Reserve Bank of India
Foreign Exchange Department
Central Office
Mumbai- 400 001
Notification No. FEMA. 242/2012-RB
Dated October 19, 2012
Foreign Exchange Management (Transfer or Issue of
Security by a Person Resident Outside India) (Sixth Amendment) Regulations, 2012
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) (hereinafter referred to as 'the principal Regulations'), 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) (Sixth Amendment)
Regulations, 2012.
(ii) Save as otherwise provided in these Regulations as to the coming into force
of any particular provision, the provisions of these Regulations shall come into
force from the date of publication of this notification.
2. Amendment to Regulation 2
In the principal Regulations, in Regulation 2, after clause (viii), the
following new clause shall be inserted and shall be deemed to have been inserted
with effect from the 9th day of August 2011, namely;
“(viiia) ‘Qualified Foreign Investor’ (QFI) means
(a) during the period from 9th day of August, 2011 to 15th day of July, 2012,
a person who satisfied the following criteria at the relevant time,
- resident of a country, that is compliant with the Financial Action Task Force
(FATF) standards and is a signatory to the IOSCO’s Multilateral Memorandum of
Understanding (MMoU); and
- satisfied the KYC requirements stipulated by SEBI
Provided that such a person is not registered with SEBI as a Foreign
Institutional Investor (FII) or Foreign Venture Capital Investor (FVCI).
(b) With effect from 16th day of July, 2012, a person who satisfies the
following criteria at the relevant time:
(i) Resident in a country that is a member of FATF or a member of a group which
is a member of FATF; and
(ii) Resident in a country that is a signatory to IOSCO’s MMoU (and referred to
as Appendix A Signatories therein) or a signatory of a bilateral MoU with SEBI
Provided that the person is not resident in a country listed in the public
statements issued by FATF from time to time on jurisdictions having strategic
AML/CFT deficiencies to which counter measures apply or that have not made
sufficient progress in addressing the deficiencies or have not committed to an
action plan developed with the FATF to address the deficiencies;
Provided that such person is not resident in India;
Provided further that such person is not registered with SEBI as a FII or
Sub-Account of an FII or FVCI.
Explanation – For the purposes of this clause :
- “bilateral MoU with SEBI” shall mean a bilateral MoU between SEBI and the
overseas regulator that, inter alia, provides for information sharing
arrangements.
- Member of FATF shall not mean an associate member of FATF.”
3. Amendment to Regulation 5
In the principal Regulations, in Regulation 5,
(i) In sub-regulation (4), after the words “or a Foreign Central Bank”, the
words ‘or a QFI or any other person resident outside India included in Schedule
5' shall be inserted and shall be deemed to have been inserted with effect from
the 9th day of August 2011.
(ii) after sub-regulation (7), the following shall be inserted and shall be
deemed to have been inserted with effect from the 13th day of January, 2012,
namely :
“(7A) A QFI may purchase equity shares of an Indian company subject to the terms
and conditions specified in Schedule 8.”
(iii) after sub-regulation(7A), the following shall be inserted, namely:
“Explanation : For the purposes of sub-regulations (1) to (7) above, no class of
investor referred to in those sub-regulations shall make investment, directly or
indirectly, in any security, issued by an Indian company which is engaged or
proposes to engage in any of the activities in which foreign investment is
prohibited under sub-regulation (b) of Regulation 4 of the Foreign Exchange
Management (Permissible Capital Account Transactions) Regulations, 2000, as
amended from time to time”.
4. Amendment to Regulation 10.
In principal Regulation, in Regulation 10,
(1) in the heading, for the opening words ‘Prior permission', the word
“Permission” shall be substituted and shall be deemed to have been substituted,
with effect from 4th day of November 2011.
(2). in sub-regulation A, for clauses (b) and (c), the following shall be
substituted and shall be deemed to have been substituted with effect from the
4th day of November, 2011, namely:
“b) any shares or convertible debentures of an Indian company under the Foreign
Direct Investment Scheme, whose activities fall under Annex B to Schedule 1,
shall, subject to sectoral limits specified therein, transfer such shares or
convertible debentures without prior approval of the Reserve Bank if the same is
by way of sale, subject to the following:
(i) that the parties concerned adhere to the pricing guidelines, documentation
and reporting requirements for such transfers, stipulated by the Reserve Bank
from time to time.
