Reserve Bank of India
Foreign Exchange Department
Central Office
Mumbai- 400 001
Notification No. FEMA.306/2014 –RB
May 23, 2014
Foreign Exchange Management (Transfer or Issue of Security by a
Person Resident Outside India) (Seventh Amendment) Regulations, 2014
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:-
- Short Title & Commencement:-
(i) These Regulations may be called the Foreign Exchange Management (Transfer or
Issue of Security by a Person Resident Outside India) (Seventh Amendment)
Regulations, 2014.
(ii) They shall come into force from the date of their publication in the
Official Gazette.
- Amendment of Regulation:-
In Regulation 9, in sub-regulation (1),
(a) in clause (i), for the words “market price determined on the floor of the
recognised stock exchanges” the words “market price prevailing on the floor of
the recognised stock exchanges” shall be substituted;
(b) the existing clauses (ii) and (iii), shall be substituted by the following,
namely:-
“(ii) In case of equity shares, preference shares or debentures of unlisted
company, at a price not exceeding that arrived at as per any internationally
accepted pricing methodology for valuation of shares on arm’s length basis, duly
certified by a Chartered Accountant or a SEBI registered Merchant Banker. The
guiding principle would be that the non-resident investor is not guaranteed any
assured exit price at the time of making such investment/agreements and shall
exit at the price prevailing at the time of exit, subject to lock-in period
requirement.”
- Amendment of Schedules
(i) In Schedule 1,
(a) in paragraph 5, the existing clause (b) shall be substituted by the
following, namely:-
"b. the valuation of shares done as per any internationally accepted pricing
methodology for valuation of shares on arm’s length basis, duly certified by a
Chartered Accountant or a SEBI registered Merchant Banker where the shares of
the company are not listed on any recognised stock exchange in India; and "
(b) in paragraph 5, clause (c), shall be omitted.
(ii) In Schedule 2, in paragraph 1, in sub-paragraph (5), in proviso, the
existing clause (b) shall be substituted by the following, namely:-
“(b) in case of issue by private placement, the price is not less than the price
arrived in terms of SEBI guidelines or not less than the fair price worked out
as per any internationally accepted pricing methodology for valuation of shares
on arm’s length basis, duly certified by a SEBI registered Merchant Banker or
Chartered Accountant, as applicable.”
(iii) In Schedule 2A, in paragraph 2, in sub-paragraph (iv), in proviso, the
existing clause (b) shall be substituted by the following, namely:-
“b) in case of issue by private placement, the price is not less than the price
arrived in terms of SEBI guidelines or not less than the fair price worked out
as per any internationally accepted pricing methodology for valuation of shares
on arm’s length basis, duly certified by a SEBI registered Merchant Banker or
Chartered Accountant, as applicable.”
(C.D.Srinivasan)
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
Published in the Official Gazette of Government
of India – Extraordinary – Part-II, Section 3, Sub-Section (i) dated 08.07.2014-
G.S.R.No.435 (E)