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TMI BlogCONSOLIDATED FDI POLICYX X X X Extracts X X X X X X X X Extracts X X X X ..... n of establishing a 'lasting interest' in an enterprise that is resident in an economy other than that of the investor. 1.1.2 The Government has put in place a policy framework on Foreign Direct Investment, which is transparent, predictable and easily comprehensible. This framework is embodied in the Circular on Consolidated FDI Policy, which may be updated every year, to capture and keep pace with the regulatory changes, effected in the interregnum. The Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce & Industry, Government of India makes policy pronouncements on FDI through Press Notes/Press Releases which are notified by the Reserve Bank of India as amendments to the Foreign Exchange Management (Transfer or Issue of Security by Persons Resident Outside India) Regulations, 2000 (notification No.FEMA 20/2000-RB dated May 3, 2000). These notifications take effect from the date of issue of Press Notes/Press Releases, unless specified otherwise therein. In case of any conflict, the relevant FEMA Notification will prevail. The procedural instructions are issued by the Reserve Bank of India vide A.P. Dir. (series) Circulars. The regulatory framework, over a p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt outside India, and includes transactions referred to in sub-section (3) of section 6 of FEMA. 2.1.7 A company is considered as "Controlled" by resident Indian citizens if the resident Indian citizens and Indian companies, which are owned and controlled by resident Indian citizens, have the power to appoint a majority of its directors in that company . 2.1.8 'Depository Receipt' (DR) means a negotiable security issued outside India by a Depository bank, on behalf of an Indian company, which represent the local Rupee denominated equity shares of the company held as deposit by a Custodian bank in India. DRs are traded on Stock Exchanges in the US, Singapore, Luxembourg, etc. DRs listed and traded in the US markets are known as American Depository Receipts (ADRs) and those listed and traded anywhere/elsewhere are known as Global Depository Receipts (GDRs). 2.1.9 'Erstwhile Overseas Corporate Body' (OCB) means a company, partnership firm, society and other corporate body owned directly or indirectly to the extent of at least sixty percent by non-resident Indian and includes overseas trust in which not less than sixty percent beneficial interest is held by non-resident Indian di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istry of Finance or Department of Industrial Policy & Promotion, as the case may be). 2.1.17 'Holding Company' would have the same meaning as defined in Companies Act 1956. 2.1.18 'Indian Company' means a company incorporated in India under the Companies Act, 1956. 2.1.19 'Indian Venture Capital Undertaking' (IVCU) means an Indian company:─ (i) whose shares are not listed in a recognised stock exchange in India; (ii) which is engaged in the business of providing services, production or manufacture of articles or things, but does not include such activities or sectors which are specified in the negative list by the SEBI, with approval of Central Government, by notification in the Official Gazette in this behalf. 2.1.20 'Investing Company' means an Indian Company holding only investments in other Indian company/(ies), directly or indirectly, other than for trading of such holdings/securities. 2.1.21 'Investment on repatriable basis' means investment, the sale proceeds of which, net of taxes, are eligible to be repatriated out of India and the expression 'investment on non-repatriable basis' shall be construed accordingly. 2.1.22 'Joint Venture' (JV) means an Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to stay in India for an uncertain period; (ii) any person or body corporate registered or incorporated in India, (iii) an office, branch or agency in India owned or controlled by a person resident outside India, (iv) an office, branch or agency outside India owned or controlled by a person resident in India. 2.1.30 'Person resident outside India' means a person who is not a Person resident in India. 2.1.31 'Portfolio Investment Scheme' means the Portfolio Investment Scheme referred to in Schedules 2 & 3 of FEM (Transfer or Issue of Security by a Person Resident Outside India) Regulations 2000. 2.1.32 'A Qualified Foreign Investor (QFI)' means a non-resident investor (other than SEBI registered FII and SEBI registered FVCI) who meets the KYC requirements of SEBI for the purpose of making investments in accordance with the regulations/orders/circulars of RBI/SEBI. 2.1.33 'RBI' means the Reserve Bank of India established under the Reserve Bank of India Act, 1934. 2.1.34 'Resident Entity' means 'Person resident in India' excluding an individual. 2.1.35 'Resident Indian Citizen' shall be interpreted in line with the definition of 'person resident in India' as per FEM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ior approval of RBI if the investment is through Automatic route. 3.1.4 (i) An FII may invest in the capital of an Indian Company under the Portfolio Investment Scheme which limits the individual holding of an FII to 10% of the capital of the company and the aggregate limit for FII investment to 24% of the capital of the company. This aggregate limit of 24% can be increased to the sectoral cap/statutory ceiling, as applicable, by the Indian Company concerned through a resolution by its Board of Directors followed by a special resolution to that effect by its General Body and subject to prior intimation to RBI. The aggregate FII investment, in the FDI and Portfolio Investment Scheme, should be within the above caps. (ii) The Indian company which has issued shares to FIIs under the FDI Policy for which the payment has been received directly into company's account should report these figures separately under item no. 5 of Form FC-GPR (Annex-1). (iii) A daily statement in respect of all transactions (except derivative trade) has to be submitted by the custodian bank in floppy/soft copy in the prescribed format directly to RBI and also uploaded directly on the OFRS web site (https:// ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of amalgamation, demerger or such corporate actions subject to the prescribed investment limits. QFIs are allowed to sell the equity shares so acquired subject to the relevant SEBI guidelines. 3.1.7.2 The individual and aggregate investment limits for the QFIs shall be 5% and 10% respectively of the paid up capital of an Indian company. These limits shall be over and above the FII and NRI investment ceilings prescribed under the Portfolio Investment Scheme for foreign investment in India. Further, wherever there are composite sectoral caps under the extant FDI policy, these limits for QFI investment in equity shares shall also be within such overall FDI sectoral caps. 3.1.7.3 Dividend payments on equity shares held by QFIs can either be directly remitted to the designated overseas bank accounts of the QFIs or credited to the single non-interest bearing Rupee account. In case dividend payments are credited to the single non-interest bearing Rupee account they shall be remitted to the designated overseas bank accounts of the QFIs within five working days (including the day of credit of such funds to the single non-interest bearing Rupee account). Within these five working days, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion norms, etc. 3.2.4 FDI in Trusts: FDI in Trusts other than VCF is not permitted. 3.2.5 FDI in Limited Liability Partnerships (LLPs): FDI in LLPs is permitted, subject to the following conditions: (a) FDI will be allowed, through the Government approval route, only in LLPs operating in sectors/activities where 100% FDI is allowed, through the automatic route and there are no FDI-linked performance conditions (such as 'Non Banking Finance Companies' or 'Development of Townships, Housing, Built-up infrastructure and Construction-development projects' etc.). (b) LLPs with FDI will not be allowed to operate in agricultural/plantation activity, print media or real estate business. (c) An Indian company, having FDI, will be permitted to make downstream investment in an LLP only if both-the company, as well as the LLP- are operating in sectors where 100% FDI is allowed, through the automatic route and there are no FDI-linked performance conditions. (d) LLPs with FDI will not be eligible to make any downstream investments. (e) Foreign Capital participation in LLPs will be allowed only by way of cash consideration, received by inward remittance, through normal banking channels ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on or after May 1, 2007 are considered as debt. Accordingly all norms applicable for ECBs relating to eligible borrowers, recognized lenders, amount and maturity, end-use stipulations, etc. shall apply. Since these instruments would be denominated in rupees, the rupee interest rate will be based on the swap equivalent of London Interbank Offered Rate (LIBOR) plus the spread as permissible for ECBs of corresponding maturity. 