(ii) where the transfer of shares or convertible debentures requires the prior
approval of the Foreign Investment Promotion Board (FIPB) as per the extant
Foreign Direct Investment (FDI) policy:
(a) the requisite approval of the FIPB has been obtained; and
(b) the transfer of shares or convertible debentures adheres with the pricing
guidelines and documentation, reporting requirements as stipulated by the
Reserve Bank from time to time.
(iii) where SEBI (Substantial Acquisition of Shares and Takeovers) Regulations,
1997 are attracted, the pricing guidelines and documentation, reporting
requirements as stipulated by SEBI are complied with.
Provided howsoever that in case the SEBI guidelines as aforesaid are not
complied with, for the purposes of this Regulation, compliance with pricing
guidelines, reporting and documentation requirements as stipulated by RBI shall
be sufficient.
(iv) where the pricing guidelines under the Foreign Exchange Management Act,
(FEMA) 1999 are not complied with -
(a) The resultant FDI is in compliance with the requirements of Schedule 1,
other than pricing guidelines; and
(b) The pricing for the transaction is compliant with the applicable SEBI
Regulations/guidelines; and
(c) Chartered Accountants Certificate to the effect that compliance with the
applicable SEBI regulations / guidelines as indicated above is attached to the
form FC-TRS to be filed with the AD bank.
(v) where the investee company is in the financial services sector
(a) No Objection Certificates (NOCs) are obtained from the respective financial
sector regulators/ regulators of the investee company as well as transferor and
transferee entities and such NOCs are filed along with the form FC-TRS with the
AD bank; and
(b) The requirements of Schedule 1 are complied with.
EXPLANATION : For the purpose of this Regulation, “financial services”, shall
mean service rendered by banking and non-banking companies regulated by the
Reserve Bank, insurance companies regulated by Insurance Regulatory and
Development Authority (IRDA), pension funds regulated by the Pension Fund
Regulatory and Development Authority, other companies regulated by any other
financial regulator and such other services as may be directed by Reserve Bank
from time to time,
“(c) any shares or convertible debentures by way of sale, shall make an
application to the Reserve Bank for its approval if
(i) the transfer is to take place at a price which is not in conformity with the
pricing guidelines stipulated by either the Reserve Bank or the SEBI , or
(ii) it is not covered by clause (b) above.”
(3) in sub-regulation A, after clause (c) the following shall be inserted and
shall be deemed to have been inserted with effect from the 22nd day of April
2009, namely :
“(d) any shares or convertible debentures by way of sale, shall make an
application to the Reserve Bank for its approval if the non-resident acquirer
proposes deferment of payment of the amount of consideration”.
(4) in sub-regulation B, after clause (2), the following shall be inserted and
shall be deemed to have been inserted with effect from 4th day of November 2011,
namely:
“(3) Where pricing guidelines under the Foreign Exchange Management Act (FEMA),
1999 are not complied with, a person resident outside India, may transfer shares
or convertible debentures of an Indian Company, by way of sale, to a person
resident in India, without the prior permission of the Reserve Bank , subject to
the following
(a) The original and resultant investment are in conformity with the
requirements of Schedule 1, other than pricing guidelines; and
(b) The pricing for the transaction is compliant with the applicable SEBI
regulations / guidelines; and
(c) Chartered Accountants Certificate to the effect that compliance with the
applicable SEBI regulations / guidelines as indicated above is attached to the
form FC-TRS to be filed with the AD bank.”
5. Amendment to Regulation 12
In the principal Regulations, in Regulation 12, after sub-regulation (ii), the
following shall be inserted, and shall be deemed to have been inserted with
effect from the 2nd day of May 2011, namely:
“(iii) Any person being a non resident investor of a company registered in India
(resident investee company) may pledge the shares or convertible debentures of
that company to a bank in India to secure the credit facilities being extended
to that company for bonafide purposes, subject to the AD bank satisfying itself
of the compliance of the conditions stipulated by the Reserve Bank, from time to
time, in this regard.
(iv) Any person being a non resident investor of a company registered in India
(resident investee company) may pledge the shares or convertible debentures of
that company to an overseas bank to secure the credit facilities being extended
to the non resident investor or non resident promoter of the resident investee
company or its overseas group company subject to the AD bank satisfying itself
of the compliance of the conditions stipulated by the Reserve Bank from time to
time in this regard."
