Notification No. F.E.R.A.150/93-RB Dated 26th April 1993 as amended up to 30th March 1999 vide Notification No.F.E.R.A.198/99-RB dated 30th March 1999
Sale/Transfer of Shares/Bonds/Debentures by NRIs/OCBs with Repatriation Rights through Stock Exchange
In exercise of the powers conferred by sub-section (6) of Section 19 of the Foreign Exchange Regulation Act, 1973 (46 of 1973), the Reserve Bank, being of the opinion that it is necessary and expedient in the public interest so to do, exempts from the operation of the provisions of sub-section (5) of the said section, transfer of any share, bond or debenture of a company registered in India, made by a person, who is a citizen of India or a person of Indian origin and resident outside India or an Overseas Corporate Body, in favour of a person who is a citizen of India or a person of Indian origin and resident in India, or in favour of a company or a body corporate incorporated under any law in force in India.
Provided that
(i) such share, bond or debenture was purchased by the transferor in accordance with the terms and conditions of the permission granted by the Reserve Bank to the designated branch of an authorised dealer on behalf of the transferor under clause (b) of sub-section (1) of Section 29 of the Act;
(ii) the transferor had purchased such share, bond or debenture from the stock market through a member of a recognised stock exchange in India and delivery of the share, bond or debenture so purchased has been taken by him or on his behalf by the concerned authorised dealer or its nominee;
(iia) the transferor had purchase such share, bond or debenture from a company registered in India, in accordance with the terms and conditions of the permission granted under Clause (d) of sub-sectioin (1) of Section 19 of the Act, by the Reserve Bank.
(iii) such share, bond or debenture is sold in the stock market through a member of a recognised stock exchange in India and the sale transaction is effected at the ruling market price as determined on the floor of the stock exchange by normal bid and offer method and through the same designated branch of the authorised dealer through which such share, bond or debenture was earlier purchased;
and (iv) the sale proceeds are paid to the said designated branch of the authorised dealer.
Explanation:
I. A person (not being a citizen of Pakistan or Bangladesh or Sri Lanka), shall be deemed to be of Indian origin, if -
(i) he, at any time, held Indian passport;
or
(ii) he or either of his parents or any of his grandparents was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955);
or
(iii) that person is the spouse of an Indian citizen or of a person of Indian origin (not being a citizen of Pakistan or Bangladesh or Sri Lanka).
II. The expression "designated branch of an authorised dealer" shall mean that branch of an authorised dealer which has been approved by the Reserve Bank for purchasing shares, bonds or debentures on behalf of the transferor.
III. The expression Overseas Corporate Body means any overseas company, partnership firm, society and other corporate body predominantly owned directly or indirectly to the extent of atleast 60 per cent by NRIs and includes any overseas trust in which not less than 60 per cent beneficial interest is held by NRIs directly or indirectly, but, irrevocably.
(Notification No. F.E.R.A.151/93-RB dated 26th April 1993 as amended upto 30th March 1999 videNotification No.F.E.R.A.199/99-RB dated 30th March 1999)
Gifting of Shares/Bonds/Debentures by NRIs
In exercise of the powers conferred by sub-section (6) of Section 19 of the Foreign Exchange Regulation Act, 1973 (46 of 1973), the Reserve Bank, being of the opinion that it is necessary and expedient in the public interest so to do,hereby exempts from the operation of the provisions of sub-section (5) of the said section, transfer, by way of gift, of any share, bond or debenture of a company registered in India by a person resident outside India who is a citizen of India or a person of Indian origin to a citizen of India or a person of Indian origin and resident in India or to a charitable trust:
Provided that
(i) such share, bond or debenture was held by the transferor with the permission of the Reserve Bank;
(ii) such transfer is between relatives as defined in Section 6 of the Companies Act, 1956 (1 of 1956);
and
(iii) in the case of a transfer in favour of a charitable trust, provisions of any other law, as applicable, are duly complied with.
Explanation:
I. A person (not being a citizen of Pakistan or Bangladesh or Sri Lanka), shall be deemed to be of Indian origin, if
(i) he, at any time, held Indian passport;
or
(ii) he or either of his parents or any of his grandparents was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955):
or
(iii) that person is the spouse of an Indian citizen or of a person of Indian origin (not being a citizen of Pakistan or Bangladesh or Sri Lanka).
II. "Charitable trust" means a trust created or an institution established for charitable purposes and duly registered under the laws in India.
(Notification No.F.E.R.A 180/98-RB dated 13th January 1998 as amended upto 30th January 1999 [vide Notification No.F.E.R.A. 191/99-RB dated 30th January 1999] )
Permission for issue of shares to foreign investors under Automatic Route of Reserve Bank
In pursuance of clause (a) and clause (d) of sub-section (1) of Section 19 read with clause (b) of sub-section (1) of Section 29 of the Foreign Exchange Regulation Act, 1973 (46 of 1973), the Reserve Bank is pleased to permit a company incorporated in India-
which is engaged or proposing to engage in an activity specified in the list for the time being in force published by the Ministry of Industry, Government of India, as Annexure III to the Statement on Industrial Policy, 1991 (hereinafter referred to as "the said Annexure III"); or
which is a Trading Company primarily engaged in export, and is registered as an Export/Trading/Star Trading House, with the Ministry of Commerce, Government of India; to issue shares subject to the conditions mentioned in para 3, to a person who is not a citizen of India (whether resident in India or not) or to a company (other than a banking company) which is not incorporated under any law in force in India, or to non-residents of Indian nationality or origin (NRIs) or to an Overseas Corporate Body, and to send such shares out of India, to their place of residence or incorporation as the case may be;
Provided that a company, existing on the date of this Notification, which is not engaged in the said Annexure III activities shall be eligible to issue shares, if it embarks upon expansion programme predominantly in the said Annexure III activities, subject to the condition that the foreign equity raised by issue of shares to foreign investor is utilised for such expansion.
Provided further that in the case of a newly set-up Trading Company primarily engaged in export, issue of shares shall be subject to the condition that registration as an Export/Trading/Star Trading House is obtained before remittance of dividend to the foreign investor.
Explanation: For the purpose of this Notification - a person (not being a citizen of Pakistan or Bangladesh or Sri Lanka) shall be deemed to be of "Indian Origin", if he, at any time, held an Indian passport; or he or either of his parents or his grandparents was citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955) "Overseas Corporate Body (OCB)" means any overseas company, partnership firm, society and other corporate body predominantly owned directly or indirectly to the extent of at least 60% by non-residents of Indian Nationality or origin (NRIs) and includes any overseas trust in which not less than 60% beneficial interest is held by NRIs, directly or indirectly but irrevocably.
