Академический Документы
Профессиональный Документы
Культура Документы
Regulatory Framework
Regulatory Framework
Section 6(3) Notification No. FEMA 20/2000-RB dated May 3, 2000, as amended from time to time
Master Circular. No.1/2009-10 dated July 01, 2009
Press notes
Definitions
Definitions
A Person is defined under FEMA as an individual a Hindu Undivided Family a company a firm an association of persons or body of individuals, whether incorporated or not every artificial juridical person, not falling within any of the preceding sub-clauses and any agency, office or branch owned or controlled by such person.
5
Definitions (contd..)
Person resident in India means (i) a person residing in India for more than one hundred and eighty-two days during the course of the preceding financial year but does not include
(A) a person who has gone out of India or who stays outside India, in either case (a) for or on taking up employment outside India, or (b) for carrying on outside India a business or vocation outside India, or (c) for any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period; (B) a person who has come to or stays in India, in either case, otherwise than (a) for or on taking up employment in India, or (b) for carrying on in India a business or vocation in India, or (c) for any other purpose, in such circumstances as would indicate his intention 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;
person resident outside India means a person who is not resident in India
6
FDI Policy announced by the Government of India. Provisions of the Foreign Exchange Management Act (FEMA), 1999. Reserve Bank - Notification No. FEMA 20 /2000-RB dated May 3, 2000.
10
Route Route
approval require from Government of India or Reserve Bank of India for the investments. approval of the Government of India, Ministry of Finance, Foreign Investment Promotion Board (FIPB) is required for the investments.
Government
Prior
* subject to sector specific investment limits as mentioned in the Master Circular dated 1st July, 2009.
11
Business of chit fund, or Nidhi company, or Real estate business, or construction of farm houses, or Trading in Transferable Development Rights (TDRs). (a) Retail Trading (except single brand product retailing) Atomic Energy Lottery Business Gambling and Betting Activities / sectors not opened to private sector investment Agriculture (excluding Floriculture, Horticulture, Development of seeds, Animal Husbandry, Pisciculture and cultivation of vegetables, mushrooms, etc. under controlled conditions and services related to agro and allied sectors) and Plantations (other than Tea Plantations)
12
Eligibility for Investment in India: a person resident outside India (other than a citizen of Pakistan) entity incorporated outside India (other than an entity incorporated in Pakistan) a citizen of Bangladesh or entity incorporated in Bangladesh (subject to prior approval of FIPB) Overseas Corporate Body (OCB)
13
Type of Instruments: Equity Shares Fully and Compulsory Convertible Debentures Fully and Compulsory Convertible Preference Shares Issue of other types of preference shares such as partially or optionally or non convertible, can be issued subject to pricing guidelines applicable for ECB
14
15
16
17
Investment in ARC
Person resident outside India other than FII can invest in equity of ARCs registered with RBI only under Government Route. FDI is restricted to 49% of paid up capital of the ARC.
18
19
ceiling of 49 per cent for Foreign Investment, with a FDI limit of 26 per cent and an FII limit of 23 per cent of the paid up capital; FDI will be allowed with specific prior approval of FIPB; and FII can invest only through purchases in the secondary market.
20
21
FDI will be allowed with specific prior approval of FIPB and RBI; Investment by SEBI Registered FIIs is permitted only through purchases in the secondary market to an extent of 24 per cent. No FII can individually hold directly or indirectly more than 10 per cent of the equity. 22
23
FDI will be allowed with specific prior approval of FIPB ; The FII purchases in equity of Commodity Exchanges are restricted to the secondary markets only. Investment is also subject to compliance with the regulations issued, in this regard, by the Forward Market Commission.
24
25
26
27
Indian Companies are allowed to issue Right shares and Bonus shares to existing non-resident shareholders subject to adherence of sectoral cap. Issue to be in accordance other applicable acts. Price of right shares offered to non-resident shareholders shall not be lower than price at which shares are offered to resident shareholders. Existing non-resident shareholders are allowed to apply for issue of additional shares / convertible debentures / preference shares over and above their rights share entitlements subject to the condition that the overall issue of shares to nonresidents in the total paid-up capital of the company does not exceed the sectoral cap.
28
29
the percentage of shareholding of persons resident outside India in the transferee or new company does not exceed the sectoral cap, and the transferor company or the transferee or the new company is not engaged in activities which are prohibited under the FDI policy
30
31
The scheme has been drawn in terms of relevant regulations issued by the SEBI, and
The face value of the shares to be allotted under the scheme to the nonresident employees does not exceed 5 per cent of the paid-up capital of the issuing company. Details of such issues has to be reported to RBI within 30 days from the date of issue of shares.
32
Reporting of FDI
33
Reporting of FDI
Reporting of Inflow: An Indian company receiving investment from outside India should report the details of amount received through an Authorised Dealer I category bank, not later than 30 days from the date of receipt.
34
shares/debentures have to be issued within 180 days from the date of receipt of the inward remittance. In case the shares/debentures are not issued within the stipulated time frame, the entire consideration received should be refunded immediately.
35
The Indian company has to file Form FCGPR not later than 30 days from the date of issue of shares.
Part A of the Form has to be signed by Managing Director/Director/Secretary of the Company and should be submitted to authorised dealer alongwith certificate from Company Secretary and Chartered Accountant. Part B of the Form should be filed on annual basis by the Indian company before July 31.
