Foreign Exchange Management (Transfer or Issue of Any Foreign Security) (Amendment) Regulations, 2008

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Foreign Exchange Management (Transfer or Issue of Any Foreign Security) (Amendment) Regulations, 2008

Notification No. FEMA.180/RB-2008

dated September 5, 2008

Foreign Exchange Management (Transfer or Issue of Any
Foreign Security) (Amendment) Regulations, 2008

In exercise of the powers conferred by clause (a) of sub-section (3) of Section 6 and sub-section (2) of 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 Any Foreign Security) Regulations, 2004 (Notification No. FEMA.120/RB-2004 dated July 7, 2004) namely:-

1. Short Title & Commencement:-

(i) These Regulations shall be called the Foreign Exchange Management (Transfer or Issue of Any Foreign Security) (Amendment) Regulations, 2008.

(ii) These Regulations shall be deemed to have come into effect from the 1st day of June 2007.

2. Amendment of Regulation 6:-

In the Foreign Exchange Management (Transfer or Issue of Any Foreign Security) Regulations, 2004 (Notification No.FEMA 120/RB-2004 dated July 7, 2004 (hereinafter referred to as the 'principal regulations' ) in Regulation 6,

(i) in sub- regulation (2), for clause (iv), the following shall be substituted, namely:-

“(iv) The Indian Party has submitted its Annual Performance Report in respect of all its overseas investments in the format given in Part III of the Form ODI .”

(ii) in sub- regulation ( 2 ), for clause ( vi ), the following shall be substituted, namely:-

“(vi) the Indian Party submits Part I of the Form ODI, duly completed, to the designated branch of an authorised dealer.”

(iii) in sub-regulation (5), in the proviso, for clause (b), the following shall be substituted, namely:-

“(b) The Indian Party files with the designated authorised dealer in Parts I and II of the Form ODI full details of the investment proposed."

3. Amendment of Regulation 9:-

In the principal Regulations, in Regulation 9, in sub-regulation (2), the following shall be substituted, namely:-
“(2) Application for direct investment in Joint Venture/Wholly Owned Subsidiary outside India, or by way of exchange for shares of a foreign company, shall be made in Part I of the Form ODI.”

4. Amendment of Regulation 14:-

In the principal Regulations, in Regulation 14, in sub-regulation (2), for clause (ii) of the following shall be substituted, namely:-

“(ii) The Indian Party shall submit through the designated authorised dealer concerned a report to the Reserve Bank in Parts I and II of the Form ODI within 30 days of effecting the final remittance.”

5. Amendment of Regulation 15:-

In the principal Regulations, in Regulation 15, for clause (iii) the following shall be substituted, namely:-

“(iii) submit to the Reserve Bank through the Authorised Dealer every year within 60 days from the date of expiry of the statutory period as specified by the respective laws of the host country for finalization of the audited accounts of the Joint Venture/Wholly Owned Subsidiary outside India or such further period as may be allowed by Reserve Bank, an Annual Performance Report in Form ODI Part III in respect of each Joint Venture or Wholly Owned Subsidiary outside India set up or acquired by the Indian Party and other reports or documents as may be specified by the Reserve Bank from time to time.”

6. Substitution of Regulation 19:-

In the principal Regulations, for Regulation 19, the following shall be substituted, namely:-

“19. Prior permission of the Reserve Bank for a Proprietary Concern in India to accept shares

A proprietary concern in India may apply to the Reserve Bank through the authorised dealer in Part I of the Form ODI for permission to accept shares of a company outside India in lieu of fees due to it for professional services rendered to the said company.

Provided that:-

(a) the value of the shares accepted from each company outside India shall not exceed fifty per cent of the fees receivable by the Indian concern from that company; and,

(b) the Indian concern’s shareholding in any one company outside India by virtue of shares accepted as aforesaid shall not exceed ten per cent of the paid-up capital of the company outside India, whose shares are accepted.

7. Substitution of Form

In the principal regulations, after Schedule II, at the end, for the Forms annexed, Form ODI annexed to these regulations shall be substituted.

(Salim Gangadharan)

Chief General Manager-in-Charge

Foot Note:

(i) The Foreign Exchange Management (Transfer or Issue of Any Foreign Security) Regulations, 2004 were published in the Official Gazette vide G.S.R.No.757 (E) dated November 19, 2004 and subsequently amended vide:

G.S.R. No.220 (E) dated April 7, 2005

G.S.R. No.337 (E) dated May 27, 2005

G.S.R. No.552 (E) dated August 31, 2005

G.S.R.No. 535(E) dated September 6, 2006

G.S.R.No. 13(E) dated January 5, 2008

G.S.R.No. 209(E) dated March 25, 2008

G.S.R.No. -------- dated --------------------

(ii) It is clarified that no person will be adversely affected as a result of retrospective effect being given to these Regulations.

Published in the Official Gazette of Government
of India – Extraordinary – Part-II, Section 3,
Sub-Section (i) dated 24.9.2008 - G.S.R.No.676 (E)

ANNEX

FORM OVERSEAS DIRECT INVESTMENT (ODI)