2. The general permission granted herein shall not apply to or in respect of- a person who is a citizen of, or a company incorporated in, Pakistan or Bangladesh. a company being - manufacturer of items reserved for small scale sector; unit manufacturing items which require industrial licence; unit manufacturing any items of aerospace and defence equipments whether specifically mentioned or not; unit manufacturing any item related to production or use of atomic energy including carrying out of any process, preparatory or ancillary to such production or use, under the Atomic Energy Act, 1962; and 100% Export Oriented Unit and unit in Export Processing Zones. 3. The general permission granted herein to issue shares (hereinafter referred to as "foreign investment") is subject to the following conditions, namely: the foreign investment shall not in aggregate exceed 50%, 51%, 74% or 100% of the capital of the issuer company, as indicated in the said Annexure III ;
Provided that - in respect of the activity of generation and transmission of electric energy (being electric energy produced in hydro-electric power plants, coal/lignite based thermal power plants, oil based thermal power plants and gas based thermal power plants) andin respect of the activity of construction and maintenance of roads, highways, vehicular bridges, toll roads, vehicular tunnels, ports and harbours, the capital by way of foreign investment shall not exceed Rs.1500 crores. Provided further that for the purpose of reckoning the extent of foreign investment under this clause, preference shares carrying a conversion option shall be included. where the issuer company is a Trading Company, foreign investment therein shall not exceed 51% of its capital.
Provided that the ceilings stipulated in clauses (i) and (ii) shall not apply in respect of issue of shares to NRIs and OCBs, and it shall be permissible for the issuer company to issue shares to NRIs and OCBs up to 100% of its equity capital; In the case of issue of shares by an existing company, Board Resolution has been passed in connection with preferential allotment of shares, if any, to foreign investor, indicating the issue price; Special Resolution has been passed under Section 81(1A) of the Companies Act, 1956, wherever applicable, in connection with such preferential allotment, indicating the issue price; In the case of a listed company, the price for the issue is worked out according to SEBI guidelines and is duly certified by the Companys Statutory Auditors; and in the case of any other company, calculation of fair value of shares (as per erstwhile CCI guidelines) is made by an independent Chartered Accountant; (iii a) In the case of issue of convertible equity shares, the valuation procedure shall conform to the guidelines issued by the Bank or SEBI, as the case may be.
Approval, wherever necessary, from any authority, statutory or otherwise, required for the project or for issue of shares is obtained by the company; payment for the shares to be issued to the foreign investor has been received by remittance from abroad through normal banking channels and/or from the NRE/FCNR accounts in the case of issue of shares to NRIs/OCBs; (vi.a) the rate of dividend payable in respect of preference shares shall not exceed SBI Prime Lending Rate (prevailing on the date of the Board meeting in which issue of shares is recommended) plus 300 basis points. remittance of dividend in respect of industries specified in the Annexure hereto, shall be subject to the condition of balancing of dividend over a period of seven years to be reckoned in the case of an existing company, from the date of issue of shares, and in any other cases, from the date of commencement of production; no disinvestment of shares by the foreign investor shall be made without the previous permission of the Reserve Bank; (vii a) the issuer company files with the Regional Office of Reserve Bank, not later than 30 days from the date of receipt of remittance, a report containing the following:
Name of the foreign investor; Country of residence or incorporation of the foreign investor; Date of receipt of remittance and its rupee equivalent; Name and address of the authorised dealer in India through whom the remittance is received. the issuer company files with the Regional Office of Reserve Bank, not later than thirty days from the date of issue, the following - one copy of Form FC (RBI) and/or one copy of form ISD(R), as applicable, duly completed containing NIC code and description of activity in accordance with the said Annexure III; original Foreign Inward Remittance Certificate (FIRC) evidencing receipt of funds, from abroad or as the case may be, from the NRE/FCNR accounts of the NRI/OCB;
Memorandum and Articles of Association of the issuer company; original certificate by a Chartered Accountant, containing particulars of shares issued, date of issue, number of shares, and the issue price; certified copy each of Board Resolution, Special Resolution, Statutory Auditors Certificate, or the Chartered Accountants calculation, referred to in Para 3(iii) above; such other particulars and documents as may be required or specified by the Reserve Bank from time to time. the issuer company shall not be engaged in agricultural/plantation activity, real estate business (excluding real estate development) or as a Nidhi company.
Annexure
(See paragraph 3(vi) of the Notification)
LIST OF 22 SPECIFIED INDUSTRIES IN THE CONSUMER GOODS SECTOR
IN WHICH DIVIDEND BALANCING IS APPLICABLE
Manufacture of food and food products
Manufacture of dairy products
Grain mill products
Manufacture of bakery products
Manufacture and refining of sugar (vacuum pan sugar factories)
Production of common salt
Manufacture of Hydrogenated oil (Vanaspati)
Tea processing
Coffee
Manufacture of beverages, tobacco and tobacco products
Distilling, rectifying and blending of spirits, wine industries, malt liquors and malt, production of country liquors and toddy
Soft drinks and carbonated water industry
Manufacture of cigar, cigarettes, cheroot and cigarette tobacco
Manufacture of wood and wood products, furniture and fixtures
Manufacture of leather and fur/leather products
Tanning, curing, finishing, embossing and japanning of leather
Manufacture of footwear(excluding repair)except vulcanised for moulded rubber or plastic footwear
Manufacture of footwear made primarily of vulcanised or moulded products
Prophylactics (rubber contraceptive)
Motor cars
Entertainment electronics(VCRs, Colour TVs, CD Players, Tape Recorders)
White goods(Domestic Refrigerators, Domestic Dishwashing Machines, Programmable Domestic Washing Machines, Microwave Ovens, Airconditioners).
Note: Remittance of dividend should be covered by earnings of the company from export of items covered by the foreign collaboration agreement. Remittance of dividend can also be covered from earnings through export of items not mentioned in the agreement provided these are in the list of industries mentioned in the said Annexure III. The amount of dividend payment may be covered by export earnings of such items recorded in years prior to the payment of dividend or in the year of payment of dividend.
(Notification No.F.E.R.A.182/98-RB dated 10th February 1998 as amended upto 11th November 1998 [vide Notification No.FERA 189/98-RB dated 11th November 1998])
Permission for issue of security in respect of foreign investment approved under SIA/FIPB Route
In pursuance of clause (a) and clause (d) of sub-Section (1) of Section 19 read with clause (b) of sub-Section (1) of Section 29 of the Foreign Exchange Regulation Act, 1973 (46 of 1973), the Reserve Bank is pleased to permit a company incorporated in India, which holds a valid SIA/FIPB approval for foreign investment in India, to issue security subject to the conditions mentioned in para 2, to a person who is not a citizen of Indian (whether resident in India or not) or to a company (other than a banking company) which is not incorporated under any law in force in India; and to send such security out of India, to their place of residence or incorporation, as the case may be;
Provided that no security shall be issued to a person who is a citizen of, or to a company incorporated in, Pakistan or Bangladesh.
Explanation: "SIA/FIPB approval" means the approval granted for foreign investment by the Government of India, Ministry of Industry, Department of Industrial Policy & Promotion, Secretariat for Industrial Assistance, or by the Foreign Investment Promotion Board.
