 days from the dale of receipt of the amount of consideration with the Regional Office of the RBI under whose jurisdiction the Registered Office of the company making the declaration is situated, called for in terms of para 9 (1) (A) of Schedule 1 to Notification No FEMA 20/2000-RB dated May 3, 2000.) Permanent Account Number (PAN) of the investee company given by the IT Department No. Particulars (In Block Letters) 1. Name of the Indian company Address of the Registered Office Fax Telephone e-mail 2. Details of the foreign investor/collaborator Name Address Country 3. Date of receipt of funds 4. Amount In foreign currency In Indian Rupees 5. Whether investment is under Automatic Route or Approval Route If Approval Route, give details (ref.no. of FIPB approval and date) Automatic Route/ Approval route 6 Name of the AD through whom the remittance is received 7. Address of the AD A copy of the FIRC evidencing the receipt of consideration for issue of shares/ convertible debentures as above is enclosed. (Authorised signatory of the AD) (Authorised signatory of the investee company) (Stamp) (Stamp) __________________________________________________________ FOR USE OF THE RESERVE BANK ONLY: Unique Identification Number for the remittance: Know Your Customer (KYC) Form in respect of the non-resident investor Registered Name of the Remitter/ Investor (Name, if the investor is an individual) Registration Number (Unique Identification Number* in case remitter is an Individual) Registered Address (Permanent Address if remitter Individual) Name of the Remitters Bank Remitter's Bank Account No. Period of banking relationship with the remitter *Passport No., Social Security No, or any. Unique No. certifying the bona fides of the remitter as prevalent in the remitter's country We confirm that all the information furnished above is true and as provided by the overseas remitting bank of the non-resident investor. (Signature of the Authorised Official of the AD bank receiving the remittance) Date: Place: Stamp: Annex D FC-GPR PART-A (To be filed by the company through its Authorised Dealer Category I bank with the Regional Office of the RBI under whose jurisdiction the Registered Office of the company making the declaration is situated as and when fresh investment in the Company is received, along with the documents mentioned in item No. 4 of the undertaking enclosed in this form) Permanent Account Number (PAN) of the investee company given by the IT Department Date of issue of shares No. Particulars (In Block Letters) 1. Name Address of the Registered Office State Registration No. given by Registrar of Companies Whether existing company or new company (strike off whichever is not applicable) Existing company / New company If existing company, give registration number allotted by RBI for FDI, if any Telephone Fax e-mail 2. Description of the main business activity NIC Code Location of the project and NIC code for the district where the project is located Percentage of FDI allowed as per FDI policy State whether FDI is allowed under Automatic Route or Approval Route(strike out whichever is not applicable) Automatic Route or Approval Route 3 Details of the foreign investor/ collaborator * Name Address Country Constitution/ Nature of the investing Entity [Specify whether 1. Individual 2. Company 3. EII 4. FVCI 5. Foreign Trust 6. Private Equity Fund 7. Pension/ Provident Fund 8. Sovereign Wealth Funds [4] 9. Partnership/ Proprietorship firm 10.Financial Institution 11. NRIs/PIOs 12. others -(please specify)] Date of incorporation 4 Particulars of Shares/ Convertible Debentures Issued (a) Nature and date of issue Nature of issue Date of issue Number of shares/ convertible debentures 01 IPO / FPO 02 Preferential allotment / private placement 03 Rights 04 Bonus 05 Conversion of ECB 06 Conversion of royalty (including lump sum payments) 07 Conversion against import of capital goods by units in SEZ 08 ESOPs 09 Share Swap 10 Others (Specify) Total (b) Type of security issued No. Nature of security Number Maturity Face value Premium Issue Price per share Amount of inflow* 01 Equity 02 Compulsory Convertible Debentures 03 Compulsorily Convertible Preference shares 04 Others (please specify) Total * If there are more than one foreign investor/collaborator, separate Annex may be included for items 3 and 4. i) In case the issue price is greater than the face value please give break up of the premium received ii) * In case the issue is against conversion of ECB or royalty or lumpsum payment or against import of capital goods by units in SEZ, a Chartered Accountant's Certificate certifying the amount of the outstanding on the date of conversion (c) Break up of premium Amount Control Premium Non competition fee Others @ Total @ please specify the nature (d) Total Inflow (in Rupees) on account of issue of shares to non-residents (including premium, if any) vide (i) Remittance through AD (ii) Debit to NRE/FCNR A/c with Bank__________ (iii) Others (please specify) Date of reporting