RBI/2015-16/128
A.P. (DIR Series) Circular No. 4
July 16, 2015
To
All Category – I Authorised Dealer banks
Madam/Sir,
Issue of shares under Employees Stock Options Scheme and/or sweat
equity shares to persons resident outside India
Attention of Authorised Dealer Category – I (AD Category-I) banks is invited
to Regulation 8 of the Foreign Exchange Management (Transfer or Issue of
Security by a Person Resident outside India) Regulations, 2000, notified by the
Reserve Bank vide
Notification No. FEMA. 20/2000-RB dated 3rd May 2000, as
amended from time to time.
- In terms of the extant instructions, an Indian company can issue shares under
Employees’ Stock Option (ESOP) Scheme, by whatever name called, to its employees
or employees of its Joint venture or Wholly owned overseas
subsidiary/subsidiaries who are resident outside India, directly or through a
Trust, provided that the scheme has been drawn in terms of regulations issued
under the SEBI Act, 1992 and face value of the shares to be allotted under the
scheme to non-resident employees does not exceed 5 per cent of the paid up
capital of the issuing company. The Trust or Indian company has to ensure
compliance with the above conditions and comply with the reporting requirement.
- On a review, it has been decided that an Indian company may issue “employees’
stock option” and/or “sweat equity shares” to its employees/directors or
employees/directors of its holding company or joint venture or wholly owned
overseas subsidiary/subsidiaries who are resident outside India, provided that :
The scheme has been drawn either in terms of regulations issued under the
Securities Exchange Board of India Act, 1992 or the Companies (Share Capital and
Debentures) Rules, 2014 notified by the Central Government under the Companies
Act 2013, as the case may be.
The “employee’s stock option”/ “sweat equity shares” issued to non-resident
employees/directors under the applicable rules/regulations are in compliance
with the sectoral cap applicable to the said company.
Issue of “employee’s stock option”/ “sweat equity shares” in a company where
foreign investment is under the approval route shall require prior approval of
the Foreign Investment Promotion Board (FIPB) of Government of India.
Issue of “employee’s stock option”/ “sweat equity shares” under the applicable
rules/regulations to an employee/director who is a citizen of
Bangladesh/Pakistan shall require prior approval of the Foreign Investment
Promotion Board (FIPB) of Government of India.
- The issuing company shall furnish to the Regional Office concerned of the
Reserve Bank of India under whose jurisdiction the registered office of the
company operates, within 30 days from the date of issue of employees’ stock
option or sweat equity shares, a return as per the Form-ESOP (given as Annex to
this circular).
- Authorised Dealer banks may bring the contents of this circular to the notice
of their constituents /customers concerned.
- Reserve Bank has since amended the Principal Regulations through the Foreign
Exchange Management (Transfer or Issue of Security by a Person Resident outside
India) (Fourth Amendment) Regulations, 2015 notified through
Notification No.
FEMA.344/2015-RB dated June 11, 2015, vide G.S.R. No. 484 (E) dated June 11,
2015.
- The directions contained in this circular have been issued under sections
10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and
are without prejudice to permissions / approvals, if any, required under any
other law.
Yours faithfully,
(B.P. Kanungo)
Principal Chief General Manager
Annex to A.P. (DIR Series) Circular No.4 dated July 16, 2015
Form ESOP
Return to be filed by Indian company who has issued shares under Employees’
Stock Options (ESOP) Scheme and/or sweat equity shares.