2. The general permission granted herein to issue security (hereinafter referred to as "foreign investment") is subject to the following conditions, namely:
(i) conditions stipulated in the SIA/FIPB approval are duly complied with;
(ii) the Board of the issuer company has satisfied itself about compliance with all pre-requisites including those stipulated in SIA/FIPB approval, for issue of securities and receipt of remittance from abroad and has recorded its satisfaction by passing a resolution to that effect;
(iii) in the case of issue of security by an existing Company,
(a) Board Resolution has been passed in connection with preferential allotment of security, if any, to foreign investor, indicating the issue price;
(b) Special Resolution has been passed under Section 81(1) of the Companies Act, 1956, wherever applicable, in connection with such preferential allotment, indicating the issue price;
(c) In the case of a listed company, the price for the issue is worked out according to SEBI guidelines and is duly certified by the Companys statutory auditors; and in the case of any other company, calculation of fair value of security (as per erstwhile CCI guidelines) is made by an independent Chartered Accountant;
(iv) approval, whenever necessary, from any authority, statutory or otherwise, required for the project, is obtained by the company;
(v) payment for the security to be issued to the foreign investor has been received by remittance from abroad through normal banking channels;
(v a) the issuer company files with the Regional Office of Reserve Bank, not later than 30 days from the date of receipt of remittance, a report containing the following-
(a) Name of the foreign investor;
(b) Country of residence or incorporation of the foreign investor;
(c) Date of receipt of remittance and its rupee equivalent;
(d) Name and address of the authorised dealer in India through whom the remittance is received.
(e) Number and date of SIA/FIPB approval in respect of which remittance is received.
(vi) the issuer company files with the Regional Office of Reserve Bank, not later than thirty days from the date of issue, the following -
(a) one copy of Form ISD duly completed;
(b) certified copy of SIA/FIPB approval;
(c) original Foreign Inward Remittance Certificate (FIRC) evidencing receipt of funds;
(d) Memorandum and Articles of Association of the issuer Company;
(e) original certificate by a Chartered Accountant, containing particulars of security issued, date of issue, number of security and the issue price;
(f) certified copy each of the Board Resolution, Special Resolution, Statutory Auditors Certificate, or the Chartered Accountants calculation, referred to in items (ii) and (iii) above;
(g) such other particulars and documents as may be required or specified by the Reserve Bank from time to time.
Sd/-
(C. Harikumar)
Executive Director
(Notification No.F.E.R.A.187/98-RB dated 3rd October 1998 as amended upto 2nd December 1998 vide Notification No.F.E.R.A.190/98-RB dated 2nd December 1998)
Permission for issue of equity shares to NRIs and OCBs under 24%/40% Scheme
In pursuance of clause (a) and clause (d) of sub-section (1) of Section 19 read with clause (b) of sub-section (1) of Section 29 of the Foreign Exchange Regulation Act, 1973 (46 of 1973) the Reserve Bank is pleased to permit a company incorporated in India to issue security being equity shares or convertible debentures to the extent and subject to the conditions mentioned in para 2 and 3 respectively, to Non-residents of Indian nationality or origin (NRIs) or to Overseas Corporate Body (OCBs), and to send such shares out of India to their place of residence or location as the case may be.
Provided that the company is not engaged in agriculture/plantation activity, real estate business (excluding real estate development) or as a Nidhi Company.
Explanation :- For the purpose of this Notification -
(a) a person (not being a citizen of Pakistan or Bangladesh or Sri Lanka) shall be deemed to be of "Indian Origin", if -
(i) he, at any time, held an Indian passport; or
(ii) he, or either of his parents or his grandparents was a citizen of India by virtue of Constitution of India or the Citizenship Act, 1955 (57 of 1955).
(b) "Overseas Corporate Body (OCB)" means any overseas company, partnership firm, society and other corporate body predominantly owned directly or indirectly to the extent of atleast 60% by non-residents of Indian nationality or origin (NRIs) and includes any overseas trust in which not less than 60% beneficial interest is held by NRIs, directly or indirectly but irrevocably.
2. The issue pursuant to this permission of security being equity shares shall not exceed the limit mentioned below :
(i) issue of shares by a - 51% of the new issue made by the issuer company specified company
(ii) any other company - 24% of the new issue made by the issuer company
Explanation :- For the purpose of this Clause, " a specified company" means a company engaged in manufacturing activity, not being an activity specified in the list for the time being in force published by the Ministry of Industries, Government of India, as Annexure III to the Statement of Industrial Policy, 1991 and whose shares are not listed on a Stock Exchange.
3. The general permission granted herein to issue security being equity shares or convertible debentures to NRIs and OCBs (hereinafter referred to as "NRI investment") is subject to the following conditions, namely :
(i) in the case of issue of shares by an existing company -
(a) Board Resolution has been passed in connection with preferential allotment of shares, if any, to NRI investors indicating the issue price;
(b) Special Resolution has been passed under Section 81(1A) of the Companies Act, 1956, wherever applicable in connection with such preferential allotment, indicating the issue price;
(c) in the case of a listed company, the price for the issue is worked out according to SEBI guidelines and is duly certified by the companys statutory auditors; and in case of any other company, calculation of fair value of shares (as per erstwhile CCI guidelines) is made by an independent Chartered Accountant;
(ii) approval, wherever necessary, from any authority, statutory or otherwise, required for the activity, is obtained by the company;
(iii) payment for the shares to be issued to the NRI investors has been received either by way of remittance from abroad through normal banking channel and/or by debit to NRE/FCNR account of the NRI investors.
(iv) No disinvestment of shares by the NRI investors shall be made without previous permission of the Reserve Bank;
(v) the issuer company files with the Regional Office of Reserve Bank, not later than thirty days from the date of issue, the following :-
(a) one copy of Form ISD(R) duly completed;
(b) original Foreign Inward Remittance Certificate (FIRC) evidencing receipt of funds from abroad or bank certificate indicating debit to NRE/FCNR account of the NRI investor, as the case may be;
(c) Memorandum and Articles of Association of the issuer company;
(d) original certificate by a Chartered Accountant, containing particulars of shares issued, date of issue, number of shares, and the issue price;
(e) certified copy each of Board Resolution, Special Resolution, Statutory Auditors Certificate, or the Chartered Accountants calculation, referred to in para 3(i) above;
(f) certified copy of the Board Resolution indicating size of the total issue, issue to NRIs/OCBs and residents;
(g) certificate in Form OAC/OAC 1 indicating the NRI shareholding at 60% either directly or indirectly in case of investment by an OCB;
(h) an undertaking that the issuer company is not, and shall not be, engaged in agricultural/plantation activity, real estate business (excluding real estate development) or as a Nidhi company;
(i) such other particulars and documents as may be required or specified by the Reserve Bank from time to time.
(Notification No.F.E.R.A.193/99-RB dated 16th March 1999)
Permission for acquisition/purchase of shares acquired on surrender of ADRs/GDRs
In exercise of the powers conferred by clause (b) of sub-section (1) of Section 29 and the clause (b) of sub-Section (4) of Section 19 of the Foreign Exchange Regulation Act, 1973 (46 of 1973), the Reserve Bank hereby permits: a non-resident holder of ADRs/GDRs issued by a company registered in India, to acquire, upon surrendering ADRs/GDRs, the underlying shares when such shares are released by the Indian Custodian of the ADR/GDR issue, and the company whose shares are so released, or a depository defined in clause (2) of sub-section (1) of Section 2 of the Depositories Act, 1996 to enter in its register or books, in which securities are registered or inscribed, an address outside India of the non-resident holder of shares.
(Notification NO. FERA 185/98-RB dated 19th August 1998)
Permission for sale/tansfer of shares Obtained after conversion of GDRs/ADRs by non-residents to residents
In exercise of the powers conferred by sub-section (6) of Section 19 of the Foreign Exchange Regulation Act 1973 (46 of 1973) the Reserve Bank being of the opinion that it is necessary and expedient in the public interest so to do, exexpts from the operation of the provision of sub-section (5) of the said section, transfer of any share underlying GDR/ADR issue of a company registered in India made by a person not resident in India in favour of aperson resident in India or a body corporate incorporated under any law in force in India.
