SECTION 19. Notification No. F.E.R.A.114/92-RB dated 27th April 1992 as amended up to 24th February 1997

Transcription

1 SECTION 19 Notification No. F.E.R.A.114/92-RB dated 27th April 1992 as amended up to 24th February 1997 Permission f Issue of Shares/Convertible Debentures to NRIs/OCBs on Non-repatriation Basis In pursuance of sub-section (1) of Section 29 read with sub-section (1) of Section 19 of the Feign Exchange Regulation Act, 1973 (46 of 1973), the Reserve Bank hereby permits - (a) (b) (c) Non-residents of Indian nationality igin (NRIs) and overseas cpate bodies (OCBs) to take up subscribe on non-repatriation basis, the shares convertible debentures issued, whether by public issue private placement, by a company incpated in India; A company incpated in India to issue shares, convertible debentures by way of new/rights/ bonus issue to NRIs OCBs; The taking sending of shares convertible debentures issued to such NRIs OCBs out of India to their place of residence incpation as the case may be pursuant to the permission hereby granted except to South Africa. Provided that - (1) the investee company, does not carry on agricultural/plantation activities real estate business (excluding real estate development i.e. development of property and construction of houses), chit fund business, is not a Nidhi company.

2 Explanation: (2) The payment f the shares convertible debentures issued to such NRIs OCBs is received by remittances from abroad through nmal banking channels by transfer of funds held in invest's NRE/FCNR/NRO account maintained with banks authised to deal in feign exchange in India authised cooperative/commercial banks in India, (3) Neither the capital invested n any income arising therefrom whether by way of capital appreciation dividend otherwise is eligible f repatriation out of India at any time, (4) All dividend accruals and sale proceeds of shares (if sold in future) with permission of the Reserve bank (wherever necessary) will be credited to the invest's dinary non-resident rupee account with a bank authised to deal in feign exchange in India, (5) The company issuing the shares convertible debentures files a declaration not later than ninety days from the date of issue, giving full particulars with the Reserve Bank of India in such fm as may be specified. Where shares convertible debentures are issued to an OCB, a certificate in the fm specified (OAC/OAC-1) issued by an overseas audit, Chartered Accountant Certified Public ccountant, showing the ownership of such OCB shall be filed with the Reserve Bank along with the declaration. I. A person (not being a citizen of Pakistan Bangladesh), shall be deemed to be of 'Indian Origin', if - he, at any time, held Indian passpt; he either of his parents any of his grandparents was a citizen of India by virtue of the Constitution of India the Citizenship Act, 1955 (57 of 1955); that person is the spouse of an Indian citizen of a person of Indian igin (not being a citizen of Pakistan Bangladesh).

3 II. 'Overseas Cpate Body' means any overseas company, partnership firm, society and other cpate body predominantly owned directly indirectly to the extent of at least 60 per cent by NRIs and includes any overseas trust in which not less than sixty percent beneficial interest is held by NRIs, directly/indirectly but irrevocably. Notification No. F.E.R.A.118/92-RB dated 7th September 1992 as amended up to 28th April 1995 Permission f retaining Feign Securities In pursuance of sub-section (1) of Section 19 of the Feign Exchange Regulation Act, 1973 (46 of 1973) and in supersession of its Notification No. F.E.R.A.12/74 RB dated 1st January 1974, the Reserve Bank is pleased to direct that the prohibition imposed by that subsection on the acquisition, holding disposal of any feign security, shall not apply to (1) feign securities acquired out of feign exchange held in India in accdance with any schemes approved by the Reserve Bank in this behalf, outside India and income thereon, if such feign exchange was acquired by a person - (a) otherwise than in contravention of the said Act, while he was resident outside India; (b) through employment, business vocation outside India, taken up commenced while such person was resident outside India. Provided that in either case, such a person has been resident outside India f a continuous period of not less than one year. (2) feign securities acquired on befe 8th July,1947 and continued to be held outside India, by a person resident in India, with the permission of the Reserve Bank;

4 (3) feign securities referred to in clause (1) clause (2) above where acquired by a person resident in India by way of gift inheritance, Provided that in case of gift, the person receiving the gift of feign securities is a relative of the person making such gift and any tax in respect of the gift has been paid in India. Explanation : F the purpose of this clause "relative" in relation to an individual, means husband, wife, brother sister any lineal ascendant descendant of this individual. Notification No. F.E.R.A.122/92-RB dated 17th September 1992 Permission to Recd Overseas Address Consequent on Change of Residence In pursuance of Sub-Section (4) of Section 19 of the Feign Exchange Regulation Act, 1973 (46 of 1973), Reserve Bank of India is pleased to permit companies in India to enter in its register books, in which securities are registered inscribed, an address outside India of a holder of any securities, consequent on change of resident status of such holder, from resident to non-resident, subject to the condition that such company obtains an undertaking from the holder that he will not seek repatriation of any income, dividend, sale proceeds of the securities. Notification No. F.E.R.A.143/93-RB dated 26th April 1993 as amended up to 31st October 1995 Permission f Subscribing to the Memandum and Articles of Association of an Indian Company In pursuance of clause (b) of sub-section (1) of Section 29 read with clause (d) of subsection (1)of Section 19 of the Feign Exchange Regulation Act, 1973 (46 of 1973) and in supersession of its Notification No. F.E.R.A.66/86-RB dated 28th November 1986, the Reserve Bank is pleased to permit a non-resident Indian citizen a person of Indian igin to subscribe to the Memandum of Association and Articles of Association and to acquire share of a company f the purpose of incpation of such company in India and such company to issue share to a non-resident Indian citizen a person of Indian igin subject to the conditions that, -

