Reserve bank of India
A.P. (DIR Series) Circular No.110
June 12, 2013
To
All Category - I Authorised Dealer banks
Madam / Sir,
Foreign Direct Investment – Reporting of issue /
transfer of Shares to/by a FVCI
Attention of Authorised Dealers Category-I (AD Category - I) banks is invited
to Regulations 9 and 10 and para 9 of Schedule I to the Foreign Exchange
Management (Transfer or Issue of Security by a Person Resident outside India)
Regulations, 2000 notified vide
Notification No. FEMA 20/2000 -RB dated May 3,
2000 (hereinafter referred to as Notification No. FEMA 20), as amended from time
to time. Attention of AD Category - I banks is also invited to
A. P. (DIR
Series) Circular No. 44 dated May 30, 2008 and
A.P. (DIR Series) Circular No.63
dated April 22, 2009.
- In terms of the said regulations, transfer of equity shares / fully
and mandatorily convertible debentures/ fully and mandatorily convertible
preference shares (hereinafter referred to as ‘shares’) of an Indian
company, from a person resident outside India (non-resident) to a person
resident in India (resident) or vice versa, has to be reported to an
Authorized Dealer bank within 60 days of transactions. Further, the receipt
of consideration for issue of shares as well as the issue of shares of an
Indian company, to a non-resident has to be reported to the Reserve Bank of
India through an Authorized Dealer bank within 30 days of the transaction.
- It has been observed that SEBI registered FVCIs making investments in an
Indian Company under FDI Scheme in terms of Schedule 1 of
Notification No. FEMA 20/2000 -RB dated May 3,
2000, as amended from time to time, also
report the same transaction under Schedule 6 of the Notification ibid,
resulting in double reporting of the transaction.
- It is clarified that wherever a SEBI registered FVCI acquires shares of
an Indian company under FDI Scheme in terms of Schedule 1 of
Notification No. FEMA 20/2000 -RB dated May 3,
2000, as amended from time to time, such
investments have to be reported in form FC-GPR/FC-TRS only, as applicable.
Where the investment is under Schedule 6 of the Notification ibid, no
FC-GPR/FC-TRS reporting is required. Such transactions would be reported by
the custodian bank in the monthly reporting format as prescribed by RBI from
time to time. Revised forms FC-GPR and FC-TRS are annexed as ANNEX-I and
ANNEX-II, respectively, to this A.P.(DIR Series) Circular.
- A SEBI registered FVCI while making investment in an Indian company may
determine upfront whether the said investment is under FDI or FVCI scheme
and report accordingly. For the guidance of FVCI investors, a suitable
remark in para 3(4) and 5(a)(4) of form FC-GPR and para 4(4) and para 5(4)
of form FC-TRS, has been incorporated, which would read as follows:
‘The investment/s made by SEBI registered FVCI is/are under FDI Scheme, in
terms of Schedule 1 to
Notification No. FEMA 20/2000 -RB dated May 3,
2000.’
- 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 Regulations vide Notification
No.FEMA.266/2013-RB dated March 05, 2013 and notified vide G.S.R.No.341(E)
dated May 28, 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
RBI/2012-13/529