Provided that
(i) such shares were released by the Indian Custodian of the GDR/ADR issue upon surrendering GDRS/ADRs
(ii) such share is sold in the stock market through a member of a recognised stock exchange in India and the sale transaction is effected at the ruling market price as determined on the stock exchange by normal bid and offer method
or
such sahre is offered for sale in terms of an offer made under the Securities and Exchange Board of India (Substantial Acquistion of Shares and Takeovers) regulations, 1997.
(Notification No.F.E.R.A.195/99-RB dated 30th March 1999)
Permission for issue of units of Mutual Fund to NRIs/OCBs with repatriation/non-repatriation basis
In pursuance of clause (a) and clause (d) of sub-section (1) of Section 19 read with clause (a) of sub-section (1) of Section 9 of the Foreign Exchange Regulation Act, 1973 (46 of 1973), the Reserve Bank is pleased to permit, Mutual Funds as referred to in Clause (23D) of Section 10 of Income-tax Act 1961
(a) to issue, to non-residents of Indian nationality or origin (NRIs) or Overseas Corporate Bodies (OCBs) Units or similar other instruments of Schemes approved by Securities and Exchange Board of India subject to conditions in paragraph 2;
(b) to send such units/instruments out of India to their place of residence or location as the case may be and
(c) to make payment to non-resident investor, on repurchase of units or other instruments subject to conditions in paragraph 3.
2. The general permission granted herein to issue units is subject to the following conditions:
(a) the Mutual Fund complies with terms and conditions stipulated by Securities and Exchange Board of India;
(b) In respect of investment made on repatriation basis, the amount representing the investment is received by inward remittance through normal banking channels or by debit to NRE/FCNR account of the non-resident investor maintained with an authorised dealer in India;
(c) in respect of investment made on non-repatriation basis, the amount representing the investment is received by inward remittance through normal banking channel or by debit to the NRE/FCNR/NRO/NRSR account of the non-resident investor maintained with an authorised dealer in India.
3. The general permission granted herein to repurchase units is subject to the following conditions:
(a) where the investment is made on repatriation basis, the amount representing the dividend/interest and maturity proceeds may be remitted through normal banking channel or credited to NRE/FCNR/NRO/NRSR account of the non-resident investor;
(b) where the investment is made by remittance from abroad through normal banking channels or by debit to NRE/FCNR/NRO account of the non-resident investor on non-repatriation basis the interest/dividend and maturity proceeds may be credited to the NRO/NRSR account of the non-resident investor; and,
(c) where the investment is made by debit to NRSR account of the non-resident investor the dividend/interest and maturity proceeds shall be credited to NRSR account of the non-resident investor.
Explanation:
I. A person (not being a citizen of Pakistan or Bangladesh or Sri Lanka) shall be deemed to be of Indian Origin, if
i) he, at any time, held Indian passport;
or
ii) he or either of his parents or any of his grandparents was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955);
or
iii) that person is the spouse of an Indian citizen or of a person of Indian origin (not being a citizen of Pakistan or Bangladesh or Sri Lanka).
II. " Overseas Corporate Body" means any overseas company, partnership firm, society and other corporate body predominantly owned directly or indirectly to the extent of atleast sixty percent by NRIs and includes overseas trust in which not less than sixty percent beneficial interest is held by NRIs, directly/indirectly but irrevocably.
(Notification No. F.E.R.A.197/99-RB dated 30th March 1999)
Permission for issue of shares to NRIs/OCBs on repatriation basis by Air-Taxi Operating Company In pursuance of clause (a) and clause (d) of sub-section (1) of Section 19 read with clause (b) of sub-section (1) of Section 29 of the Foreign Exchange Regulation Act, 1973 (46 of 1973), the Reserve Bank is pleased to permit a company incorporated in India holding a valid Air Taxi Operators Permit granted by the Competent Authority specified by the Government of India from time to time to issue shares or convertible debentures to the extent of 100% of its paid-up capital and subject to the conditions mentioned in paragraph 2, to non-residents of Indian nationality or origin (NRIs) or Overseas Corporate Bodies (OCBs) and to send such shares out of India to their place of residence or location, as the case may be.
2. The general permission granted herein to issue shares and or convertible debentures is subject to following conditions:
(i) the company complies with the conditions of permit granted by the competent authority for carrying on Air-Taxi operations in India and any directions/instructions issued by it from time to time;
(ii) in the case of issue of shares by an existing listed company, the price for the issue is worked out according to SEBI guidelines and is duly certified by the Companys statutory auditors; and i the case of any other company, calculation of fair value of shares (as per erstwhile CCI guidelines) is made by an independent Chartered Accountant;
(iii) payment for the shares issued to NRIs/OCBs is received by remittance from abroad through normal banking channels or by transfer of funds held in the investors NRE/FCNR Account maintained with an authorised dealer in India.
(iv) approval, wherever necessary, from any authority, statutory or otherwise, is obtained by the company.
(v) the issuer company files with the Regional Office of Reserve Bank, not later than thirty days from the date of receipt of remittance, a report containing the following -
(a) Name of the non-resident investor;
(b) Country of residence or incorporation of the non-resident investor;
(c) Date of receipt of remittance and its rupee equivalent;
(d) Name and address of the authorised dealer in India through whom the remittance is received.
(vi) The issuer company files with Regional Office of Reserve Bank, not later than thirty days from the date of issue of shares/debentures, the following -
(a) One copy of Form ISD(R) duly completed.
(b) Original Foreign Inward Remittance Certificate (FIRC) /Bank Certificate evidencing receipt of funds, from abroad or from the NRE/FCNR account, as the case may be, of the NRI/OCB.
(c) Memorandum and Articles of Association of the issuer company.
(d) Original certificate from the Chartered Accountant containing particulars of shares issued, date of issue, number of shares issued and the issue price.
(e) Certified copy of Statutory Auditors Certificate or the Chartered Accountants calculation referred to in (ii) above.
(f) Certificate in Form OAC/OAC1 indicating that NRI shareholding of atleast 60% either directly or indirectly in case of investment by OCB.
(g) Such other particulars and documents as may be required by or specified by Reserve Bank from time to time.
(h) An undertaking that the issuer company is not and shall not be engaged in agricultural/plantation activity, real estate business or as a Nidhi company.
Explanation :
I. A person (not being a citizen of Pakistan or Bangladesh or Sri Lanka) shall be deemed to be of Indian Origin, if -
i) he, at any time, held Indian passport;
or
ii) he or either of his parents or any of his grandparents was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955);
or
iii) that person is the spouse of an Indian citizen or of a person of Indian origin (not being a citizen of Pakistan or Bangladesh or Sri Lanka).
II. "Overseas Corporate Body" means any overseas company, partnership firm, society and other corporate body predominantly owned directly or indirectly to the extent of atleast sixty percent by NRIs and includes overseas trust in which not less than sixty percent beneficial interest is held by NRIs, directly/indirectly but irrevocably.
