RESERVE BANK OF INDIA
FOREIGN EXCHANGE DEPARTMENT
CENTRAL OFFICE
MUMBAI-400 001
Notification No. FEMA. 355/2015-RB
November 16, 2015
Foreign Exchange Management (Transfer or Issue of Security by a Person
Resident outside India) (Eleventh Amendment) Regulations, 2015
In exercise of the powers conferred by clause (b) of sub-section (3) of Section
6 and Section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999), the
Reserve Bank of India hereby makes the following amendments in the Foreign
Exchange Management (Transfer or Issue of Security by a Person Resident outside
India) Regulations, 2000 (Notification No.FEMA 20/2000-RB dated 3rd May 2000)
namely:-
1. Short Title & Commencement:-
(i) These Regulations may be called the Foreign Exchange Management (Transfer or
Issue of Security by a Person Resident Outside India) (Eleventh Amendment)
Regulations, 2015.
(ii) They shall come into force from the date of publication in the official
Gazette.
2. Amendment to Regulations:-
A. Amendment to Regulation 2
(i) After the existing sub-regulation (ii f) the following shall be added
namely:-
“(ii g) ‘Investment Vehicle’ shall mean an entity registered and regulated under
relevant regulations framed by SEBI or any other authority designated for the
purpose and shall include Real Estate Investment Trusts (REITs) governed by the
SEBI (REITs) Regulations, 2014, Infrastructure Investment Trusts (InvIts)
governed by the SEBI (InvIts) Regulations, 2014 and Alternative Investment Funds
(AIFs) governed by the SEBI (AIFs) Regulations, 2012.”
(ii) After the existing sub-regulation (xi), the following shall be added
namely:-
“(xi A) ‘Unit’ shall mean beneficial interest of an investor in the Investment
Vehicle and shall include shares or partnership interests.”
B. Amendment to Regulation 5
In the principal Regulations, in Regulation 5, after the existing sub-regulation
(9), the following shall be added, namely:-
“(10) A person resident outside India (other than an individual who is citizen
of or any other entity which is registered / incorporated in Pakistan or
Bangladesh), including an Registered Foreign Portfolio Investor (RFPI) or a
non-resident Indian (NRI) may acquire, purchase, hold, sell or transfer units of
an Investment Vehicle, in the manner and subject to the terms and conditions
specified in Schedule 11.”
C. Amendment to Regulation 9
In the principal Regulations, in Regulation 9, for the words,
“shares or convertible debentures or warrants," and "shares or convertible
debentures or warrants of an Indian company”, wherever they appear,
the words, “shares or convertible debentures or warrants of an Indian company or
units of an Investment Vehicle” shall be substituted.
Provided that the words “shares or convertible debentures or warrants of an
Indian company or units of an Investment Vehicle” shall not be substituted in
the qualification clause of Regulation 9(1) beginning with “Further” and ending
with “subject to lock-in period requirement”.
D. Amendment to Regulation 12
In the principal Regulations, in Regulation 12, after the existing
sub-regulation (v), the following shall be added, namely:
“(vi) Any person who is a non-resident and holds units of an Investment Vehicle
in accordance with these Regulations, may pledge such units to secure credit
facilities being extended to the non-resident investor.”
E. Addition of a new Schedule
After the existing Schedule 10, the following shall be added
Schedule 11
[See Regulation 5(10)]
Investment by a person resident outside India in an Investment Vehicle
- A person resident outside India including an RFPI and an NRI may invest in
units of Investment Vehicles subject to the conditions laid down in this
Schedule.
- The payment for the units of an Investment Vehicle acquired by a person
resident or registered / incorporated outside India shall be made by an inward
remittance through the normal banking channel including by debit to an NRE or an
FCNR account.
- A person resident outside India who has acquired or purchased units in
accordance with this Schedule may sell or transfer in any manner or redeem the
units as per regulations framed by SEBI or directions issued by RBI.
- Downstream investment by an Investment Vehicle shall be regarded as foreign
investment if neither the Sponsor nor the Manager nor the Investment Manager is
Indian ‘owned and controlled’ as defined in Regulation 14 of the principal
Regulations.
Provided that for sponsors or managers or investment managers organized in a
form other than companies, SEBI shall determine whether the sponsor or manager
or investment manager is foreign owned and controlled.