6. Amendment to Schedule 1
In the principal Regulations, in Schedule 1,
(I) in paragraph 3, in clause (d) the words ‘including second-hand machinery’
shall be substituted by the words ‘excluding second-hand machinery’ and shall be
deemed to have been substituted with effect from the 10th day of April 2012.
(II) after paragraph 5, the following shall be inserted and shall be deemed to
have been inserted with effect from 26th day of September 2012, namely:
“ 5B. Notwithstanding anything contained in paragraph 5 above, where shares in
an Indian company are issued to a person resident outside India in compliance
with the provisions of the Companies Act, 1956, by way of subscription to
Memorandum of Association, such investments may be made at face value subject to
eligibility to invest under this Schedule.”
(III) in paragraph 8,
(a) after clause (ii), the following shall be inserted and shall be deemed to
have been inserted with effect from the 2nd day of May 2011, namely:
“(iii) by debit to a non-interest bearing Escrow account (in Indian Rupees)
maintained in India with an AD bank in accordance with Foreign Exchange
Management ( Deposit ) Regulations, 2000.”
(b) in the Explanation, after the words “ as given else where in the Schedule”,
the words“ import payables of capital goods by units in Special Economic Zones”.
shall be inserted and shall be deemed to have been inserted with effect from the
1st day of April, 2003.
(c) in the First Proviso, for the words “ debit to NRE/FCNR(B) account” the
words “debit to NRE / FCNR (B) /Escrow account” shall be substituted and shall
be deemed to have been substituted with effect from the 2nd day of May, 2011.
(IV) In paragraph 9,
(a) for sub-paragraph (1) the following shall be substituted and shall be deemed
to have been substituted with effect from the 30th day of May 2008, namely:
“Reporting of issuance of shares of Indian company:
9 (1) An Indian company issuing shares or convertible debentures in accordance
with these Regulations shall submit through AD bank to the Regional Office
concerned of the Reserve Bank under whose jurisdiction the Registered office of
the company operates,
(A) not later than 30 days from the date of receipt of the amount of
consideration received by Indian company for issue of shares and convertible
debentures, a report in form specified in Annex C to this Schedule along with a
copy/ies of Foreign Inward Remittance Certificate/s (FIRC), Know Your Customer
(KYC) report on the non resident investor and details of the Government
approval, if any.
(B) not later than 30 days from the date of issue of shares, a report in form
FC-GPR together with,
(i) a certificate from the Company Secretary of the company accepting investment
from persons resident outside India certifying that
- all the requirements of the Companies Act, 1956 have been complied with;
- terms and conditions of the Government approval, if any, have been complied
with;
- the company is eligible to issue shares under these Regulations; and
- the company has all original certificates issued by authorised dealers in India
evidencing receipt of amount of consideration in accordance with paragraph 8 of
this Schedule;
(ii) a certificate from SEBI registered Merchant Banker or Chartered Accountant
indicating the manner of arriving at the price of the shares issued to the
persons resident outside India.
[Provided that, in addition to above, the company shall report the conversion of
ECB into equity, in ECB-2 Return of the respective month in case of full
conversion of ECB. In case of partial conversion of ECB, the converted portion
shall be reported in form FC-GPR to the Regional Office concerned of Reserve
Bank and non-converted portion in Form ECB-2].
(b) after sub-paragraph (1), the following shall be inserted and shall be deemed
to have been inserted with effect from the 15th day of March 2011.
“(2) All Indian companies which have received Foreign Direct Investment in the
previous year(s) including the current year shall submit to the Reserve Bank of
India, on or before the 15th day of July of each year, a report titled “Annual
Return on Foreign Liabilities and Assets” in the form specified in Annex E to
this Schedule.
(3) Reserve Bank may, by notification, modify from time to time, the format of
report titled “Annual Return on Foreign Liabilities and Assets” specified in
Annex E to this Schedule.
(V). after paragraph 9, the following shall be inserted and shall be deemed to
have been inserted with effect from the 22nd day of April 2009, namely:
"Reporting of transfer of shares of Indian company:
10.(i) In case of transfer of shares or convertible debentures of an Indian
company by way of sale from a person resident in India to a person resident
outside India or vice versa, the transferor/transferee, resident in India, shall
submit to the AD bank a report in the form FC-TRS specified in Annex F to this
Schedule, within 60 days from the date of receipt or payment of the amount of
consideration. The onus of submission of the form FC-TRS within the specified
time shall be on the transferor / transferee, resident in India.
(ii) Reserve Bank may, by notification, modify from time to time the Form FC-TRS
specified in Annex F to this Schedule.