36
37
39
41
Transfer of shares of companies engaged in sectors falling under the Government Route. Transfer of shares resulting in foreign investments in the Indian company, breaching the sectoral cap applicable.
42
43
Where NRIs are permitted to acquire shares/debentures of Indian companies or units of domestic Mutual Funds through the stock exchange (s) in India.
44
By Whom?
FIIs
(Foreign Institutional Investors)
NRIs
(Non Residential Indians)
OCBs
(Overseas Corporate Bodies)
45
INVESTMENTS BY FIIs
46
Shareholding limits
Total shareholding of each FII < 10% of paid-up capital Aggregate shareholding of all FIIs < 24% of paid-up capital > 24 % of paid-up capital - by Board Resolution followed by special resolution
47
Prohibition on Investments in equity shares issued by Asset Reconstruction Company. Chit Fund Nidhi Company Agricultural or plantation activities or Real estate business, or construction of farm houses Trading in Transferable Development Rights (TDRs).
48
49
SEBI Registered FIIs are allowed to trade in all exchange traded derivative contracts approved by RBI/SEBI on recognised stock exchanges FIIs are allowed to offer foreign sovereign securities with AAA rating as collateral to the recognised stock exchanges in India for their transactions in derivatives segment
SEBI approved clearing corporations of stock exchanges and their clearing members are allowed to undertake the following transactions: to open and maintain demat accounts with foreign depositories to remit the proceeds arising from corporate action to liquidate such foreign sovereign securities
clearing corporations have to report, on monthly basis, the balances of foreign sovereign securities to the RBI
50
FIIs can open a foreign currency denominated account and/ or special Non- Resident Rupee Account for the purpose of investment
They can transfer sums from the foreign currency account to Rupee Account for making genuine investments in securities at the prevailing market rate
The Special Non- Resident Rupee Account may be credited with the proceeds of the transactions. The banks shall confirm from the investee company/FII concerned that the tax at source, wherever necessary, has been deducted The Special Non-Resident Rupee Account may be debited for payment of fees to applicant FIIs
51
SEBI registered FIIs are permitted to purchase shares/convertible debetures of an indian company through offer/ private placement, subject to the ceilings prescribed, i.e.,
Individual FII/sub-account 10 % and All FIIs/sub-accounts put together 24 % of the paid up capital
Provided that : - In the case of public offer, the price of shares to be issued is not less than the price at which the shares are issued to the residents; and - In the case of private placement, the price is not less than the price arrived at in terms of SEBI guidelines
52
53
INVESTMENTS BY NRIs
54
NRIs are allowed to invest in shares of listed Indian companies in recognised stock exchanges under the PIS route Limits Total shareholding of each NRI < 5% of paid-up capital Aggregate shareholding of all NRIs < 10% of paid-up capital can be increased to 24 % of paid-up capital - by Board Resolution followed by special resolution
55
Contd
The NRI investor has to take delivery of the shares purchased and give delivery of shares sold. Short selling is not permitted Payment for purchase of securities on repatriation basis has to be made by way of inward remittance of foreign exchange through normal banking channels or out of funds held in NRE/ FCNR (B) account maintained in India
If the shares are purchased on non-repatriation basis, the NRIs can utilise their funds in NRO account in addition to the above
56
Contd
The bank shall report to RBI on daily basis PIS transactions undertaken by it
Shares purchased by NRIs on the stock exchange under PIS cannot be transferred by way of sale under private under arrangement by way of gift
Exceptions :
- by NRIs to their relatives as defined in section 6 of Companies Act, 1956 or - to a charitable trust duly registered under the laws in India, and - to a person resident in India or outside India with prior approval of RBI
NRIs are allowed to invest in exchange traded derivative contracts approved by SEBI from time to time out of Rupee Funds held in India on non-repatriation basis
57
58
With effect from November 29, 2001, OCBs are not permitted to invest under the PIS in India further, the OCBs which have already made investments under the PIS are allowed to continue holding such shares/convertible debentures till such time these are sold on the stock exchanges OCBs have been de-recognised as a class of investor in India with effect from September 16, 2003
59
60
SEBI registered Foreign Venture Capital Investor (FVCI) with specific approval from RBI under FEMA regulations can invest in
- in Indian Venture Capital Undertaking (IVCI) - in Indian Venture Capital Fund (IVCF) - in a scheme floated by such IVCFs subject to the condition that the VCF should should also be registered with SEBI
61
FCVIs can purchase equity/equity linked instruments/debt/debt instruments, debentures of an IVCU or a VCF through - Initial Public Offer or - Private Placement
contd..
The purchase/sale of shares, debentures and units can be at a price that is mutually acceptable to the buyer and seller
Banks can offer forward cover to FVCIs to the extend of total inward remittance.
62
63
By FIIs
64
Inward remittance can be through normal banking channels/funds held in NRE/FCNR/NRO account Sale proceeds will not be repatriated abroad
65
Repatriation basis
Securities includes shares/convertible debentures, government dated securities, Treasury bills, units of domestic mutual funds without any limit Purchase is in accordance with terms and conditions stipulated in notice inviting bids
66
FIIs can buy securities on repatriation basis from issuer companies or through registered stock broker on recognised stock exchange. Purchases are subject to limits notified by SEBI and RBI from time to time
67