Explanation 1: Ownership and control is clearly determined as per the extant FDI
policy. AIF is a pooled investment vehicle. ‘Control’ of the AIF should be in
the hands of ‘sponsors’ and ‘mangers/investment managers’, with the general
exclusion of others. In case the ‘sponsors’ and ‘managers/investment managers’
of the AIF are individuals, for the treatment of downstream investment by such
AIF as domestic, ‘sponsors’ and ‘managers/investment managers’ should be
resident Indian citizens. As ownership and control cannot be determined in LLP
under the extant FDI policy, a LLP shall not act as sponsor or
manager/investment manager.
Explanation 2: The extent of foreign investment in the corpus of the Investment
Vehicle will not be a factor to determine as to whether downstream investment of
the Investment Vehicle concerned is foreign investment or not.
- Downstream investment by an Investment Vehicle that is reckoned as foreign
investment shall have to conform to the sectoral caps and conditions /
restrictions, if any, as applicable to the company in which the downstream
investment is made as per the FDI Policy or Schedule 1 of the principal
Regulations.
- Downstream investment in an LLP by an Investment Vehicle that is reckoned as
foreign investment has to conform to the provisions of Schedule 9 of the
principal Regulations as well as the extant FDI policy for foreign investment in
LLPs.
- An Alternative Investment Fund Category III with foreign investment shall
make portfolio investment in only those securities or instruments in which a
Registered Foreign Portfolio Investor is allowed to invest under the principal
Regulations.
- The Investment Vehicle receiving foreign investment shall be required to make
such report and in such format to Reserve Bank of India or to SEBI as may be
prescribed by them from time to time.
[A K Pandey]
Chief General Manager
Foot Note:-
The Principal Regulations were published in the Official Gazette vide G.S.R.
No.406 (E) dated May 8, 2000 in Part II, Section 3, sub-Section (i) and
subsequently amended as under:-
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. 821 (E) dated 10.11.2012
G.S.R.No. 606(E) dated 03.08.2012
G.S.R.No. 795(E) dated 30.10.2012
G.S.R.No. 796(E) dated 30.10.2012
G.S.R. No. 797(E) dated 30.10.2012
G.S.R.No. 945 (E) dated 31.12.2012
G.S.R. No.946(E) dated 31.12.2012
G.S.R. No.38(E) dated 22.01.2013
G.S.R.No.515(E) dated 30.07.2013
G.S.R.No.532(E) dated 05.08.2013
G.S.R. No.341(E) dated 28.05.2013
G.S.R.No.344(E) dated 29.05.2013
G.S.R. No.195(E) dated 01.04.2013
G.S.R.No.393(E) dated 21.06.2013
G.S.R.No.591(E) dated 04.09.2013
G.S.R.No.596(E) dated 06.09.2013
G.S.R.No.597(E) dated 06.09.2013
G.S.R.No.681(E) dated 11.10.2013
G.S.R.No.682(E) dated 11.10.2013
G.S.R. No.818(E) dated 31.12.2013
G.S.R. No.805(E) dated 30.12.2013
G.S.R.No.683(E) dated 11.10.2013
G.S.R.No.189(E) dated 19.03.2014
G.S.R.No.190(E) dated 19.03.2014
G.S.R.No.270(E) dated 07.04.2014
G.S.R.No. 361 (E) dated 27.05.2014
G.S.R.No.370(E) dated 30.05.2014
G.S.R.No.371(E) dated 30.05.2014
G.S.R.No. 435 (E) dated 08.07.2014
G.S.R.No. 400 (E) dated 12.06.2014
G.S.R.No. 436 (E) dated 08.07.2014
G.S.R.No. 487 (E) dated 11.07.2014
G.S.R.No. 632 (E) dated 02.09.2014
G.S.R.No. 798 (E) dated 13.11.2014
G.S.R.No. 799 (E) dated 13.11.2014
G.S.R.No. 800 (E) dated 13.11.2014
G.S.R.No. 829 (E) dated 21.11.2014
G.S.R.No. 906(E) dated 22.12.2014
G.S.R.No. 914 (E) dated 24.12.2014
G.S.R.No. 30 (E) dated 14.01.2015
G.S.R.No. 183 (E) dated 12.03.2015
G.S.R.No. 284 (E) dated 13.04.2015
G.S.R.No. 484 (E) dated 11.06.2015
G.S.R.No. 745 (E) dated 30.09.2015
G.S.R.No. 759 (E) dated 06.10.2015
Published in the Official Gazette of Government of India –
Extraordinary – Part-II, Section 3, Sub-Section (i) dated 16.11.2015-
G.S.R.No.858(E)
|