RBI/2013-14/356
A.P. (DIR Series) Circular No.68
November 01, 2013
To
All Category – I Authorised Dealer banks
Madam/Sir,
Foreign Direct Investment (FDI) in India –definition of ‘group company’
Attention of Authorised Dealer Category – I (AD Category-I) banks is invited to
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.
- The extant FDI policy has since been reviewed and it has been decided to
incorporate the definition for ‘group company’ as under;
‘Group company’ means two or more enterprises which, directly or indirectly, are
in position to:
(i) exercise twenty-six per cent, or more of voting rights in other enterprise;
or
(ii) appoint more than fifty per cent, of members of board of directors in the
other enterprise.
- Copy of Press Note No. 2 (2013 Series) dated June 3, 2013 issued by
Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce &
Industry, Government of India in this regard is enclosed.
- AD Category - I banks may bring the contents of the circular to the notice of
their customers/constituents concerned.
- Reserve Bank has since amended the subject Regulations accordingly through
the Foreign Exchange Management (Transfer or Issue of Security by a Person
Resident outside India) (Sixteenth Amendment) Regulations, 2013 which have been
notified vide
Notification No. FEMA.292/2013-RB dated October 4, 2013, vide
G.S.R. No. 683(E) dated October 11, 2013.
- 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,
(Rudra Narayan Kar)
Chief General Manager-In-Charge