of (i) and (ii)above to RBI under Para 9 (1) A (i) of Notification No. FEMA 20/2000-RB dated May 3, 2000, as amended from time to time. (e) Disclosure of fair value of shares issued** We are a listed company and the market value of a share as on date of the issue is* We are an un-listed company and the fair value of a share is* ** before issue of shares *(Please Indicate as applicable) 5. Post issue pattern of shareholding Equity Compulsorily convertible Preferences Shares/ Debentures Investor category No. of shares Amount (Face Value) Rs. % No. of shares Amount (Face Value) Rs. % a) Non- Resident 01 Individuals 02 Companies 03 FIIs 04 FVCIs 05 Foreign Trusts 06 Private Equity Funds 07 Pension/ Provident funds 08 Sovereign Wealth Funds 09 Partnership/ Proprietorship firms 10 Financial Institutions 11 NRIs/PIOs 12 Others (Please specify) Sub Total b) Resident Total DECLARATION TO BE FILED BY THE AUTHORISED REPRESENTATIVE OF THE INDIAN COMPANY: (Delete whichever is not applicable and authenticate) We hereby declare that: 1. We comply with the procedure for issue of shares as laid down under the FDI scheme as indicated in Notification No. FEMA 20/2000-RB dated 3 rd May 2000 as amended from time to time. 2. The investment is within the sectoral cap/statutory ceiling permissible under the Automatic Route of RBI and we fulfill at the conditions laid down for investments under the Automatic Route namely (strike off whichever is not applicable) a) Foreign entity/entities than individuals), to whom we: have issued shares have existing joint venture or technology transfer or trade mark agreement in India in the same field and Conditions stipulated in Press Note 1 of 2005 Series dated January 12, 2005 have been complied with. OR b) Foreign entity/entities (other than individuals), to whom we have issued shares do not have any existing joint venture or technology transfer or trade mark agreement in India in the same field. c) We are not an SSI unit. OR We are a SSI unit and the investment limit of 24 % of paid-up capital has been observed/ requisite approvals have been obtained. d) Shares issued on rights basis to non-residents are in conformity with Regulation 6 of the RBI Notification No. FEMA 20/2000-RB dated 3 rd May 2000, as amended from time to time. OR e) Shares issued are bonus shares. OR f) Shares have been issued under a scheme of merger and amalgamation of two or more Indian companies or reconstruction by way of de-merger or otherwise of an Indian company, duly approved by a court in India. OR g) Shares are issued under ESOP and the conditions regarding this issue have been satisfied 3. Shares haven issued in terms of SIA/FIBP approval No. __________dated ________ 4. We enclose the following documents in compliance with Paragraph 9(1) (B) of schedule 1 to Notification No. FEMA 20/2000-RB dated 3 rd May, 2000.: (i) A certificate from our Company Secretary certifying that (a) all the requirements of the Companies Act, 1956 have been complied with; (b) terms and conditions of the Government approval, if any, have been complied with; (c) the company is eligible to issue shares under these Regulations; and (d) the company has all original certificates issued by authorised dealers in India evidencing receipt of amount of consideration in accordance with paragraph 8 of Schedule 1 to Notification No. FEMA 20/2000-RB dated 3 rd May, 2000. (ii) A certificate from Statutory Auditors/ Chartered Accountant indicating the manner of arriving at the price of the shares issued to the persons resident outside India. 5. Unique Identification Number given for all the remittances received as consideration for issue of shares/ convertible debentures (details as above),by RBI: R (Signature of the Applicant)* : _________________________________ (Name in Block Letters) : _____________________________________ (Designation of the signatory):__________________________________ Place: Date: (* To be signed by Managing Director/Director/Secretary of the Company) CERTIFICATE TO BE FILED BY THE COMPANY SECRETARY [5] OF THE INDIAN COMPANY ACCEPTING THE INVESTMENT: (As per Para 9(1) (B) (i) of Schedule 1 to Notification No. FEMA 20/2000-RB dated 3 rd May, 2000) In respect of the above-mentioned details, we certify the following: 1. All the requirements of the Companies Act, 1956 have been complied with. 2. Terms and conditions of the Government approval, if any, have been complied with. 3. The company is eligible to issue shares under these Regulations. 