3.3.3 The inward remittance received by the Indian company vide issuance of DRs and FCCBs are treated as FDI and counted towards FDI. 3.3.4 Issue of shares by Indian Companies under FCCB/ADR/GDR (i) Indian companies can raise foreign currency resources abroad through the issue of FCCB/DR (ADRs/GDRs), in accordance with 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 there under from time to time. (ii) A company can issue ADRs/GDRs if it is eligible to issue shares to persons resident outside India under the FDI Policy. However, an Indian listed company, which is not eligible to raise funds from the Indian Capital Market includ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing, selling or dealing in securities by SEBI will not be eligible to subscribe to ADRs/GDRs issued by Indian companies. (viii) The pricing of ADR/GDR issues should be made at a price determined under the provisions of the Scheme of issue of Foreign Currency Convertible Bonds and Ordinary Shares (through Depository Receipt Mechanism) Scheme, 1993 and guidelines issued by the Government of India and directions issued by the Reserve Bank, from time to time. (ix) The pricing of sponsored ADRs/GDRs would be determined under the provisions of the Scheme of issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993 and guidelines issued by the Government of India and directions issued by the Reserve Bank, from time to time. 3.3.5 (i) Two-way Fungibility Scheme: A limited two-way Fungibility scheme has been put in place by the Government of India for ADRs/GDRs. Under this Scheme, a stock broker in India, registered with SEBI, can purchase shares of an Indian company from the market for conversion into ADRs/GDRs based on instructions received from overseas investors. Re-issuance of ADRs/GDRs would be permitted to the extent of ADR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from time to time, where the issue of shares is on preferential allotment. However, where non-residents (including NRIs) are making investments in an Indian company in compliance with the provisions of the Companies Act, 1956, by way of subscription to its Memorandum of Association, such investments may be made at face value subject to their eligibility to invest under the FDI scheme. 3.4.3 Foreign Currency Account - Indian companies which are eligible to issue shares to persons resident outside India under the FDI Policy may be allowed to retain the share subscription amount in a Foreign Currency Account, with the prior approval of RBI. 3.4.4 Transfer of shares and convertible debentures - (i) Subject to FDI sectoral policy (relating to sectoral caps and entry routes), applicable laws and other conditionalities including security conditions, non-resident investors can also invest in Indian companies by purchasing/acquiring existing shares from Indian shareholders or from other non-resident shareholders. General permission has been granted to non-residents/NRIs for acquisition of shares by way of transfer subject to the following: (a) A person resident outside India (other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action along with the Form FC-TRS. (iii) Escrow: AD Category-I banks have been given general permission to open Escrow account and Special account of non-resident corporate for open offers/exit offers and delisting of shares. The relevant SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (SAST) Regulations or any other applicable SEBI Regulations/provisions of the Companies Act, 1956 will be applicable. AD Category-I banks have also been permitted to open and maintain, without prior approval of RBI, non-interest bearing Escrow accounts in Indian Rupees in India on behalf of residents and/or non-residents, towards payment of share purchase consideration and/or provide Escrow facilities for keeping securities to facilitate FDI transactions subject to the terms and conditions specified by RBI. SEBI authorised Depository Participants have also been permitted to open and maintain, without prior approval of RBI, Escrow accounts for securities subject to the terms and conditions as specified by RBI. In both cases, the Escrow agent shall necessarily be an AD Category- I bank or SEBI authorised Depository Participant (in case of securities' accounts). These facilitie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e following cases, approval of RBI is not required: A. Transfer of shares from a Non Resident to Resident under the FDI scheme where the pricing guidelines under FEMA, 1999 are not met provided that :- i. The original and resultant investment are in line with the extant FDI policy and FEMA regulations in terms of sectoral caps, conditionalities (such as minimum capitalization, etc.), reporting requirements, documentation, etc.; ii. The pricing for the transaction is compliant with the specific/explicit, extant and relevant SEBI regulations/guidelines (such as IPO, Book building, block deals, delisting, exit, open offer/substantial acquisition/SEBI SAST, buy back); and iii. Chartered Accountants Certificate to the effect that compliance with the relevant SEBI regulations/guidelines as indicated above is attached to the form FC-TRS to be filed with the AD bank. B. Transfer of shares from Resident to Non Resident: (i) where the transfer of shares requires the prior approval of the Government conveyed through FIPB as per the extant FDI policy provided that : (a) the requisite approval of the FIPB has been obtained; and (b) the transfer of share adheres with the pricing gu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conversion facility is available for ECBs availed under the Automatic or Government Route and is applicable to ECBs, due for payment or not, as well as secured/unsecured loans availed from non-resident collaborators. (ii) General permission is also available for issue of shares/preference shares against lump sum technical know-how fee, royalty, subject to entry route, sectoral cap and pricing guidelines (as per the provision of para 3.4.2 above) and compliance with applicable tax laws. (iii) Issue of equity shares under the FDI policy is allowed under the Government route for the following: (I) import of capital goods/machinery/equipment (excluding second-hand machinery), subject to compliance with the following conditions: (a) Any import of capital goods/machinery etc., made by a resident in India, has to be in accordance with the Export/Import Policy issued by Government of India/as defined by DGFT/FEMA provisions relating to imports. (b) The application clearly indicating the beneficial ownership and identity of the Importer Company as well as overseas entity. (c) Applications complete in all respects, for conversions of import payables for capital goods into FDI bein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owed to apply for issue of additional shares/fully, compulsorily and mandatorily convertible debentures/fully, compulsorily and mandatorily convertible preference shares over and above their rights share entitlements. The investee company can allot the additional rights share out of unsubscribed portion, subject to the condition that the overall issue of shares to non-residents in the total paid-up capital of the company does not exceed the sectoral cap. 3.5.4 Acquisition of shares under Scheme of Merger/Demerger/Amalgamation - Mergers/demergers/amalgamations of companies in India are usually governed by an order issued by a competent Court on the basis of the Scheme submitted by the companies undergoing merger/demerger/amalgamation. Once the scheme of merger or demerger or amalgamation of two or more Indian companies has been approved by a Court in India, the transferee company or new company is allowed to issue shares to the shareholders of the transferor company resident outside India, subject to the conditions that: (i) the percentage of shareholding of persons resident outside India in the transferee or new company does not exceed the sectoral cap, and (ii) the transferor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rised