(Notification No. F.E.R.A.206 /99-RB dated 31st July 1999)
General Permission to Non Residents for Acquisition/Purchase of shares from other Non-Residents In exercise of powers conferred by clause (b) of sub-section (1) of Section 29 and sub-section 4 of Section 19 of the Foreign Exchange Regulation Act, 1973 (46 of 1973), the Reserve Bank of India hereby permits
- (a)
- (i) Non-Residents to acquire shares of companies incorporated in India from other Non-Residents (other than Overseas Corporate Bodies predominantly owned by Non-Resident Indians/Persons of Indian Origin, Non-Resident Indians and Persons of Indian Origin) by way of sale/transfer provided the transferor/seller had acquired the shares under general/special permission of Reserve Bank
(ii) Non-Resident Indians and Persons of Indian Origin and Overseas Corporate Bodies predominantly owned by Non-Resident Indians/Persons of Indian Origin to acquire shares of companies incorporated in India from other Non-Resident Indians, Persons of Indian Origin or Overseas Corporate Bodies predominantly owned by Non-Resident Indians/ Persons of Indian Origin by way of sale/transfer provided the transferor had acquired the shares under general or special permission of Reserve Bank provided that the rights of the transferee/purchaser in respect of shares so acquired, shall be subject to same restrictions and conditions as were applicable to the transferor/seller of the shares.(b) Companies incorporated in India and/or a depository defined in clause (2) of sub-section 1 of Section 2 of Depository Act, 1996 to enter in their register or books in which securities are registered or inscribed an address outside India of a holder of any securities consequent upon acquisition of such securities by non-resident under this notification.
(b) Companies incorporated in India and/or a depository defined in clause (2) of sub-section 1 of Section 2 of Depository Act, 1996 to enter in their register or books in which securities are registered or inscribed an address outside India of a holder of any securities consequent upon acquisition of such securities by non-resident under this notification.
(Notification No. F.E.R.A.207/99-RB dated 31st July 1999)
Permission for Sale/Transfer of shares from subscribers of the Memorandum and Articles of Association of 100% owned subsidiaries of Foreign Firms/Companies etc. to parent foreign companies or their nominees In pursuance of powers conferred by clause (b) of sub-section (1) of Section 29 and the clause (b) of sub-section (4) of Section 19 of the Foreign Exchange Regulation Act 1973 (46 of 1973), the Reserve Bank of India hereby permits a) a person resident outside India or a Company incorporated outside India to acquire shares from the shareholders who had acquired such shares as signatories to Memorandum and Articles of Association provided
(i) The Indian company whose shares are so acquired is permitted to become a 100% owned subsidiary of the Foreign Firm/Company or is allowed to be entirely held by persons resident outside India (i.e. either Government approval for acquisition of 100% shares has been granted or there exists a general permission to have foreign investment upto 100% under the Automatic Route).
(ii) The total number of shares so acquired does not exceed 500 and the face value of shares to be transferred is less than 0.1% (one tenth of one per cent) of the paid-up capital of company. b) the company whose shares are so released and/or a depository defined in clause (2) of sub-section 1 of Section 2 of the Depository Act, 1996 to enter in its register or books in which securities are registered or inscribed, an address outside India of the non-resident holder of shares.
(Notification No.F.E.R.A.208/99-RB dated 31st July 1999)
General Permission to Indian companies to issue Rights/Bonus shares to Non-Residents In exercise of the powers conferred by clause (a) and clause (d) of sub-section 1 of Section 19 and clause (b) of sub-section 1 of Section 29 of FERA, 1973, (46 of 1973), Reserve Bank of India, hereby permits Indian Companies to issue rights/bonus shares to Non-Residents and to send such shares out of India and such persons to acquire such shares, subject to the following conditions :
1) the issue of right/bonus shares does not bring any change in the percentage of foreign equity already approved.
2) the existing shares on which the right/bonus shares are proposed to be issued are held by the Non-Resident holders with the Reserve Banks permission under Section 29 of the FERA, 1973, and where the shares were issued under the General Permission of the Reserve Bank, the Indian Company had made the requisite report to RBI in Form FC (Reserve Bank of India), ISD/ISD (R) as the case may be.
3) the shares are not issued to the Non-Residents at a price lower than that offered to the resident shareholders.
4) the rights/bonus shares are subject to the same restrictions with regard to repatriability and other conditions as the original shares.
- 5)
- (a) in case of foreign nationals and companies incorporated outside India, the consideration is received by way of Foreign Inward remittance,
(b) in case the original investment was made by NRIs/Persons of Indian Origin/OCBs on repatriation basis, the funds are received through normal banking channels by way of Inward Remittance or by debit to the FCNR/NRE account of the NRI/PIO/OCB,
(c) in case the original investment was made by NRIs/Persons of Indian Origin/OCBs on non-repatriation basis, the funds are received through normal banking channels by way of Inward Remittance or by debit to the FCNR/NRE/NRO/NRSR account of the NRI/PIO/OCB. 6. the original project cost as approved by FIPB was up to Rs.600 crores.
Provided however, that issue of right/bonus shares resulting into increase in the percentage of foreign equity as also issue of shares by companies whose original cost was more than Rs.600 crores shall continue to require prior approval by FIPB/Government of India, as per the existing procedure.
(Notification No.F.E.R.A. 212 /99-RB dated 18th October 1999)
In pursuance of clause(a) and clause(d) of sub-section (1) of Section 19 read with clause (a) of sub-section (1) of Section 9 of the Foreign Exchange Regulation Act, 1973 ( 46 of 1973), the Reserve Bank is pleased to permit a Mutual Fund as referred to in Clause (23D) of Section 10 of Income-tax Act 1961. to issue, units or similar instruments under Schemes approved by Securities and Exchange Board of India to Foreign Institutional Investors(FIIs) subject to para 2 below. to send such units/instruments out of India to their global custodians. to repurchase units or other instruments issued to FIIs and make payment therefor, subject to para 3 below.
2. The general permission granted herein to issue units is subject to the following conditions:- the Mutual Fund complies with terms and conditions stipulated by Securities and Exchange Board of India;
The amount representing the investment is received by debit to the Special Non-Resident Rupee Account of the FII maintained with a designated bank, approved by the Bank.
3. The general permission granted herein to repurchase units is subject to the condition that the amount representing dividend/interest and maturity proceeds are credited to Special Non-Resident Rupee Account.
Explanation: Foreign Institutional Investor means an institution established or incorporated outside India and registered with SEBI which proposes to make investment in India in securities, as defined in SEBI(FII) Regulations 1995.
(Notification No. F.E.R.A.213 /99-RB dated 1st November 1999)
Investment in Non-Convertible Debentures(NCDs).
In pursuance of clause (a) and clause(d) of sub-section (1) of Section 19 read with clause (b) of sub-section (1) of Section 29 of the Foreign Exchange Regulation Act, 1973 (46 of 1973), the Reserve Bank is pleased to permit a company incorporated in India to issue, by way of public isssue, Non-Convertible Debentures (NCDs) to non-residents of Indian nationality or origin(NRIs) or Overseas Corporate Bodies(OCBs), on repatriation basis as well as on non-repatriation basis, and to send such NCDs out of India to their place of residence or location , as the case may be.
