| Date: |
13-04-2016
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| Notification No: |
RBI/2015-16/371 A.P. (DIR Series) Circular No. 59
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| Issuing Authority: |
RBI
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| Type: |
A.P.D.(Series) Circulars
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| File No: |
RBI/2015-16/371 |
| Subject: |
Acceptance of deposits by Indian companies from a person resident outside India for nomination as Director
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RBI/2015-16/371
A.P. (DIR Series) Circular No. 59
April 13, 2016
To
All Authorised Dealer Banks
Madam / Sir,
Acceptance of deposits by Indian companies from a person resident outside India
for nomination as Director
Attention of Authorised Dealers Banks is invited to Regulation 3 of the Foreign
Exchange Management (Deposit) Regulations, 2016, notified vide
Notification No.
FEMA 5(R)/2016-RB dated April 1, 2016, in terms of which no person resident in
India shall accept any deposit from, or make any deposit with, a person resident
outside India.
- Under section 160 of the Companies Act, 2013, it is provided that a
person who intends to nominate himself or any other person as a director in
an Indian company is required to place a deposit with the said company. In
this context, it has come to the notice of the Reserve Bank that there is
ambiguity whether such deposits will require any specific approval from the
Reserve Bank under
Notification No. FEMA 5(R), in cases where the deposit is
received from a person resident outside India.
- It is clarified that keeping deposits with an Indian company by persons
resident outside India, in accordance with section 160 of the Companies Act,
2013, is a current account (payment) transaction and, as such, does not
require any approval from Reserve Bank. All refunds of such deposits,
arising in the event of selection of the person as director or getting more
than twenty five percent votes, shall be treated similarly.
- AD Category – I banks may bring the contents of this circular to the
notice of their constituents and customers concerned. Necessary amendments
have been carried out in Master Direction No 14 on Deposits and Accounts.
- The directions contained in this circular have been issued under section
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,
(A K Pandey)
Chief General Manager
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