dealer. The authorized dealer, shall issue the no objection for such a pledge after having satisfied itself that the external commercial borrowing is in line with the extant FEMA regulations for ECBs and that : (i) the loan agreement has been signed by both the lender and the borrower, (ii) there exists a security clause in the Loan Agreement requiring the borrower to create charge on financial securities, and (iii) the borrower has obtained Loan Registration Number (LRN) from the Reserve Bank: and the said pledge would be subject to the following conditions : (a) the period of such pledge shall be co-terminus with the maturity of the underlying ECB; (b) in case of invocation of pledge, transfer shall be in accordance with the extant FDI Policy and directions issued by the Reserve Bank; (c) the Statutory Auditor has certified that the borrowing company will utilized/has utilized the proceeds of the ECB for the permitted end use/s only. (B) Non-resident holding shares of an Indian company, can pledge these shares in favour of the AD bank in India to secure credit facilities being extended to the resident investee company for bonafide business purpose, subject to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction companies, private sector banking, broadcasting, commodity exchanges, credit information companies, insurance, print media, telecommunications and satellites, Government approval/FIPB approval would be required in all cases where: (i) An Indian company is being established with foreign investment and is not owned by a resident entity or (ii) An Indian company is being established with foreign investment and is not controlled by a resident entity or (iii) The control of an existing Indian company, currently owned or controlled by resident Indian citizens and Indian companies, which are owned or controlled by resident Indian citizens, will be/is being transferred/passed on to a non-resident entity as a consequence of transfer of shares and/or fresh issue of shares to non-resident entities through amalgamation, merger/demerger, acquisition etc. or (iv) The ownership of an existing Indian company, currently owned or controlled by resident Indian citizens and Indian companies, which are owned or controlled by resident Indian citizens, will be/is being transferred/passed on to a non-resident entity as a consequence of transfer of shares and/or fresh issue of shares to non-re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly in the activity of investing in the capital of other Indian company/ies (regardless of its ownership or control): 3.10.3.1 Foreign investment into an Indian company, engaged only in the activity of investing in the capital of other Indian company/ies, will require prior Government/FIPB approval, regardless of the amount or extent of foreign investment. Foreign investment into Non-Banking Finance Companies (NBFCs), carrying on activities approved for FDI, will be subject to the conditions specified in 1[paragraph 6.2.17.8] of this Circular. 3.10.3.2 Those companies, which are Core Investment Companies (CICs), will have to additionally follow RBI's Regulatory Framework for CICs. 3.10.3.3 For infusion of foreign investment into an Indian company which does not have any operations and also does not have any downstream investments, Government/FIPB approval would be required, regardless of the amount or extent of foreign investment. Further, as and when such a company commences business(s) or makes downstream investment, it will have to comply with the relevant sectoral conditions on entry route, conditionalities and caps. Note: Foreign investment into other Indian companies would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of paragraphs 3.10.3 and 3.10.4.1. CHAPTER 4 CALCULATION OF FOREIGN INVESTMENT 4.1 TOTAL FOREIGN INVESTMENT i.e. DIRECT AND INDIRECT FOREIGN INVESTMENT IN INDIAN COMPANIES. 4.1.1 Investment in Indian companies can be made both by non-resident as well as resident Indian entities. Any non-resident investment in an Indian company is direct foreign investment. Investment by resident Indian entities could again comprise of both resident and non-resident investment. Thus, such an Indian company would have indirect foreign investment if the Indian investing company has foreign investment in it. The indirect investment can also be a cascading investment i.e. through multi-layered structure. 4.1.2 For the purpose of computation of indirect Foreign investment, Foreign Investment in Indian company shall include all types of foreign investments i.e. FDI; investment by FIIs (holding as on March 31); NRIs; ADRs; GDRs; Foreign Currency Convertible Bonds (FCCB); fully, compulsorily and mandatorily convertible preference shares and fully, compulsorily and mandatorily convertible Debentures regardless of whether the said investments have been made under Schedule 1, 2, 3 and 6 of FEM ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y X), then only 75% would be treated as indirect foreign equity and the balance 25% would be treated as resident held equity. The indirect foreign equity in Company X would be computed in the ratio of 75: 25 in the total investment of Company Y in Company X. (iii) The total foreign investment would be the sum total of direct and indirect foreign investment. (iv) The above methodology of calculation would apply at every stage of investment in Indian companies and thus to each and every Indian company. (v) Additional conditions: (a) The full details about the foreign investment including ownership details etc. in Indian company(s) and information about the control of the company(s) would be furnished by the Company(s) to the Government of India at the time of seeking approval. (b) In any sector/activity, where Government approval is required for foreign investment and in cases where there are any inter-se agreements between/amongst share-holders which have an effect on the appointment of the Board of Directors or on the exercise of voting rights or of creating voting rights disproportionate to shareholding or any incidental matter thereof, such agreements will have to be info ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... policy and methodology would be applicable for determining the total foreign investment in all sectors, except in sectors where it is specified in a statute or rule there under. The above methodology of determining direct and indirect foreign investment therefore does not apply to the Insurance Sector which will continue to be governed by the relevant Regulation. 4.1.5 Any foreign investment already made in accordance with the guidelines in existence prior to February 13, 2009 (date of issue of Press Note 2 of 2009) would not require any modification to conform to these guidelines. All other investments, past and future, would come under the ambit of these new guidelines. CHAPTER 5 FOREIGN INVESTMENT PROMOTION BOARD (FIPB) 5.1 CONSTITUTION OF FIPB: 5.1.1 FIPB comprises of the following Secretaries to the Government of India: (i) Secretary to Government, Department of Economic Affairs, Ministry of Finance - Chairperson (ii) Secretary to Government, Department of Industrial Policy & Promotion, Ministry of Commerce & Industry (iii) Secretary to Government, Department of Commerce, Ministry of Commerce & Industry (iv) Secretary to Government, Economic Relations, Ministry of E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PTER 6 SECTOR SPECIFIC CONDITIONS ON FDI 6.1 PROHIBITED SECTORS: FDI is prohibited in: (a) Lottery Business including Government/private lottery, online lotteries, etc. (b) Gambling and Betting including casinos etc. (c) Chit funds (d) Nidhi company (e) Trading in Transferable Development Rights (TDRs) (f) Real Estate Business or Construction of Farm Houses (g) Manufacturing of Cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes (h) Activities/sectors not open to private sector investment e.g. Atomic Energy and Railway Transport (other than Mass Rapid Transport Systems). Foreign technology collaboration in any form including licensing for franchise, trademark, brand name, management contract is also prohibited for Lottery Business and Gambling and Betting activities. 