(iii) The IBD/FED/nodal branch of the AD bank shall submit a consolidated
monthly statement in respect of all such transactions reported by its branches,
to the Reserve Bank in the form and manner stipulated by Reserve Bank, Foreign
Exchange Department, Central Office, from time to time.
(iv) The sale consideration in respect of shares or convertible debentures
remitted into India through normal banking channels, shall be subjected to a KYC
check by the remittance receiving AD bank at the time of receipt of funds. In
case, the remittance receiving AD bank is different from the AD bank handling
the transfer transaction, the KYC check shall be carried out by the remittance
receiving bank and the KYC report shall be submitted by the customer to the AD
bank for carrying out the transaction along with the form FC-TRS.
(v) In case prior approval of the Reserve Bank is granted for transfer of shares
or convertible debentures, from a resident to the non-resident on deferred
payment of consideration, the same shall be reported in form FC-TRS, duly
certified by the AD bank, within 60 days from the date of receipt of the full
and final amount of consideration.”
(VI) The existing paragraph 10 shall be renumbered as paragraph 11.
(VII) For the existing Annex A, “Annex A” hereto shall be substituted and shall
be deemed to have been substituted with effect from the 20th day of September,
2012.
(VIII) For the existing Annex B, “Annex B” hereto shall be substituted with
effect from the date of this notification unless a different date is indicated
for the coming into force of any item therein.
(IX) For the existing Annex C, “Annex C” hereto shall be substituted.
(X) For the existing Annex D , “Annex D” hereto shall be substituted and shall
be deemed to have been substituted with effect from the 15th day of March 2011.
(XI) After Annex D, “Annex E” hereto shall be inserted and shall be deemed to
have been inserted with effect from the 15th day of March 2011.
7. Amendment to Schedule 2
In the principal Regulations, in Schedule 2,
(i) in paragraph 1, in sub-paragraph 5, in the proviso, for clause (b), the
following shall be substituted and shall be deemed to have been substituted with
effect from the 21st day of April 2010, namely:-
“(b) in case of issue by private placement, the price is not less than the price
arrived in terms of SEBI guidelines or not less than the fair price worked out
as per the Discounted Cash Flow method duly certified by a SEBI registered
Merchant Banker or Chartered Accountant, as applicable.”
(ii) in paragraph 2, after clause (iii), the following shall be inserted,
namely:
“(iv) The Foreign Currency Account and the Special Non-Resident Rupee account of
the registered FII shall be a non-interest bearing account/s.”
8. Amendment to Schedule 5
In the principal Regulations, in Schedule 5,
(i).In paragraph 1, the following shall be substituted , namely:
“Permission to Foreign Institutional Investors for purchase of securities.
(1) A registered Foreign Institutional Investor (FII) may purchase, on
repatriation basis, either directly from the issuer of such securities or
through a registered stock broker on a recognized Stock Exchange in India the
following securities, subject to the terms and conditions as specified by the
SEBI and the Reserve Bank from time to time:
(a) dated Government securities/treasury bills;
(b) listed non-convertible debentures/bonds issued by an Indian company;
(c) commercial papers issued by an Indian company;
(d) units of domestic mutual funds;
(e) Security Receipts issued by Asset Reconstruction Companies provided that the
total holding by a single FII in each tranche of scheme of Security Receipts
shall not exceed 10 per cent of the issue and the total holdings of all FIIs put
together shall not exceed 49 per cent of the paid up value of each tranche of
scheme of Security Receipts issued by the Asset Reconstruction Companies;
(f) Perpetual Debt instruments eligible for inclusion as Tier I capital and Debt
capital instruments as upper Tier II capital issued by banks in India to augment
their capital (Tier I capital and Tier II capital as defined by Reserve Bank,
and modified from time to time) provided that the investment by all FIIs in
Perpetual Debt instruments (Tier I) shall not exceed an aggregate ceiling of 49
per cent of each issue, and investment by individual FII shall not exceed the
limit of 10 per cent of each issue. The investment by FIIs in Debt capital
instruments (Tier II) shall be within the limits stipulated by SEBI for FII
investment in corporate debt;
(g) with effect from April 29, 2011 listed and unlisted non-convertible
debentures/bonds issued by an Indian company in the infrastructure sector, where
‘infrastructure’ is defined in terms of the extant ECB guidelines, subject to
residual maturity and lock-in period as stipulated by Reserve Bank from time to
time. ;
(h) with effect from November 3, 2011 non-convertible debentures/bonds issued by
Non-Banking Finance Companies categorized as ‘Infrastructure Finance
Companies’(IFCs) by the Reserve Bank, subject to residual maturity and lock-in
period as stipulated by the SEBI and the Reserve Bank from time to time
(i) with effect from November 22, 2011, Rupee denominated bonds/units issued by
Infrastructure Debt Funds subject to lock-in period and residual maturity as
stipulated by the Reserve Bank and SEBI from time to time, provided that the
FIIs may trade such bonds/ units amongst the eligible non-resident investors for
Infrastructure Debt Funds within the lock-in period;
(j) with effect from March 1, 2012, primary issues of non-convertible debentures
/ bonds provided such non-convertible debentures / bonds are committed to be
listed within 15 days of such investment. In the event of such non-convertible
debentures / bonds issued not being listed within 15 days of issuance, for any
reason, then the FII shall immediately dispose of those non-convertible
debentures / bonds either by way of sale to a third party or to the issuer and
the terms of offer to FIIs should contain a clause that the issuer of such debt
securities shall immediately redeem / buyback those securities from the FIIs in
such an eventuality.
