Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Seventeenth Amendment) Regulations, 2013 - ربی - Reserve Bank of India
Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Seventeenth Amendment) Regulations, 2013
RESERVE BANK OF INDIA Notification No.FEMA. 294/2013-RB Dated : November 12, 2013 Foreign Exchange Management (Transfer or Issue of Security by a Person 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) (Seventeenth Amendment) Regulations, 2013. (ii) They shall come into force from the date of their publication in the Official Gazette. 2. Amendment to Regulation 5 In the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000, (Notification No.FEMA 20/2000-RB dated 3rd May 2000), in Regulation 5, in sub-Regulation (1), in clause (i), the following shall be added, namely:- “Further, shares or convertible debentures containing an optionality clause but without any option/right to exit at an assured price shall be reckoned as eligible instruments to be issued to a person resident outside India by an Indian company subject to the terms and conditions as specified in Schedule I .” 3. Amendment to Regulation 9 In Regulation 9, in sub-regulation 1, the following shall be added, namely:- “Further, subject to minimum lock-in period of one year or minimum lock-in period as prescribed under Annex-B of Schedule 1 whichever is higher, a person resident outside India holding the shares or debentures of an Indian company containing an optionality clause in accordance with these Regulations and exercising the option/right, may exit without any assured return, subject to the following conditions: (i) In case of listed company, at the market price determined on the floor of the recognised stock exchanges; (ii) In case of equity shares of unlisted company, at a price not exceeding that arrived on the basis of Return on Equity (RoE) as per latest audited balance sheet. Any agreement permitting return linked to equity as above shall not be treated as violation of FDI policy. Explanation - RoE shall mean Profit After Tax / Net Worth; Net worth would include all free reserves and paid up capital. (iii) In case of Preference shares or debentures, at a price worked out as per any internationally accepted pricing methodology at the time of exit, duly certified by a Chartered Accountant or a SEBI registered Merchant Banker. The guiding principle would be that the non-resident investor is not guaranteed any assured exit price at the time of making such investment/agreements and shall exit at the price prevailing at the time of exit, subject to lock-in period requirement.” (Rudra Narayan Kar) 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:-
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