6.2 PERMITTED SECTORS In the following sectors/activities, FDI up to the limit indicated against each sector/activity is allowed, subject to applicable laws/regulations; security and other conditionalities. In sectors/activities not listed below, FDI is permitted upto 100% on the automatic route, subject to applicable laws/regulations; security and other conditionalit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be effected through protected cultivation under green houses, net houses, poly houses or any other improved infrastructure facilities where micro-climatic conditions are regulated anthropogenically. ♦ In case of Animal Husbandry, scope of the term 'under controlled conditions' covers - • Rearing of animals under intensive farming systems with stall-feeding. Intensive farming system will require climate systems (ventilation, temperature/humidity management), health care and nutrition, herd registering/pedigree recording, use of machinery, waste management systems. • Poultry breeding farms and hatcheries where micro-climate is controlled through advanced technologies like incubators, ventilation systems etc. ♦ In the case of pisciculture and aquaculture, scope of the term 'under controlled conditions' covers - • Aquariums • Hatcheries where eggs are artificially fertilized and fry are hatched and incubated in an enclosed environment with artificial climate control. ♦ In the case of apiculture, scope of the term 'under controlled conditions' covers - • Production of honey by bee-keeping, except in forest/wild, in designate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ist of industries reserved for the public sector. Vide Resolution No. 8/1(1)/97-PSU/1422 dated 6th October 1998 issued by the Department of Atomic Energy laying down the policy for exploitation of beach sand minerals, private participation including Foreign Direct Investment (FDI), was permitted in mining and production of Titanium ores (Ilmenite, Rutile and Leucoxene) and Zirconium minerals (Zircon). Vide Notification No. S.O.61(E) dated 18.1.2006, the Department of Atomic Energy re-notified the list of "prescribed substances" under the Atomic Energy Act 1962. Titanium bearing ores and concentrates (Ilmenite, Rutile and Leucoxene) and Zirconium, its alloys and compounds and minerals/concentrates including Zircon, were removed from the list of "prescribed substances". (i) FDI for separation of titanium bearing minerals & ores will be subject to the following additional conditions viz.: (A) value addition facilities are set up within India along with transfer of technology; (B) 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, 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re. The issue of Industrial License is subject to a few general conditions and the specific condition that the Industrial Undertaking shall undertake to export a minimum of 50% of the new or additional annual production of the MSE reserved items to be achieved within a maximum period of three years. The export obligation would be applicable from the date of commencement of commercial production and in accordance with the provisions of section 11 of the Industries (Development & Regulation) Act 1951. 6.2.6 DEFENCE 6.2.6.1 Defence Industry subject to Industrial license under the Industries (Development & Regulation) Act 1951 26% Government 6.2.6.2 Other conditions: (i) Licence applications will be considered and licences given by the Department of Industrial Policy & Promotion, Ministry of Commerce & Industry, in consultation with Ministry of Defence. (ii) The applicant should be an Indian company / partnership firm. (iii) The management of the applicant company/partnership should be in Indian hands with majority representation on the Board as well as the Chief Executives of the company/partnership firm being resident Indians. (iv) Full particulars of the Directors an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Quality Assurance Procedures of the licensee. Self-certification would be permitted by the Ministry of Defence on case to case basis, which may involve either individual items, or group of items manufactured by the licensee. Such permission would be for a fixed period and subject to renewals. (xiii) Purchase preference and price preference may be given to the Public Sector organizations as per guidelines of the Department of Public Enterprises. (xiv) Arms and ammunition produced by the private manufacturers will be primarily sold to the Ministry of Defence. These items may also be sold to other Government entities under the control of the Ministry of Home Affairs and State Governments with the prior approval of the Ministry of Defence. No such item should be sold within the country to any other person or entity. The export of manufactured items would be subject to policy and guidelines as applicable to Ordnance Factories and Defence Public Sector Undertakings. Non-lethal items would be permitted for sale to persons/entities other than the Central of State Governments with the prior approval of the Ministry of Defence. Licensee would also need to institute a verifiable system ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to the following security conditions/terms: Mandatory Requirement for Key Executives of the Company (i) The majority of Directors on the Board of the Company shall be Indian Citizens. (ii) The Chief Executive Officer (CEO), Chief Officer In-charge of technical network operations and Chief Security Officer should be resident Indian Citizens. Security Clearance of Personnel (iii) The Company, all Directors on the Board of Directors and such key executives like Managing Director/Chief Executive Officer, Chief Financial Officer (CFO), Chief Security Officer (CSO), Chief Technical Officer (CTO), Chief Operating Officer (COO), shareholders who individually hold 10% or more paid-up capital in the company and any other category, as may be specified by the Ministry of Information and Broadcasting from time to time, shall require to be security cleared. In case of the appointment of Directors on the Board of the Company and such key executives like Managing Director/Chief Executive Officer, Chief Financial Officer (CFO), Chief Security Officer (CSO), Chief Technical Officer (CTO), Chief Operating Officer (COO), etc., as may be specified by the Ministry of Information and Broadcas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onitoring from a centralized location as an when required by Government. (xii) The company, at its own costs, shall, on demand by the government or its authorized representative, provide the necessary equipment, services and facilities at designated place(s) for continuous monitoring or the broadcasting service by or under supervision of the Government or its authorized representative. (xiii) The Government of India, Ministry of Information & Broadcasting or its authorized representative shall have the right to inspect the broadcasting facilities. No prior permission/intimation shall be required to exercise the right of Government or its authorized representative to carry out the inspection. The company will, if required by the Government its authorized representative, provide necessary facilities for continuous monitoring for any particular aspect of the company's activities and operations. Continuous monitoring, however, will be confined only to security related aspects, including screening of objectionable content. (xiv) The inspection will ordinarily be carried out by the government of India, Ministry of Information & Broadcasting or its authorized representative after re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Other Conditions: (i) 'Magazine', for the purpose of these guidelines, will be defined as a periodical publication, brought out on non-daily basis, containing public news or comments on public news. (ii) Foreign investment would also be subject to the Guidelines for Publication of Indian editions of foreign magazines dealing with news and current affairs issued by the Ministry of Information & Broadcasting on 4.12.2008. 6.2.8.3 Publishing/printing of Scientific and Technical Magazines/specialty journals/periodicals, subject to compliance with the legal framework as applicable and guidelines issued in this regard from time to time by Ministry of Information and Broadcasting. 100% Government 6.2.8.4 Publication of facsimile edition of foreign newspapers 100% Government 6.2.8.4.1 Other Conditions: (i) FDI should be made by the owner of the original foreign newspapers whose facsimile edition is proposed to be brought out in India. (ii) Publication of facsimile edition of foreign newspapers can be undertaken only by an entity incorporated or registered in India under the provisions of the Companies Act, 1956. (iii) Publication of facsimile edition of foreign newspape ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lines which meet the conditions as given in the Civil Aviation Requirements issued by the Ministry of Civil Aviation; (x) "Seaplane" means an aeroplane capable normally of taking off from and alighting solely on water; (xi) "Ground Handling" means (i) ramp handling, (ii) traffic handling both of which shall include the activities as specified by the Ministry of Civil Aviation through the Aeronautical Information Circulars from time to time, and (iii) any other activity specified by the Central Government to be a part of either ramp handling or traffic handling. 