2. The General permission granted herein to issue NCDs is subject to the following conditions:-
i) The payment for the NCDs issued to NRIs/OCBs on repatriation basis should be received by remittance from abroad through normal banking channels or by transfer of funds held in the investors NRE/FCNR accounts maintained with an authorised dealer in India. Further, the percentage of such NCDs issued to NRIs/OCBs to the total paid-up value of each series of NCDs issued should not exceeed the ceiling applicable for issue of equity shares/convertible debentures as prescribed by the Reserve Bank from time to time, under the respective schemes viz. 24%/ 51%/100% etc. for investment by NRIs/OCBs on repatriation basis in the capital of the issuer company.
ii) The payment for the NCDs issued to NRIs/OCBs on non-repatriation basis should be received by remittance from abroad through normal banking channels or by transfer of funds held in the investors NRE/FCNR/NRO/NRSR accounts maintained with an authorised dealer in India.In such cases the amount of capital invested will not be allowed to be repatriated outside India. If the investment in NCDs is made out of funds held in NRSR accounts, the interest on such NCDs will also not be repatriable outside India.
iii) The rate of interest on such NCDs shall not exceed SBI prime lending rate plus 300 basis points as on the date of resolution in the companys General Body Meeting approving the issue. iv) The minimum period for redemption of such NCDs should be three years.
v) The company raising funds through NCDs should not carry on agricultural/plantation/real estate business/Trading in Transferable Development Rights (TDRs) or should not act as Nidhi/ Chit Fund company.
vi) The issuer company files with the Regional Office of Reserve Bank, not later than 30 days from the date of receipt of remittance, a report containing the following:-
(a) Name of the non-resident investor;
(b) Country of residence or incorporation of the non-resident investor;
(c) Date of receipt of remittance and its rupee equivalent;
(d) Name and address of the authorised dealer in India through whom the remittance is received.
vii) The issuer company files with Regional Office of Reserve Bank, not later than thirty days from the date of issue of NCDs, the following:
(a) A list containing names of NRIs/OCBs and the number and face value of NCDs issued to each of them on repatriation /non-repatriation basis.
(b) Certified true copy of resolution passed in the meeting of the Board of Directors of the company, indicating the quantum and value of NCDs issued to NRIs/OCBs and residents and other details of the issue such as coupon rate and redemption date.
(c) Original Foreign Inward Remittance Certificate(FIRC)/Bank Certificate evidencing receipt of funds, from abroad or from the NRE/FCNR/NRO/NRSR account, as the case may be, of the NRI/OCB. (d) Memorandum and Articles of Association of the issuer company.
(e) In the case of investment by OCBs, a certificate in Form OAC/OAC1 showing that it is an OCB within the meaning of Explanation II of this Notification.
(f) An undertaking that the issuer company is not and shall not be engaged in any of the prohibited activities specified in condition 2(v) above.
(g) Any other information sought by the Reserve Bank with reference to the issue of NCDs within such time as may be stipulated.
Explanation:-
I. A person ( not being a citizen of Pakistan or Bangladesh or Sri Lanka) shall be deemed to be of "Indian Origin", if:-
i) he, at any time, held Indian passport;
or
ii) he or either of his parents or any of his grandparents was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955)
or
iii) that person is the spouse of an Indian citizen or of a person of Indian origin( not being a citizen of Pakistan or Bangladesh or Sri Lanka)
II. "Overseas Corporate Body" means any overseas company, partnership firm, society and other corporate body predominantly owned directly or indirectly to the extent of atleast sixty percent by NRIs and includes overseas trust in which not less than sixty percent beneficial interest is irrevocably held by NRIs, either directly or indirectly.
III. " Transferable Development Rights" (TDRs) are certificates issued in respect of category of land acquired for public purpose either by Central or State Government in consideration of surrender of land by the owner without monetary compensation, which are transferable in part or whole."
SECTION 24
(Notification No. F.E.R.A.165/95-RB dated 28th April 1995)
Settlement or Gift of Foreign Exchange held in India/Abroad in certain cases
In pursuance of the powers conferred by Section 24 of the Foreign Exchange Regulation Act, 1973 (46 of 1973), and in supersession of its
notification No.FERA.119/92-RB dated 7th September 1992, the Reserve Bank hereby directs that the prohibition imposed by that Section shall not apply to making of any settlement or gift of, -
(i) any foreign exchange held in India in accordance with any scheme approved by the Reserve Bank in this behalf or any property held outside India and income thereon if such foreign exchange or property as the case may be, was acquired by a person
(a) otherwise than in contravention of the said Act while he was resident outside India; or
(b) through employment, business or vocation outside India taken up or commenced while such person was resident outside India.
Provided that in either case, such a person has been resident outside India for a continuous period of not less than one year.
(ii) any property held outside India and income thereon if,-
(a) the property was acquired before 8th July, 1947 and such property and/or the income arising or accruing thereon is held by any person in pursuance of permission granted to him by the Reserve Bank: or
(b) the property including any income thereon was acquired and held by a person resident in India by way of gift, or inheritance from any person referred to in clause (i) or in sub-clause (a) of this clause.
Provided that in the case of property acquired by way of gift, the receipient of gift is a relative of the person making such gift and any tax in respect of the gift has been paid in India.
Explanation : For the purpose of this clause, "relative" means husband, wife, brother or sister or any lineal ascendant or descendant of that individual.
SECTION 25
(Notification No. F.E.R.A.120/92-RB dated 7th September 1992 as amended up to 28th April 1995)
Acquisition of Immovable Property Abroad by Residents in certain cases
In pursuance of sub-section (1) of Section 25 of the Foreign Exchange Regulation Act, 1973 (46 of 1973), the Reserve Bank is pleased to direct that the prohibition imposed by that sub-section shall not apply to
(i) the acquisition outside India of immovable property out of foreign exchange held in India, in accordance with any schemes approved by the Reserve Bank in this behalf or outside India and income thereon, if such foreign exchange was acquired by a person -
(a) otherwise than in contravention of the said Act, while he was resident outside India;
or
(b) through employment business or vocation outside India, taken up or commenced while such person was resident outside India.
Provided that in either case, such a person has been resident outside India for a continuous period of not less than one year.
(2) immovable property outside India acquired on or before 8th July, 1947 and continued to be held with the permission of the Reserve Bank,
(3) immovable property referred to in clause (1) or (2) above where acquired by a person resident in India by way of gift or inheritance from a person referred to in clause (1) or clause (2) hereinabove.
Provided in case of gift the person resident in India receiving such gift is a relative of the person referred to in clause (1) or clause (2) above and any tax in respect of the gift has been paid in India.
Explanation : For the purpose of this clause "relative" in relation to an individual means husband, wife, brother or sister or any lineal ascendant or descendant of that individual.
SECTION 26
(Notification No. F.E.R.A.132/93-RB dated 26th April 1993)
Guarantees to or on behalf of Non-residents
In pursuance of Section 26 of the Foreign Exchange Regulation Act, 1973 (46 of 1973) and in supersession of its
Notifications Nos. F.E.R.A.16/74-RB dated 11th January 1974 and F.E.R.A.35/76-RB dated 10th April 1976, the Reserve Bank is pleased to permit -
(a) an authorised dealer, subject to such instructions as may be issued by Reserve Bank from time to time -
(i) to give a guarantee in favour of a person resident in India in respect of any debt or other obligation or liability of a person resident outside India;
(ii) to give a bid bond or performance bond or a guarantee (including those in lieu of earnest money) in favour of an overseas buyer on account of exports from India;
(b) a firm or company in India to give a guarantee to an Income-tax Officer or any other authority under the Income-tax Act, 1961 (43 of 1961) in respect of taxes due by a national of a foreign state in the employ of the firm or company;
(c) a shipping agent, subject to such instructions as may be issued from time to time, to give, in respect of any debt or other obligation or liability of his foreign shipping principals, guarantee in favour of any officer or other authority appointed or constituted under -
(i) the Income-tax Act, 1961 (43 of 1961),
(ii) the Customs Act, 1962 (52 of 1962),
(iii) the Major Port Trusts Act, 1963 (38 of 1963),
or
(iv) any other Central or State Act.