Provided that FIIs may offer such securities as permitted by the Reserve Bank
from time to time as collateral to the recognized Stock Exchanges in India for
their transactions in exchange traded derivative contracts as specified in
sub-Regulation 6 of Regulation 5.”
(ii) in paragraph 2, in sub-paragraph 1(A), after clause (iii), the following
shall be inserted and shall be deemed to have been inserted with effect from the
22nd day of November 2011, namely,
“(iv) bonds/units issued by Infrastructure Debt Funds, subject to lock-in period
and residual maturity as stipulated by the Reserve Bank and SEBI from time to
time, provided that a Non Resident Indian may trade such bonds/ units amongst
the eligible non-resident investors for Infrastructure Debt Funds within the
lock-in period.”
(iii) after paragraph 1, the following shall be inserted and shall be deemed to
have been inserted with effect from the 9th day of August 2011, namely:
“ Permission for Qualified Foreign Investors for purchase of securities
1A (i) A QFI may purchase on repatriation basis, subject to the terms and
conditions stipulated by the SEBI and the Reserve Bank in this regard from time
to time in the following rupee denominated units of :
(a) equity schemes of SEBI registered domestic mutual funds,
(b) debt scheme of SEBI registered domestic mutual funds which invest in
infrastructure,
(c) any scheme of SEBI registered domestic mutual funds that hold at least 25
per cent of their assets (either in debt or equity or both) in infrastructure.
For the purpose of sub-clauses (b) and (c) above, ‘infrastructure’ shall mean
infrastructure as defined in terms of the ECB guidelines.
(ii) A QFI may purchase securities referred to in sub-clauses (a) to (c) above
under the following routes, subject to the terms and conditions stipulated by
SEBI and Reserve Bank in this regard, from time to time:
- Direct Route- SEBI registered Qualified Depository Participant (QDP) route;
- Indirect Route – Unit Confirmation Receipt (UCR) route.”
(iv) in Paragraph 1A, after clause (ii), the following shall be inserted and
shall be deemed to have been inserted with effect from the 16th day of July
2012.
“(iii) A QFI may:
(a) purchase, on repatriation basis through SEBI registered Qualified Depository
Participants (QDPs) (defined as per the extant SEBI regulations), listed
non-convertible debentures, listed bonds of Indian companies and listed units of
Mutual Fund Debt Schemes directly from the issuer or through a registered stock
broker on a recognized stock exchange in India and sell through a registered
stock broker on a recognized stock exchange in India or by way of buyback or
redemption by the issuer;
(b) invest in primary issues of non-convertible debentures / bonds provided such
non-convertible debentures / bonds are committed to be listed within 15 days of
such investment. In the event of such non-convertible debentures / bonds issued
to the QFI not being listed within 15 days of issuance to the QFI for any
reason, then the QFI shall immediately dispose of these non-convertible
debentures / bonds either by way of sale to a third party or to the issuer and
the terms of offer to QFI should contain a clause that the issuer of such debt
securities shall immediately redeem / buyback the said securities from the QFIs
in such an eventuality.”
(v) in paragraph 1A, after clause (iii), the following shall be inserted and
shall be deemed to have been inserted with effect from the 9th day of August
2011.