6.2.9.2 Airports (a) Greenfield projects 100% Automatic (b) Existing projects 100% Automatic up to 74% Government route beyond 74% 6.2.9.3 Air Transport Services (1) Scheduled Air Transport Service/Domestic Scheduled Passenger Airline 49% FDI (100% for NRIs) Automatic (2) Non-Scheduled Air Transport Service 74% FDI (100% for NRIs) Automatic up to 49% Government route beyond 49% and up to 74% (3) Helicopter services/seaplane services requiring DGCA approval 100% Automatic 6.2.9.3.1 Other conditions: (a) Air Transport Services would include Domestic Scheduled Passenger Airlines; Non-Scheduled Air T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, 1898 and excluding the activity relating to the distribution of letters. 100% Government 6.2.11 Construction Development: Townships, Housing, Built-up infrastructure 6.2.11.1 Townships, housing, built-up infrastructure and construction-development projects (which would include, but not be restricted to, housing, commercial premises, hotels, resorts, hospitals, educational institutions, recreational facilities, city and regional level infrastructure) 100% Automatic 6.2.11.2 Investment will be subject to the following conditions: (1) Minimum area to be developed under each project would be as under: (i) In case of development of serviced housing plots, a minimum land area of 10 hectares (ii) In case of construction-development projects, a minimum built-up area of 50,000 sq.mts (iii)In case of a combination project, any one of the above two conditions would suffice (2) Minimum capitalization of US$10 million for wholly owned subsidiaries and US$ 5 million for joint ventures with Indian partners. The funds would have to be brought in within six months of commencement of business of the Company. (3) Original investment cannot be repatriated before a period of thre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ped land or built up space or a combination with common facilities, is developed and made available to all the allottee units for the purposes of industrial activity. (ii) "Infrastructure" refers to facilities required for functioning of units located in the Industrial Park and includes roads (including approach roads), water supply and sewerage, common effluent treatment facility, telecom network, generation and distribution of power, air conditioning. (iii) "Common Facilities" refer to the facilities available for all the units located in the industrial park, and include facilities of power, roads (including approach roads), water supply and sewerage, common effluent treatment, common testing, telecom services, air conditioning, common facility buildings, industrial canteens, convention/conference halls, parking, travel desks, security service, first aid center, ambulance and other safety services, training facilities and such other facilities meant for common use of the units located in the Industrial Park. (iv) "Allocable area" in the Industrial Park means- (a) in the case of plots of developed land- the net site area available for allocation to the units, excluding the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ude investment by Foreign Institutional Investors (FIIs), Non-resident Indians (NRIs), Foreign Currency Convertible Bonds (FCCBs), American Depository Receipts (ADRs), Global Depository Receipts (GDRs) and convertible preference shares held by foreign entity. In any case, the 'Indian' shareholding will not be less than 26 percent. (iii) FDI in the licensee company/Indian promoters/investment companies including their holding companies shall require approval of the Foreign Investment Promotion Board (FIPB) if it has a bearing on the overall ceiling of 74 percent. While approving the investment proposals, FIPB shall take note that investment is not coming from countries of concern and/or unfriendly entities. (iv) The investment approval by FIPB shall envisage the conditionality that Company would adhere to licence Agreement. (v) FDI shall be subject to laws of India and not the laws of the foreign country/countries. (2) Security Conditions: (i) The Chief Officer In-charge of technical network operations and the Chief Security Officer should be a resident Indian citizen. (ii) Details of infrastructure/network diagram (technical details of the network) could be provided on a n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tances, should any RA to the Suppliers/manufacturers and affiliate(s) be enabled to access Lawful Interception System(LIS), Lawful Interception Monitoring(LIM), Call contents of the traffic and any such sensitive sector/data, which the licensor may notify from time to time. (xiii) The licensee company is not allowed to use remote access facility formonitoring of content. (xiv) Suitable technical device should be made available at Indian end to the designated security agency/licensor in which a mirror image of the remote access information is available on line for monitoring purposes. (xv) Complete audit trail of the remote access activities pertaining to the network operated in India should be maintained for a period of six months and provided on request to the licensor or any other agency authorised by the licensor. (xvi) The telecom service providers should ensure that necessary provision (hardware/software) is available in their equipment for doing the Lawful interception and monitoring from a centralized location. (xvii) The telecom service providers should familiarize/train Vigilance Technical Monitoring (VTM)/security agency officers/officials in respect of relevant oper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /Wholesale Trading (including sourcing from MSEs) 100% Automatic 6.2.16.1.1 Definition: Cash & Carry Wholesale trading/Wholesale trading, would mean sale of goods/merchandise to retailers, industrial, commercial, institutional or other professional business users or to other wholesalers and related subordinated service providers. Wholesale trading would, accordingly, be sales for the purpose of trade, business and profession, as opposed to sales for the purpose of personal consumption. The yardstick to determine whether the sale is wholesale or not would be the type of customers to whom the sale is made and not the size and volume of sales. Wholesale trading would include resale, processing and thereafter sale, bulk imports with ex-port/ex-bonded warehouse business sales and B2B e-Commerce. 6.2.16.1.2 Guidelines for Cash & Carry Wholesale Trading/Wholesale Trading (WT): (a) For undertaking WT, requisite licenses/registration/permits, as specified under the relevant Acts/ Regulations/Rules/Orders of the State Government/Government Body/Government Authority/Local Self-Government Body under that State Government should be obtained. (b) Except in case of sales to Government, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 100% Government 6.2.16.4 Single Brand product retail trading 100% Government (1) Foreign Investment in Single Brand product retail trading is aimed at attracting investments in production and marketing, improving the availability of such goods for the consumer, encouraging increased sourcing of goods from India, and enhancing competitiveness of Indian enterprises through access to global designs, technologies and management practices. (2) FDI in Single Brand product retail trading would be subject to the following conditions: (a) Products to be sold should be of a 'Single Brand' only. (b) Products should be sold under the same brand internationally i.e. products should be sold under the same brand in one or more countries other than India. (c) 'Single Brand' product-retail trading would cover only products which are branded during manufacturing. (d) Only one non-resident entity, whether owner of the brand or otherwise, shall be permitted to undertake single brand product retail trading in the country, for the specific brand, through a legally tenable agreement, with the brand owner for undertaking single brand product retail trading in respect of the specific brand f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roduce, including fruits, vegetables, flowers, grains, pulses, fresh poultry, fishery and meat products, may be unbranded. (ii) Minimum amount to be