(Notification No.F.E.R.A. 181/98-RB dated January 31, 1998)
Permission for issue of corporate Guarantees by Project Exporters
In pursuance of the powers conferred by Section 26 of the Foreign Exchange Regulation Act,1973 (46 of 1973), the Reserve Bank is pleased to permit exporters who have obtained pre-bid or post-bid letters of approval from the Exim Bank on behalf of the Working Group on Project Exports or the Exim Bank or an Authorised Dealer within their delegated powers, to issue corporate guarantees for performance or for availing of fund based and/or non-fund based facilities from banks/financial institutions abroad in connection with projects being executed abroad as approved in the letter of approval provided -
(a) the approval is in respect of export of engineering goods on deferred payment terms or execution of turn-key projects/civil construction contracts abroad or for the export of consultancy, technical or other services abroad;
(b) the terms and conditions specified in the letter of approval and any directions that may be given from time to time by the Reserve Bank are strictly complied with by the exporter;
(c) within 15 days of the issue of corporate guarantee, the exporter submits to the concerned Regional Office of the Reserve Bank, a statement containing full particulars of such corporate guarantee.
SECTION 29
(Notification No. F.E.R.A.22/74-RB dated 11th October 1974)
Carrying on activities in India by Foreign Shipping Companies through Local Agents
G.S.R. 1159 In pursuance of sub-section (1) of Section 29 of the Foreign Exchange Regulation Act, 1973 (46 of 1973), the Reserve Bank is pleased to grant general permission to shipping companies which are not incorporated in India and which do not have a branch, office or other place of business in India, to carry on in India through their local agents and subject to the other provisions of the said Act and of any rules, directions or orders made thereunder, their normal commercial activities like transportation of goods and passengers, and collection of freight charges and fares.
(Notification No.FERA.202/99-RB dated April 15, 1999)
RESERVE BANK OF INDIA
EXCHANGE CONTROL DEPARTMENT
CENTRAL OFFICE
MUMBAI-400 001.
(Notification No.FERA.202/99-RB dated April 15, 1999)
Carrying on Activities in India by Foreign Airline Companies through Local Agents
In Pursuance of Clause (a) of Sub-Section (1) of Section 29 of the Foreign Exchange Regulation Act, 1973 (46 of 1973), the Reserve Bank is pleased to grant general permission to airline companies which are not incorporated in India and which do not have a branch, office or other place of business in India, to carry on in India through their local agents subject to the other provisions of the said Act and of any rules, directions or orders made thereunder, their normal commercial activities like transportation of goods and passengers, and collection of freight charges and fares for online and offline operations.Provided that
1. In respect of online operations, permission from the Director General of Civil Aviation has been obtained;
2. In case of offline operations, a bilateral air-service agreement exists between the Government of India and the Government of the country of incorporation of the foreign airline company.
Khizer Ahmed
Executive Director
(Notification No. F.E.R.A.113/92-RB dated 27th April 1992 amended up to 26th April 1993)
Permission for Investment in Proprietary/Partnership Concerns in India to NRIs on Non-repatriation basis
In pursuance of sub-section (1) of Section (9) read with sub-section (1) of Section 29 of the Foreign Exchange Regulation Act, 1973 (46 of 1973), the Reserve Bank hereby permits -
(a) Non-residents of Indian nationality or origin (NRIs) to invest on non-repatriation basis by way of capital contribution in any proprietary or partnership concern in India engaged in any industrial, commercial or trading activity and such NRIs and Indian concerns to carry on the above mentioned activities in India.
(b) A proprietary or partnership concern in India to place to the credit of or make payment to or for the credit of any NRI any sum invested by such NRI in that proprietary or partnership concern or the income accruing to such person by way of profit on his investments.
Provided that -
(1) the amount invested is received from NRI investor either by remittances from abroad through normal banking channels or by transfer of funds held in investors NRE/FCNR/NRO account maintained with banks authorised to deal in foreign exchange in India or authorised co-operative/commercial banks in India. A declaration in the specified form giving the particulars of the amount invested by NRIs is filed by the NRI, proprietary or partnership concern with the Reserve Bank within a period of ninety days from the date of receipt of the investment,
(2) the proprietary or partnership concern or the NRI is not engaged in India in any agricultural/ plantation activity or real estate business i.e. dealing in land and immovable property with a view to earning profit or earning income therefrom,
(3) the amount invested and the income accruing on such investment is not eligible for repatriation to any place outside India and is payable only in non-repatriable Indian rupees. All such payments as and when made are credited to an ordinary non-resident rupee account of the NRI investor maintained with any bank authorised to deal in foreign exchange in India.
Explanation:
A person (not being a citizen of Pakistan or Bangladesh), shall be deemed to be of Indian origin, if -
(i) he, at any time, held Indian passport;
or
(ii) he or either of his parents or any of his grandparents was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955);
or
(iii) that person is the spouse of an Indian citizen or of a person of Indian origin (not being a citizen of Pakistan or Bangladesh).
(Notification No. F.E.R.A..146/93-RB dated 26th April 1993)
General Permission to Foreign Nationals of Indian Origin permanently resident in India
In pursuance of sub-section (1) of Section 28 and sub-section (1) of Section 29 of the Foreign Exchange Regulation Act, 1973 (46 of 1973) and in supersession of its
Notification No. F.E.R.A.124/92-RB dated 15th October 1992, the Reserve Bank directs that none of the prohibitions imposed by the said sub-sections shall apply to a foreign citizen of Indian origin permanently resident in India.
Explanation :
I. A person (not being a citizen of Pakistan or Bangladesh), shall be deemed to be of Indian origin, if -
(i) he, at any time, held Indian passport;
or
(ii) he or either of his parents or any of his grandparents was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955);
or
(iii) that person is the spouse of an Indian citizen or of a person of Indian origin (not being a citizen of Pakistan or Bangladesh).
II. A foreign citizen of Indian origin is treated as not permanently resident in India if he is residing in India for employment of a specified duration (irrespective of the length thereof) or for a specific job or assignment the duration of which does not exceed three years.
(Notification No. F.E.R.A.155/93-RB dated 16th September 1993)
Letting out of Immovable Property in India
In pursuance of sub-section (1) of Section 29 of the Foreign Exchange Regulation Act,1973 (46 of 1973) and in supersession of its
Notification No. F.E.R.A.99/92-RB dated 8th January 1992, the Reserve Bank is pleased to permit the letting out of any immovable property (commercial/residential) by an Indian citizen resident outside India or a foreign citizen of Indian origin who holds such property in India, subject to the following conditions, namely :
a) that the rental income and the proceeds of any investment out of such income shall not be repatriable outside India,
and
b) the rental income shall be credited into his Non-resident (Ordinary) Rupee Account maintained with a bank in India.