“(iv) A QFI which purchases securities under this Regulation shall open a single
demat account with a Qualified Depository Participant in India.”
(vi) after paragraph 1A, the following shall be inserted and shall be deemed to
have been inserted with effect from the 22nd day of November 2011”
"Permission to Other Non Resident investors for purchase of securities
1B (i) Long term investors like Sovereign Wealth Funds (SWFs), Multilateral
Agencies, Endowment Funds, Insurance Funds, Pension Funds and High Networth
Individuals which are registered with SEBI as eligible non-resident investors in
Infrastructure Debt Funds may purchase on repatriation basis Rupee denominated
bonds/ units issued by Infrastructure Debt Funds subject to lock-in period and
residual maturity as stipulated by the Reserve Bank and SEBI from time to time
provided that aforementioned investors may trade such bonds/ units amongst the
eligible non-resident investors for Infrastructure Debt Funds within the lock-in
period”.
(vii) in paragraph 1B, after clause (i), the following shall be inserted and
shall be deemed to have been inserted with effect from the 25th day of June
2012.
"(ii) Long term investors like Sovereign Wealth Funds (SWFs), Multilateral
Agencies, Endowment Funds, Insurance Funds, Pension Funds and Foreign Central
Banks registered with SEBI may purchase, on repatriation basis, dated Government
securities, subject to the terms and conditions as stipulated by the SEBI and
the Reserve Bank from time to time”.
(viii) in paragraph 3, after sub-paragraph (4), the following shall be inserted
and shall be deemed to have been inserted with effect from the 9th day of August
2011, namely:
“(5) A QFIwho purchases securities under this Schedule (other than by way of
Indirect Route) shall make payment out of funds held in a single non-interest
bearing Rupee Account maintained with an AD bank in terms of the Foreign
Exchange Management (Deposit) Regulations, 2000, as amended from time to time”.
9. Amendment to Schedule 6
In the principal Regulations, in Schedule 6, in paragraph1, at the end of
sub-paragraph (2), the following shall be added and shall be deemed to have been
added with effect from the19th day of March 2012, namely:
"The registered FVCI may invest in the eligible securities (equity, equity
linked instruments, debt, debt instruments, debentures of an IVCU or VCF, units
of schemes / funds set up by a VCF) by way of private arrangement / purchase
from a third party, subject to the terms and conditions stipulated by the
Reserve Bank from time to time. The registered FVCI may invest in securities on
a recognized stock exchange subject to the provisions of the SEBI (FVCI)
Regulations, 2000, as amended from time to time, as well as the terms and
conditions stipulated therein.”
10. Amendment to Schedule 7
In the principal Regulations, in Schedule 7, in paragraph 2, for clause (b), the
following shall be substituted and shall be deemed to have been substituted with
effect from the 28th day of August, 2012.
“(b) Limited two way fungibility of IDRs shall be permissible subject to the
terms and conditions stipulated by Reserve Bank in this regard from time to
time.
(Rudra Narayan Kar)
Chief General Manager
Foot Note:
@(i) It is clarified that no person will be adversely affected as a result of
the retrospective effect being given to these regulations, since all the
directions were issued through A.P. (DIR Series) Circulars on the different
dates indicated as effective dates in this Notification.
(ii) 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:
G.S.R.No. 158(E) dated 02.03.2001
G.S.R.No. 175(E) dated 13.03.2001
G.S.R.No. 182(E) dated 14.03.2001
G.S.R.No. 4(E) dated 02.01.2002
G.S.R.No. 574(E) dated 19.08.2002
G.S.R.No. 223(E) dated 18.03.2003
G.S.R.No. 225(E) dated 18.03.2003
G.S.R.No. 558(E) dated 22.07.2003
G.S.R.No. 835(E) dated 23.10.2003
G.S.R.No. 899(E) dated 22.11.2003
G.S.R.No. 12(E) dated 07.01.2004
G.S.R.No. 278(E) dated 23.04.2004
G.S.R.No. 454(E) dated 16.07.2004
G.S.R.No. 625(E) dated 21.09.2004
G.S.R.No. 799(E) dated 08.12.2004
G.S.R.No. 201(E) dated 01.04.2005
G.S.R.No. 202(E) dated 01.04.2005
G.S.R.No. 504(E) dated 25.07.2005
G.S.R.No. 505(E) dated 25.07.2005
G.S.R.No. 513(E) dated 29.07.2005
G.S.R.No. 738(E) dated 22.12.2005
G.S.R.No. 29(E) dated 19.01.2006
G.S.R.No. 413(E) dated 11.07.2006
G.S.R.No. 712(E) dated 14.11.2007
G.S.R.No. 713(E) dated 14.11.2007
G.S.R.No. 737(E) dated 29.11.2007
G.S.R.No. 575(E) dated 05.08.2008
G.S.R.No. 896(E) dated 30.12.2008
G.S.R.No. 851(E) dated 01.12.2009
G.S.R.No. 341 (E) dated 21.04.2010
G.S.R.No.______ dated _________
G..S.R.No.606(E) dated 03.08.2012
G.S.R.No.______ dated _________
G.S.R.No.______ dated _________ and
G.S.R.No.______ dated _________.