brought in, as FDI, by the foreign investor, would be US $ 100 million. (iii) At least 50% of total FDI brought in shall be invested in 'backend infrastructure' within three years of the first tranche of FDI, where 'back-end infrastructure' will include capital expenditure on all activities, excluding that on front-end units; for instance, back-end infrastructure will include investment made towards processing, manufacturing, distribution, design improvement, quality control, packaging, logistics, storage, ware-house, agriculture market produce infrastructure etc. Expenditure on land cost and rentals, if any, will not be counted for purposes of backend infrastructure. (iv) At least 30% of the value of procurement of manufactured processed products purchased shall be sourced from Indian 'small industries' which have a total investment in plant & machinery not exceeding US $ 1.00 million. This valuation refers to the value at the time of installation, without providing for depreciation. Further, if at any point in time, this valuatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s outlets will be in compliance of applicable State/Union Territory laws/regulations, such as the Shops and Establishments Act etc. (ix) Retail trading, in any form, by means of e-commerce, would not be permissible, for companies with FDI, engaged in the activity of multi-brand retail trading. (x) Applications would be processed in the Department of Industrial Policy & Promotion, to determine whether the proposed investment satisfies the notified guidelines, before being considered by the FIPB for Government approval. (2) LIST OF STATES/UNION TERRITORIES AS MENTIONED IN PARAGRAPH 6.2.16.5(1)(viii) 1. Andhra Pradesh 2. Assam 3. Delhi 4. Haryana 5. Jammu & Kashmir 6. Maharashtra 7. Manipur 8. Rajasthan 9. Uttarakhand 10. Daman & Diu and Dadra and Nagar Haveli (Union Territories) 6.2.17 FINANCIAL SERVICES Foreign investment in other financial services, other than those indicated below, would require prior approval of the Government: 6.2.17.1 Asset Reconstruction Companies 6.2.17.1.1 'Asset Reconstruction Company' (ARC) means a company registered with the Reserve Bank of India under Section 3 of the Securitisation and Reconstruction of Financial Assets and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p capital by the bank concerned through a resolution by its Board of Directors followed by a special resolution to that effect by its General Body. (a) Thus, the FII investment limit will continue to be within 49 per cent of the total paid-up capital. (b) In the case of NRIs, as hitherto, individual holding is restricted to 5 per cent of the total paid-up capital both on repatriation and non-repatriation basis and aggregate limit cannot exceed 10 per cent of the total paid-up capital both on repatriation and non-repatriation basis. However, NRI holding can be allowed up to 24 per cent of the total paid-up capital both on repatriation and non-repatriation basis provided the banking company passes a special resolution to that effect in the General Body. (c) Applications for foreign direct investment in private banks having joint venture/subsidiary in insurance sector may be addressed to the Reserve Bank of India (RBI) for consideration in consultation with the Insurance Regulatory and Development Authority (IRDA) in order to ensure that the 26 per cent limit of foreign shareholding applicable for the insurance sector is not being breached. (d) Transfer of shares under FDI fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Banking- Public Sector subject to Banking Companies (Acquisition & Transfer of Undertakings) Acts 1970/80. This ceiling (20%) is also applicable to the State Bank of India and its associate Banks. 20% (FDI and Portfolio Investment) Government 6.2.17.4 Commodity Exchanges 6.2.17.4.1 1 Futures trading in commodities are regulated under the Forward Contracts (Regulation) Act, 1952. Commodity Exchanges, like Stock Exchanges, are infrastructure companies in the commodity futures market. With a view to infuse globally acceptable best practices, modern management skills and latest technology, it was decided to allow foreign investment in Commodity Exchanges. 2 For the purposes of this chapter, (i) "Commodity Exchange" is a recognized association under the provisions of the Forward Contracts (Regulation) Act, 1952, as amended from time to time, to provide exchange platform for trading in forward contracts in commodities. (ii) "recognized association" means an association to which recognition for the time being has been granted by the Central Government under Section 6 of the Forward Contracts (Regulation) Act, 1952 (iii) "Association" means any body of individuals, whether inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of 23 per cent of the paid-up capital ] Government (For FDI) 6.2.17.6.2 Other Conditions: 6.2.17.6.2.1 FII can invest only through purchases in the secondary market 6.2.17.7 Insurance 6.2.17.7.1 Insurance 26% Automatic 6.2.17.7.2 Other Conditions: (1) FDI in the Insurance sector, as prescribed in the Insurance Act, 1938, is allowed under the automatic route. (2) This will be subject to the condition that Companies bringing in FDI shall obtain necessary license from the Insurance Regulatory & Development Authority for undertaking insurance activities. 6.2.17.8 Non-Banking Finance Companies (NBFC) 6.2.17.8.1 Foreign investment in NBFC is allowed under the automatic route in only the following activities: (i) Merchant Banking (ii) Under Writing (iii) Portfolio Management Services (iv) Investment Advisory Services (v) Financial Consultancy (vi) Stock Broking (vii) Asset Management (viii) Venture Capital (ix) Custodian Services (x) Factoring (xi) Credit Rating Agencies (xii) Leasing & Finance (xiii) Housing Finance (xiv) Forex Broking (xv) Credit Card Business (xvi) Money Changing Business (xvii) Micro Credit (xviii) Rural Credit 100% Automat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... granting approval. 6.2.19 Power Exchanges 6.2.19.1 Power Exchanges registered under the Central Electricity Regulatory Commission (Power Market) Regulations, 2010 49% (FDI &FII) Government (for FDI) 6.2.19.2 Other conditions: (i) Such foreign investment would be subject to an FDI limit of 26 per cent and an FII limit of 23 per cent of the paid-up capital; (ii) FII investments would be permitted under the automatic route and FDI would be permitted under the government approval route; (iii) FII purchases shall be restricted to secondary market only; (iv) No non-resident investor/entity, including persons acting in concert, will hold more than 5% of the equity in these companies; and (v) The foreign investment would be in compliance with SEBI Regulations; other applicable laws/ regulations; security and other conditionalities. CHAPTER 7 REMITTANCE, REPORTING AND VIOLATION 7.1 REMITTANCE AND REPATRIATION 7.1.1 Remittance of sale proceeds/Remittance on winding up/Liquidation of Companies: (i) Sale proceeds of shares and securities and their remittance is 'remittance of asset' governed by The Foreign Exchange Management (Remittance of Assets) Regulations 2000 under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e amount of consideration to the Regional Office concerned of the Reserve Bank not later than 30 days from the date of receipt in the Advance Reporting Form enclosed as Annex-5. (ii) Indian companies are required to report the details of the receipt of the amount of consideration for issue of shares/convertible debentures, through an AD Category-I bank, together with a copy/ies of the FIRC/s evidencing the receipt of the remittance along with the KYC report (enclosed as Annex-6) on the non-resident investor from the overseas bank remitting the amount. The report would be acknowledged by the Regional Office concerned, which will allot a Unique Identification Number (UIN) for the amount reported. 