Explanation :
For the purpose of this Notification, a foreign citizen shall be deemed to be of Indian origin if Ä
(i) he held an Indian passport at any time;
or
(ii) he or his father or grandfather was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955).
Provided that the citizens of Pakistan, Bangladesh, Afghanistan, Bhutan, Nepal and Sri Lanka shall be deemed to be not of Indian origin.
(Notification No.F.E.R.A.159/94-RB dated 5th October 1994)
General Permission to NRIs/OCBs to purchase shares of Public Sector Enterprises (PSEs)
In pursuance of sub-section (1) of Section 29 and sub-section (4) of Section 19 of the Foreign Exchange Regulation Act, 1973 (46 of 1973), the Reserve Bank hereby permits-
(1) a non-resident of Indian nationality or origin (NRI) and Overseas Corporate Body (OCB) to purchase on repatriation basis,
(2) the Public Sector Enterprise to enter in its register or books, in which securities are registered or inscribed, an address outside India of a holder of any shares, consequent on his purchase of, a share of Public Sector Enterprise (PSE) sold by way of disinvestment by the Central Government, subject to the conditions, that :-
(a) the holding of shares by a NRI or by an OCB, at any time does not exceed one per cent of the paid up capital of the Public Sector Enterprise concerned;
(b) the purchase consideration/bid money is received by way of remittance from abroad through normal banking channels or by transfer of funds held in investors NRE/FCNR account maintained with banks authorised to deal in foreign exchange in India or with authorised co-operative/commercial banks in India;
(c) the application is submitted along with deposit of bid money/purchase consideration at the branch of State Bank of India designated by the Central Government for that purpose in the notice inviting the bids.
Explanations:
For the purpose of this Notification -
I. A person (not being a citizen of Pakistan or Bangladesh), shall be deemed to be of `Indian Origin, if -
(i) he, at any time, held Indian passport;
or
(ii) he or either of his parents or any of his grandparents was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955);
or
(iii) that person is the spouse of an Indian citizen or of a person of Indian origin (not being a citizen of Pakistan or Bangladesh).
II. A "public sector enterprise" means "a public sector company" as defined in sub-section (36A) of Section 2 of the Income-Tax Act, 1961.
III. `Overseas Corporate Body means any overseas company, partnership firm, society and other corporate body predominantly owned directly or indirectly to the extent of atleast 60 per cent by NRIs and includes any overseas trust in which not less than sixty percent beneficial interest is held by NRIs, directly/indirectly but irrevocably.
SECTION 31
(Notification No. F.E.R.A.133/93-RB dated 26th April 1993)
Acquisition or Holding of Immovable Property for Carrying on Activity Permitted by Reserve Bank
In pursuance of sub-section (1) of Section 31 of the Foreign Exchange Regulation Act, 1973 (46 of 1973) and in supersession of its
Notifications No. F.E.R.A.2/74-RB dated 1st January 1974 and No. F.E.R.A.67/86-RB dated 28th November 1986, the Reserve Bank is pleased to permit a company (other than a banking company) which is not incorporated under any law in force in India;
(a) to acquire or hold any immovable property situated in India, provided that
(i) such acquisition or holding of immovable property is necessary for or incidental to carrying on by such company of any activity permitted under Section 28 or Section 29 of the said Act;
and
(ii) such company files a declaration with the Reserve Bank not later than ninety days from the date of such acquisition or holding in such form as may be specified.
(b) to transfer, by way of security for any borrowing, any such immovable property so acquired or held.
Provided that the permission granted hereby shall not be available to a company which has been permitted under Section 29 to open a liaison office or to post a representative in India.
(Notification No. F.E.R.A.152/93-RB dated 26th May 1993 as amended upto 30th March 1999 vide Notification No.F.E.R.A.201/99-RB dated 30th March 1999)
Acquisition, Holding, etc. of Immovable Property in India by Foreign Citizens of Indian origin
In pursuance of sub-section (1) of Section 31 of the Foreign Exchange Regulation Act, 1973 (46 of 1973) and in supersession of its
notification No. F.E.R.A.100/92-RB dated 8th January 1992, the Reserve Bank is pleased to grant general permission to foreign citizens of Indian origin, to acquire by way of purchase or inheritance and dispose of by way of sale any immovable property, not being agricultural land/farm house/plantation property, situate in India, and to acquire by way of gift and dispose of by way of sale or gift any residential property situate in India, subject to the following conditions :
- 1.
- (a) In the case of purchase the entire consideration is paid out of foreign exchange brought into India through normal banking channel or out of the funds held in Non-Resident External (NRE) Rupee or Foreign Currency Non-Resident (FCNR) account maintained by the purchaser in India. Purchase of residential property is, however, permissible only for bona fide residential purpose of the purchaser, and it shall not be let out except where it is not immediately required for that purpose.
(b) In the case of acquisition by way of gift -
(i) it is effected between relatives;
(ii) it does not exceed two residential properties in the case of persons resident outside India;
and
(iii) gift tax liability, if any, is duly discharged.
(ba) In the case of disposal by way of gift -
(i) it is effected between rerlatives; or
(ii) it is effected in favour of a charitable trust;
(iii) provisions of any other law, as applicable, are duly complied with.
(c) The person acquiring such property submits to the Chief General Manager, Exchange Control Department, Foreign Investment Division (III), Reserve Bank of India, Central Office, Mumbai, within a period of 90 days from the date of such acquisition, a declaration in the specified form together with a true copy of the conveyance deed and a certificate from the concerned bank in India, indicating the particulars about payment of consideration amount.
2. The entire income by way of rent or the interest on the investment of sale proceeds and the entire sale proceeds of the immovable property, acquired under this notification, shall be credited to the Non-Resident Ordinary (NRO) Rupee account maintained in India.
3. Repatriation of sale proceeds -
(a) Repatriation of sale proceeds of any immovable property acquired in accordance with this notification is permissible with the prior approval of Reserve Bank -
(i) if such sale takes place after three years from the date of acquisition or from the date of payment of final instalment of consideration amount, whichever is later;
and
(ii) to the extent of consideration amount equivalent in foreign exchange paid for acquisition of the immovable property sold;Provided that in the case of sale of residential properties, amount repatriable shall not exceed the sum of the consideration amount equivalent in foreign exchange paid for acquisition of not more than two residential properties sold.
(b) Any person, seeking repatriation of permissible portion of sale proceeds of any such immovable property, may apply to the Chief General Manager, Exchange Control Department, Foreign Investment Division (III), Reserve Bank of India, Central Office, Mumbai in the form specified, at the earliest.
Explanations :
A. A person (not being a citizen of Pakistan or Bangladesh or Afghanistan or Bhutan or Sri Lanka or Nepal) shall be deemed to be of Indian origin, if -
(i) he, at any time, held an Indian passport;
or
(ii) he, or his father or grandfather was a citizen of India by virtue of the Constitution of India or Citizenship Act, 1955 (57 of 1955).
B. The word "relative" shall have the meaning as given under Section 6 of the Companies Act, 1956 (1 of 1956).
C. "Chairtable Trust" means a trust created or an institution established for charitable purposes and duly registered under the laws in India.