Schedule 8
[See Regulation 5 (7A)]
Scheme for Investment by Qualified Foreign Investors in equity shares
1. Eligible Investors:
The Schedule shall be applicable to Qualified Foreign Investors (QFIs) as
defined in these regulations.
2. Eligible instruments and eligible transactions –
(a). Purchase: QFIs shall be permitted to invest through SEBI registered
Qualified Depository Participants (QDPs)-
(i) in equity shares of listed Indian companies through SEBI registered stock
brokers on recognized stock exchanges in India.
(ii) in equity shares of Indian companies which are offered to public in India
in terms of the relevant and applicable SEBI guidelines/regulations.
(iii) equity shares by way of rights shares, bonus shares or equity shares on
account of stock split / consolidation or equity shares on account of
amalgamation, demerger or such corporate actions.
(b) Sale : QFIs shall be allowed to sell the equity shares so acquired by way of
sale
(i). Through recognized brokers on recognized stock exchanges in India; or
(ii). In an open offer in accordance with the SEBI (Substantial Acquisition of
Shares and Takeovers) Regulations, 2011; or
(iii). In an open offer in accordance with the SEBI (Delisting of Securities)
Guidelines, 2009; or
(iv). Through buyback of shares by a listed Indian company in accordance with
the SEBI (Buyback) Regulations, 1998.
3. Pricing – The pricing of all eligible transactions and investment in all
eligible instruments by QFIs under this scheme shall be in accordance with the
relevant and applicable SEBI guidelines only.
4. Mode of payment / repatriation – For QFI investments under this scheme open a
single non-interest bearing Rupee Account with an AD Category- I bank in India,
for the limited purpose of routing the receipt and payment for transactions
relating to purchase and sale of equity shares of listed Indian companies
subject to the following conditions :
(a). The account shall be funded by inward remittance through normal banking
channel and by credit of the sale/redemption/buyback proceeds (net of taxes) and
on account of interest payment / dividend on the eligible securities for QFIs.
(b). The funds in this account shall be utilized for purchase of eligible
securities for QFIs or for remittance (net of taxes) outside India.
(c). The QDP will operate such non-interest bearing Rupee Accounts on behalf of
the QFIs and at the instructions of the QFIs.
5. Demat accounts - QFIs would be allowed to open a dedicated demat account with
a QDP in India for investment in equity shares under the scheme. It is clarified
that each QFI shall maintain a single demat account with a QDP for all
investments in eligible securities for QFIs in India.
6. Limits and its monitoring:
The individual and aggregate investment limits for the QFIs shall be 5 per cent
and 10 per cent 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.
The onus of monitoring and compliance of these limits shall remain jointly and
severally with the respective QFIs, DPs and the respective Indian companies
(receiving such investment)
7. Other conditions
(i) Eligibility – QFI would have to meet eligibility criteria as prescribed by
SEBI from time to time.
(ii) Know Your Customer (KYC) - QDPs will ensure KYC of the QFIs as per the
norms prescribed by SEBI. AD Category-I banks will also ensure KYC of the QFIs
for opening and maintenance of the single non- interest bearing Rupee accounts
as per the extant norms.
(iii) Permissible currencies - QFIs will remit foreign inward remittance through
normal banking channel in any permitted currency (freely convertible) directly
into the single non-interest bearing Rupee account of the QFI maintained with an
AD Category-I bank.
8. Reporting – In addition to the reporting to SEBI as may be prescribed by
them, QDPs and AD Category-I banks (maintaining QFI accounts) will also ensure
reporting to the Reserve Bank of India in a manner and format as prescribed by
the Reserve Bank of India from time to time