7 2 2 Reporting of issue of shares (i) After issue of shares (including bonus and shares issued on rights basis and shares issued under ESOP)/fully, mandatorily & compulsorily convertible debentures/fully, mandatorily & compulsorily convertible preference shares, the Indian company has to file Form FC-GPR, enclosed in Annex-1, not later than 30 days from the date of issue of shares. (ii) Form FC-GPR has to be duly filled up and signed by Managing Director/Director/Secretary of the Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and vice- versa is to be done in Form FC-TRS (Annex 8). The Form FC-TRS should be submitted to the AD Category-I bank, within 60 days from the date of receipt of the amount of consideration. The onus of submission of the Form FC-TRS within the given timeframe would be on the transferor/transferee, resident in India. The AD Category-I bank, would forward the same to its link office. The link office would consolidate the Form FC-TRS and submit a monthly report to the Reserve Bank. 7.2.4 Reporting of Non-Cash Details of issue of shares against conversion of ECB have to be reported to the Regional Office concerned of the RBI, as indicated below: (i) In case of full conversion of ECB into equity, the company shall report the conversion in Form FC-GPR to the Regional Office concerned of the Reserve Bank as well as in Form ECB-2 to the Department of Statistics and Information Management (DSIM), Reserve Bank of India, Bandra-Kurla Complex, Mumbai - 400 051, within seven working days from the close of month to which it relates. The words "ECB wholly converted to equity" shall be clearly indicated on top of the Form ECB-2. Once reported, filing of Form ECB-2 in the subsequent months is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corporate and includes a firm or other association of individuals as defined in the Companies Act), every person who, at the time the contravention was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company as well as the company, shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly. (iii) Any Adjudicating Authority adjudging any contraventions under 6.3.1(i), may, if he thinks fit in addition to any penalty which he may impose for such contravention direct that any currency, security or any other money or property in respect of which the contravention has taken place shall be confiscated to the Central Government. 7.3.2 Adjudication and Appeals (i) For the purpose of adjudication of any contravention of FEMA, the Ministry of Finance as per the provisions contained in the Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000 appoints officers of the Central Government as the Adjudicating Authorities for holding an enquiry in the manner prescribed. A reasonable opportunity has to be given to the person alleged to have committed contra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany 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/Approval Route 3 Details of the foreign investor/collaborator1* Name Address Country Constitution/Nature of the investing Entity [Specify whether 1. Individual 2. Company 3. FII 4. FVCI 5. Foreign Trust 6. Private Equity Fund 7. Pension/Provident Fund 8. Sovereign Wealth Fund (SWF)4 9. Partnership/Proprietorship Firm 10. Financial Institution 11. NRIs/PIO 12. Others (please specify)] Date of incorporation 4 Particulars of Shares/Convertible Debentures /others Issued (a) Nature and date of issue Nature of issue Date of issue Number of shares/ convertible debentures/others 01 IPO/FPO 02 Preferential allotment/private placement 03 Rights 04 Bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me as indicated in Notification No. FEMA 20/2000-RB dated 3rd 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 all the conditions laid down for investments under the Automatic Route namely (strike off whichever is not applicable). (a) Shares issued on rights basis to non-residents are in conformity with Regulation 6 of the RBI Notification No FEMA 20/2000-RB dated 3rd May 2000, as amended from time to time. OR (b) Shares issued are bonus. OR (c) 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 (d) Shares are issued under ESOP and the conditions regarding this issue have been satisfied 3. Shares have been issued in terms of SIA /FIPB approval No._____________ Dated____________ 4 The foreign investment received and reported now will be utilized in compliance with the provision of a Prevention of Money Laundering Act 2002 (PMLA) and Unlawful Activities(Prevention) Act, 1967 (UAPA). We confirm that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reporting receipt of remittance R Annex - 2 Terms and conditions for Transfer of Shares /Convertible Debentures, by way of Sale, from a Person Resident in India to a Person Resident Outside India and from a Person Resident Outside India to a Person Resident in India 1.1 In order to address the concerns relating to pricing, documentation, payment/ receipt and remittance in respect of the shares/ convertible debentures of an Indian company, in all sectors, transferred by way of sale, the parties involved in the transaction shall comply with the guidelines set out below. 1.2 Parties involved in the transaction are (a) seller (resident/non-resident), (b) buyer (resident/non-resident), (c) duly authorized agent/s of the seller and/or buyer, (d) Authorised Dealer bank (AD) branch and (e) Indian company, for recording the transfer of ownership in its books. 2. Pricing Guidelines 2.1 The under noted pricing guidelines are applicable to the following types of transactions: i. Transfer of shares, by way of sale under private arrangement by a person resident in India to a person resident outside India. ii. Transfer of shares, by way of sale under private arrangement by a person re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the consideration shall be remitted to India through normal banking channel or paid out of funds held in NRE/FCNR (B)/NRO accounts. 4.2. The sale proceeds of shares (net of taxes) sold by a person resident outside India may be remitted outside India. In case of FII, the sale proceeds may be credited to its special Non-Resident Rupee Account. In case of NRI, if the shares sold were held on repatriation basis, the sale proceeds (net of taxes) may be credited to his NRE /FCNR(B) accounts and if the shares sold were held on non repatriation basis, the sale proceeds may be credited to his NRO account subject to payment of taxes. 4.3 The sale proceeds of shares (net of taxes) sold by an OCB may be remitted outside India directly if the shares were held on repatriation basis and if the shares sold were held on non-repatriation basis, the sale proceeds may be credited to its NRO (Current) Account subject to payment of taxes, except in the case of OCBs whose accounts have been blocked by Reserve Bank. 5. Documentation Besides obtaining a declaration in the enclosed Form FC-TRS (in quadruplicate), the AD branch should arrange to obtain and keep on record the following documents: 5.1 Fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value of shares from a Chartered Accountant. v. No Objection/Tax Clearance Certificate from Income Tax authority/Chartered Account. vi. Undertaking from the buyer to the effect that the Pricing Guidelines have been adhered to. 6. Reporting requirements 6.1 Reporting of transfer of shares between residents and non-residents and vice versa is to be done in Form FC-TRS. The Form FC-TRS should be submitted to the AD Category-I bank, within 60 days from the date of receipt of the amount of consideration. The onus of submission of the Form FC-TRS within the given timeframe would be on the transferor/transferee, resident in India. The AD Category-I bank, would forward the same to its link office. The link office would consolidate the Forms and submit a monthly report to the Reserve Bank2. For the purpose the Authorized Dealers may designate branches to specifically handle such transactions. These branches could be staffed with adequately trained staff for this purpose to ensure that the transactions are put through smoothly. The ADs may also designate a nodal office to coordinate the work at these branches and also ensure the reporting of these transactions to the Reserve Bank. 