4. The company has all original certificates issued by AD Category - 1 banks in India, evidencing receipt of amount of consideration in accordance with paragraph 8 of Schedule 1 to Notification No. FEMA 20/2000-RB dated 3 rd May, 2000. (Name Signature of the Company Secretary) (Seal) FOR USE OF THE RESERVE BANK ONLY: G Unique Identification Number for the FC-GPR: PART-B (i) This part of the return to be submitted to the Director, Balance of Payment Statistical Division, Department of Statistics Information Management, Reserve Bank of India, C8, 3 rd Floor, Bandra-Kurla Complex, Bandra (E), Mumbai- 400051; Tel: 2657 1 265, 2657 2513, Fax: 26570848; email: [email protected] (ii) This is an annual return to be submitted by 31 st of July every year by all companies, pertaining to all investments by way of direct/portfolio investments/ reinvested earnings/others in the Indian company made during the previous years (i.e. the information in Part B submitted by 31 st July 2007 will pertain to all the investments made in the previous years up to 31 st March, 2007). The details of the investments to be reported would include all foreign investments made into the company which is outstanding as on balance sheet date. The details of overseas investments in the company both under Direct/ portfolio investment may be separately indicated. Please use end-March Market prices/exchange rates for compiling the relevant information. -------------------------------------- Permanent Account Number (PAN) of the Investee Company given by the IT Department No. Particulars (In Block Letters) 1. Name Address State Registration No. given by the Registrar of .Companies 2. Name of the Contact Person: Designation: Tel. E-mail: Fax: 3. Account closing date: 4. Details of changes if any, with regard to information furnished earlier (Change in name of company/ Change of location, activities, etc.) 5. Whether listed company or unlisted company Listed/ unlisted 5.1 If listed, i) Market value per share as at end-March ii) Net Asset Value per share as or date of latest Audited Balance Sheet 5.2 If unlisted, Net Asset Value per share as on date of latest Audited Balance-Sheet 6. Foreign Direct Investment (FDI) Amount in Lakhs of Rupees Foreign Liabilities in India* Foreign Assets Outside India " " Outstanding at end- March of Previous Year Outstanding at end-March of Current Year Outstanding at end- March of Previous Year Outstanding at end-March of Current Year 6.0 Equity Capital 6.1 Other Capital Ω 6.2 Disinvestments during the year 6.3 Retained earnings during the year + 7.Portfolio and other investment [please furnish here the outstanding investments other those mentioned under FDI above] Amount in Lakhs of Rupees Foreign Liabilities in India Foreign Assets Out-side India Outstanding at end-March of Previous Year Outstanding at end-March of Current Year Outstanding at end-March of Previous Year Outstanding at end-March of Current Year 7.0 Equity Securities 7.1 Debt Securities 7.1.1 Bonds and Notes 7.1.2 Money Market Instruments 7.2 Disinvestments during the year 8. Financial Derivatives (notional value) 9. Other Investment 9.1 Trade Credit 9.1.1 Short Term 9.1.2 Long Term 9.2 Loans Please see the note below 9.3 Other 9.3.1 Short Term 9.3.2 Long Term 10. Shareholding pattern as at end-March Equity Compulsorily convertible Preference Shares /Debentures Investor category /Nature of investing entity No. of shares Amount (Face Value) Rs. % No. of shares Amount (Face Value) % a) Non-Resident 01 Individual 02 Companies 03 FIIs 04 FVCIs 05 Foreign Trust 06 Private Equity Funds 07 Pension/Provident Funds 08 Sovereign Wealth Funds [6] 09 Partnership/Proprietorship 10 Financial Institution 11 NRIs/PIOs 12 Other (please specify) Sub Total b) Resident Total 11. Persons employed during the financial year ending Mach 31 Directly Indirectly Total Signature of the authorised Official :___________________________ Name (in block letters) :___________________________ Designation :___________________________ Place: Date: * Please furnish the outstanding investment of non-resident investors (Direct Investors) who were holding 10 per cent or more ordinary shares of your company on the reporting date. " " Please furnish your total investment outside the country in each of which your company held 10 % or more ordinary shares of that non-resident enterprise on the reporting date. Ω Other Capital includes transactions between the non-resident direct investor/ reporting company, relating to i) Short Term Borrowing from overseas investors, ii) Long Term Borrowing from overseas investors, iii) Trade Credit, iv) Suppliers Credit, v) Control Premium, vii) Non-Competition Free in case of transactions not involving issue of shares, viii) Non - cash acquisition of shares against technical transfer, plant and machinery, goodwill, business development and similar considerations and ix) investment in immovable property made during the year + Under foreign liabilities, for retained earnings (undistributed profit), please furnish the proportionate amount as per the share holding of non- resident investors (Direct investors). Similarly under foreign assets outside India, the retained earnings of your company would be proportionate to your shareholding of ordinary shares in the non-resident enterprise. Note: Asper details of the Loans availed of by our company are collected through Authorised Dealers separately by Foreign Exchange Department of the Reserve Bank of India in ECB returns, the details of external loans availed by your company need