(To be filed by the company through its Authorised Dealer Category – I bank with
the Regional Office of the RBI under whose jurisdiction the Registered Office of
the company is situated making the declaration as and when shares under
Employees’ Stock Options Scheme and/or sweat equity shares are issued to the
foreign investor)
I. Details of the Company issuing ESOP/sweat equity shares
S. No. |
Particulars |
(In Block Letters) |
1. |
Name of the Company |
|
2. |
Permanent Account Number (PAN) |
|
3. |
Address of the Registered office |
|
4. |
Registration No. given by Registrar of Companies |
|
5. |
Registration No. given by RBI for FDI, if applicable |
|
6. |
Telephone |
|
7. |
Fax |
|
8. |
e-mail |
|
9. |
Business details |
|
a) |
Description of the main business activity |
|
b) |
NIC Code |
|
c) |
Percentage of FDI allowed as per FDI policy |
|
d) |
State whether FDI is allowed under Automatic Route or Approval route
|
|
e) |
FIPB approval, if any |
|
II. Type of security issued |
(Tick mark whichever is applicable) |
1. Sweat equity shares |
( ) |
2. Stock Option Scheme |
( ) |
3. Shares issued against exercise of option |
( ) |
Please provide the details of the security issued in a separate Annex viz. date
of issue, names of persons to whom shares are issued, number of shares, issue
price, consideration other than cash(if any), in case of options (maturity date,
pre-determined issue price etc.) and any other details relevant to the issue.
DECLARATION TO BE FILED BY THE AUTHORISED REPRESENTATIVE OF THE INDIAN COMPANY:
(Delete whichever is not applicable and authenticate)
We hereby declare that:
- We comply with the procedure for issue of shares under Employees’ Stock
Option Scheme/ sweat equity shares as indicated in
Notification No. FEMA
20/2000-RB dated 3rd May 2000, as amended from time to time.
- The investment is within the sectoral cap / statutory ceiling permissible
under the Automatic Route of RBI and we fulfill all the conditions laid down for
investments under the Automatic Route namely (strike off whichever is not
applicable).
- Options issued under Employees’ Stock Option Scheme
OR
- Shares issued against exercise of option as (a) above
OR
- Sweat Equity Shares issued to non-residents
- Shares have been issued in terms of FIPB approval No.___________________
dated ____________________
- The foreign investment received and reported now will be utilized in
compliance with the provision of a Prevention of Money Laundering Act 2002
(PMLA) and Unlawful Activities(Prevention) Act, 1967 (UAPA). We confirm that the
investment complies with the provisions of all applicable Rules and Regulations.
- We enclose the following documents in compliance with Regulation 8 of
Notification No. FEMA 20/2000-RB dated May 3, 2000:
(i) A certificate from our Company Secretary certifying that
Sweat equity shares have been issued / the Employees’ Stock Option Scheme has
been drawn either in terms of regulations issued under the Securities Exchange
Board of India Act, 1992 or the Companies (Share Capital and Debentures) Rules,
2014 notified by the Central Government under the Companies Act, 2013, as the
case may be
all the requirements of the Companies Act, 2013 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
Schedule 1 to
Notification No. FEMA 20/2000-RB dated May 3, 2000.
(ii) A certificate from SEBI registered Merchant Banker / Chartered Accountant
indicating the manner of arriving at the price of the shares issued to the
persons resident outside India.
- Unique Identification Numbers given for all the remittances received as
consideration for issue of shares under Employees’ Stock Option Scheme/ Sweat
Equity shares by Reserve Bank.
(Signature of the Applicant)* :____________________
(Name in Block Letters) :_______________________
(Designation of the signatory) :___________________
Place:
Date:
(* To be signed by Managing Director/Director/Secretary of the Company)
CERTIFICATE TO BE FILED BY THE COMPANY SECRETARY OF THE INDIAN COMPANY ACCEPTING
THE INVESTMENT:
In respect of the abovementioned details, we certify the following:
Sweat equity shares have been issued / the Employees’ Stock Option Scheme has
been drawn either in terms of regulations issued under the Securities Exchange
Board of India Act, 1992 or the Companies (Share Capital and Debentures) Rules,
2014 notified by the Central Government under the Companies Act, 2013, as the
case may be
all the requirements of the Companies Act, 2013 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
Schedule 1 to
Notification No. FEMA 20/2000-RB dated May 3, 2000.
(Name & Signature of the Company Secretary) (Seal)
FOR USE OF THE RESERVE BANK ONLY:
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