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds, a certificate issued by a Chartered Accountant on the market value of such security. v. In case of units of domestic mutual funds and units of Money Market Mutual Funds, a certificate from the issuer on the Net Asset Value of such security. vi. In case of shares and convertible debentures, a certificate from a Chartered Accountant on the value of such securities according to the guidelines issued by Securities & Exchange Board of India or DCF method for listed companies and unlisted companies, respectively. vii. Certificate from the concerned Indian company certifying that the proposed transfer of shares/convertible debentures by way of gift from resident to the non-resident shall not breach the applicable sectoral cap/ FDI limit in the company and that the proposed number of shares/convertible debentures to be held by the non-resident transferee shall not exceed 5 per cent of the paid up capital of the company. viii. An undertaking from the resident transferor that the value of security to be transferred together with any security already transferred by the transferor, as gift, to any person residing outside India does not exceed the rupee equivalent of USD 50,000 during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Y: Unique Identification Number for the remittance received: Annex - 6 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 Remitter's Bank Remitter's Bank Account No. Period of banking relationship with the remitter * Passport No., Social Security No, or any Unique No. certifying the bonafides of the remitter as prevalent in the remitter's country We confirm that all the information furnished above is true and accurate 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 - 7 RESERVE BANK OF INDIA Annual Return on Foreign Liabilities and Assets as on 31 March, 20 _ _ (Return to be filled under A.P. (DIR Series) Circular No. dated and submitted to the Department of Statistics and Information Management, RBI, Mumbai) Please read the guidelines/definitions carefully before filling-in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are capital (= 1.1(a) + 1.1(b)) (a) Ordinary/Equity Share* (b) Participating Preference Share 1.2 Non-participating Preference Share# 2.0 Non-resident Holdings (at face value in Rs lakh) 2.1 Equity & Participating Preference share capital (Sum of item-1 to item-12) 1 Individuals 2 Companies 3 Foreign Institutional Investors (FIIs) 4 Foreign Venture Capital Investors (FVCIs) 5 Foreign Trusts 6 Private Equity Funds 7 Pension/ Provident Funds 8 Sovereign Wealth Fund (SWF) 9 Partnership/ Proprietorship firms 10 Financial Institutions 11 NRIs/PIO 12 Others non-resident holdings 2.2 Non-Participating Preference share 3.0 Non Resident Equity & Participating Preference share capital % Note *In case of different class of Equity Share (class A, class B etc.), consolidated figure should be reported. #Non-participating Preference Share do not have following rights. (a) to receive dividend, out of surplus profit after paying the dividend to equity shareholders. (b) to have share in surplus assets remaining after the entire capital is paid in case of winding up of the company. Block 1B: Profit and Loss Account (from P/L Account) Item Amount in Rs lakh Previous Year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be furnished for more than one investor, then add separate Block with same format (ii) #: Other capital, item 2.1 & 2.2 of Block-2A includes all other liabilities and claims at Nominal value, except equity and participating preference shares, (i.e. trade credit, loan, debentures, Non-participating share capital, other accounts receivable and payables etc.) of Indian reporting company with its director investor indicated in Block-2A. Block 2B: Investment in India under Foreign Direct Investment (FDI) scheme (Less than 10% Equity Holding) [Please furnish here the outstanding investments made under the FDI Scheme in India by Non-resident Direct investors, who were individually holding less 10 than per cent ordinary/equity and participating preference shares of your company on the reporting date]. Country-wise consolidated information should be provided below: Type of Capital Country of non-resident investor Equity & Participating Preference share capital holding per cent as at the end of latest year (%) Amount in Rs lakh as at the end of Previous March Latest March 1.0 Equity Capital ( = 1.1-1.2) 1.1 Liabilities to Direct Investor 1.2 Claims on Direct Investor (Reverse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Currency Amount in Foreign Currency as at the end of (in actual) Previous March Latest March 3.1 Total Equity of DIE 3.2 Equity of DIE held by you 3.3 Reserves (Excluding P&L Account) 3.4 Profit and Loss Account balance 3.5 Reserve and Surplus (=3.3+3.4) 3.6 Net Worth of DIE (=3.1+3.5) 3.7 Exchange rate in Rs per unit foreign currency* *: Exchange rate of reporting foreign currency against Indian Rs should be given as on closing date of reference period. FEDAI website (http://www.fedai.org.in) may be used for Exchange rates. Block-4: Direct Investment Abroad under Overseas Direct Investment (ODI) Scheme Block-4A: Direct Investment Abroad (10% or more equity holding) Please furnish here the market value of outstanding investments in DIE, made by your company under the ODI Scheme, in each of which your company hold 10% or more equity shares on the reference date. Name of the non-resident DIE Type of Capital Country of non-resident DIE Equity holding per cent as at the end of latest year (%) Amount in Rs lakh as at the end of Previous March Latest March 1.0 Equity Capital (=1.1-1.2) 1.1 Claims on Direct Investment Enterprise 1.2 Liabilities to Direct Investme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted information pertaining to each type of investment should be reported separately. (ii) If the information is to be furnish for more than one country, then use the ADD Block 5 with the same format.. Section V (Other Assets and Liabilities) Block 6: Other Investment (i.e., position with unrelated parties) This is a residual category that includes all financial outstanding liability and claims not considered as direct investment or portfolio investment. Other Investment Outstanding Liabilities with unrelated party Outstanding claims on unrelated party Amount in Rs lakh as at the end of Previous March Latest March Previous March Latest March 6.1 Trade Credit 6.2 Loans 6.3 Currency & Deposits 6.4 Other receivable and payable accounts [e-Form version of this Return is available on the FEMA Forms section under the 'Forms' category on the RBI website (www.rbi.org.in). System Requirement: MS-Excel 2003 and above, with macro enabled] Declaration The foreign investment received and reported have been utilized in compliance with the provision of a Prevention of Money Laundering Act 2002(PMLA) and Unlawful Activities(Prevention) Act, 1967 (UAPA). We confirm that the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vident Fund 8. Sovereign Wealth Fund (SWFð) 9. Partnership/Proprietorship firm 10. Financial Institution 11. NRIs/PIOs 12. others Date and Place of Incorporation Address of the buyer (including e-mail, telephone number. Fax no.) 5 Name of the seller Constitution/Nature of the disinvesting entiry Specify whether 1. Individual 2. Company 3. FII 4. FVCI 5. Foreign Trust 6. Private Equity Fund 7. Pension/ Provident Fund 8. Sovereign Wealth Fund (SWF∏) 9. Partnership/Proprietorship firm 10. Financial Institution 11. NRIs/PIOs 12. Others Date and Place of Incorporation Address of the seller (including e-mail, telephone Number Fax no) 6 Particulars of earlier Reserve Bank/FIPB approvals 7 Details regarding shares/compulsorily and mandatorily convertible preference shares (CMCPS)/debentures/ others (such as FDI compliant instruments like participating interest rights in oil fields, etc.) to be transferred Date of the transaction Number of shares CMCPS/ debentures/others Face value in Rs. Negotiated Price for the transfer**in Rs. Amount of consideration in Rs. 8 Foreign Investments in the company No. of shares Percentage Before the transfer A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Individual) Registration Number (Unique Identification Number* in case remitter is an Individual) Registered Address (Permanent Address if remitter Individual) Name of the Remitter's Bank Remitter's Bank Account No. Period of banking relationship with the Remitter *Passport No., Social Security No, or any Unique No. certifying the bonafides of the remitter as prevalent in the remitter's country. We confirm that all the information furnished above is true and accurate 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 : Proforma Statement of inflows/outflows on account of remittance received/made in connection with transfer of shares/compulsorily and mandatorily convertible preference shares/debentures/others/other, by way of sale Category-wise Part A - NRI/erstwhile OCB Part B - Foreign National/non-resident incorporated entity Part C - Foreign Institutional Investors Inflow -Transfer from resident to non-resident [Amount in Rs.] Date of Transaction Name of the Company Activity NIC Code Name of the Buyer Constitution/ Nature of Business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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/- Chartered Accountant Sd/- Authorised Signatory of the Company Annex - 10 Form DR - Quarterly [Refer to paragraph 4(3) of Schedule 1] Quarterly Return (to be submitted to the Reserve Bank of India, Foreign Investment 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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