not be filled in. however, the external loans exterided by your company to non-residents enterprise other than WOS/JVs outside India should be reported under "Foreign Assets Outside India" Please indicate the number of persons recruited by your company during the financial year for which the return is being submitted. Under "Directly", indicate the number of persons on the roll of your company. whereas under "Indirectly", indicate the number of persons otherwise engaged by your company during the year. Form DR [Refer to paragraph 4(2) of Schedule 1] Return to be filed by an Indian Company who has arranged issue of GDE/ADR Instructions.: The form should be completed and submitted to the Reserve. Bank of India, Foreign Investment Division, Central Office, Mumbai, 1. Name of the Company 2. Address of Registered Office 3. Address for Correspondence 4. Existing Business (please give the NIC Code of the activity in which the company is predominantly engaged) 5. Details of the purpose for which GDRs/ADRs have been raised. If funds are deployed for overseas investment, details thereof 6. Name and address of the Depository abroad 7. Name and address of the Lead/ Manager investment/Merchant Banker 8. Name and address of the Sub-Manager the issue 9. Name and address of the Indian-Custodians 10. Details of FIPB approval (please quote the relevant NIC Code if the GDRS are being issued under the Automatic Route) 11. Whether any overall sectoral cap for foreign investment is applicable. If yes, please give details 12. Details of the Equity Capital________ Before Issue_________ After Issue (a) Authorised Capital (b) Issued and Paid-up Capital (i) Held by persons Resident in India (ii) Held by foreign investors other than FIIs/NRIs/PIOs/ OCBs (a list of foreign investor holding more than 10 percent of the paid-up capital and number of shares held by each of them should be furnished) (iii) Field by NRIs/PIOs/OCBs (iv) Held by FIIs Total Equity held by non-residents (c) Percentage of equity held by non- residents to total paid-up capital 13. Whether issue was on private placement basis. If yes, please give details of the investors and GDRs/ADRs issued to each of them 14. Number of GDRs/ADRs issued 15. Ratio of GDRs/ADRs to underlying shares 16. Issue Related Expenses (a) Fee paid/payable to Merchant Bankers/Lead Manager (i) Amount (in US$) (ii) Amount as percentage to the total issue (b) Other expenses 17. Whether funds are kept abroad. If yes, name and address of the bank 18. Details of the listing arrangement Name of Stock Exchange Date of commencement of trading 19. The date on which GDRs/ADRs issue was launched 20. Amount raised (in US $) 21. Amount repatriated (in US $) Certified that all the conditions laid down by Government of India and Reserve Bank of India have been complied with. Sd/- Sd/- Chartered Accountant Authorised Signatory of the Company Form DR - Quarterly [Refer to paragraph 4(3) of Schedule 1] Quarterly Return (to be submitted to the Reserve Bank of India, Foreign In Division, Central Office. Mumbai) 1. Name of the Company 2. Address 3. GDR/ADR issue launched on 4. Total No. of GDRs/ADRs issued 5. Total amount raised 6. Total interest earned till end of quarter 7. Issue expenses and commission etc. 8. Amount repatriated 9. Balance kept abroad - Details (i)Banks Deposits (ii)Treasury Bills (iii) Others (please Specify) 10. No. of GDRs/ADRs still outstanding 11. Company's share price at the end of the quarter 12. GDRs/ADR price quoted on overseas stock exchange as at the end of the quarter Certified that the funds raised through GDRs/ADRs have not been invested in stock market or real estate. Sd/- Sd/- Chartered Accountant Authorised Signatory of the Company Note :- 1. This Regulation is given retrospective effect from 12th day of January, 2005, that is, from the date on which Press Note No.1 (2005 Series) was issued by Department of Industrial Policy and Promotion, Ministry of Commerce and Industry , Government of India. 2. This amendment is given retrospective effect from 10th day of February, 2006, that is, from the date on which Press Note No.4 (2006 Series) was issued by Departmental of Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of India. 3. This amendment is given retrospective effect from 29th day of November, 2003, that is, from the date on which Press Note 5(2003) was issued by Departmental of Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of India. 4. SWF is a government investment vehicle which is funded by foreign exchange assets and manages overseas assets such as stocks, property or other financial instruments, separately from the official reserves of the monetary authorities. 5. If the company doesn't have full time Company Secretary, a certificate from practising CS may be submitted. 6. SWF is a government investment vehicle which is funded by foreign exchange assets and manages overseas assets such as stocks, property or other financial instruments, separately from the official reserves of the monetary authorities.