5 the total face value of the shares to be taken up by the non-resident Indian citizen person of Indian igin does not exceed Rs.10,000/- (Rupees ten thousand only); such company is not engaged in any activity relating to agriculture plantation; the Memandum of Association of such company does not permit the company to take up any agricultural/plantation activity and/ to deal in real estate business other than developing real estate, i.e. development of property and construction of houses; and (iv) such company files a declaration, regarding particulars of shares issued, with the Reserve Bank within ninety days from the date of its incpation in such fm as may be specified. Explanation: A person (not being a citizen of Pakistan Bangladesh), shall be deemed to be of 'Indian igin, if - he, at any time, held Indian passpt; he either of his parents any of his grandparents was a citizen of India by virtue of the Constitution of India the Citizenship Act, 1955 (57 of 1955); that person is the spouse of an Indian citizen of a person of Indian igin (not being a citizen of Pakistan Bangladesh).

6 Notification No. F.E.R.A.145/93-RB dated 26th April 1993 Permission to Convert Shareholdings into Joint Holdings by/with NRIs/Resident Indians In pursuance of sub-sections (1) and (5) of Section 19 read with clause (b) of subsection (1) of Section 29 of the Feign Exchange Regulation Act, 1973 (46 of 1973) and in supersession of its Notification No. F.E.R.A.123/92-RB dated 17th September 1992, the Reserve Bank is pleased to permit - (1) a person of Indian nationality igin resident outside India, who holds any securities issued registered in India, to convert his holding into joint holding by addition of the name(s) of any person persons of Indian nationality igin resident in India, subject to the conditions that - (a) transfer fmalities as required under the Companies Act, 1956 are complied with; and (b) dividend, income sale proceeds of the securities, accruing to a person resident in India who becomes a joint holder by addition of his name, will not be permitted to be repatriated outside India even if he becomes a nonresident sole ( first named) holder by succession by way of gift any other transfer under due process of law. (2) a citizen of India, who is resident in India and holds any securities issued registered in India, to convert his holding into a joint holding, by addition of the name(s) of any person(s) of Indian nationality igin resident outside India, subject to the conditions that - (a) (b) (c) the resident holder continues to be the first holder; the joint holding is treated as non-resident holding in the books of the company; any dividend income sale proceeds, as and when it becomes payable to the non-resident joint holder(s), shall be credited to the Ordinary Nonresident Rupee Account(s) of such person(s);

7 and (d) the securities shall not be sold disposed of, otherwise than in the stock market through a member of a recognised Stock Exchange in India, except with the previous permission of the Reserve Bank. Explanation: A person (not being a citizen of Pakistan Bangladesh), shall be deemed to be of 'Indian igin', if - he, at any time, held Indian passpt; he either of his parents any of his grandparents was a citizen of India by virtue of the Constitution of India the Citizenship Act, 1955 (57 of 1955); that person is the spouse of an Indian citizen of a person of Indian igin (not being a citizen of Pakistan Bangladesh). Notification No. F.E.R.A.149/93-RB dated 26th April 1993 Sale/Transfer of Shares/Bonds/Debentures by NRIs on Non-repatriation basis through Stock Exchange In exercise of the powers conferred by sub-section (6) of Section 19 of the Feign Exchange Regulation Act, 1973 (46 of 1973), the Reserve Bank being of the opinion that it is necessary and expedient in the public interest so to do, hereby exempts from the operation of the provisions of sub-section (5) of the said section, transfer of any share, bond debenture of a company registered in India made by a person who is a citizen of India a person of Indian igin and resident outside India, in favour of a person who is a citizen of India a person of Indian igin and resident in India in favour of a company a body cpate incpated under any law in fce in India. Provided that - such share, bond debenture is purchased by the transferee from the stock market through a member of a recognised Stock Exchange in India;

8 and he proceeds of such transfer are credited to the dinary non-resident rupee account of the transfer with a bank with no right of repatriation outside India. Explanation: A person (not being a citizen of Pakistan Bangladesh),shall be deemed to be of 'Indian igin', if he, at any time, held Indian passpt; he either of his parents any of his grandparents was a citizen of India by virtue of the Constitution of India the Citizenship Act, 1955 (57 of 1955); that person is the spouse of an Indian citizen of a person of Indian igin (not being a citizen of Pakistan Bangladesh). Notification No. F.E.R.A.150/93-RB Dated 26th April 1993 as amended up to 22nd January 1997 Sale/Transfer of Shares/Bonds/Debentures by NRIs/OCBs with Repatriation Rights through Stock Exchange In exercise of the powers conferred by sub-section (6) of Section 19 of the Feign Exchange Regulation Act, 1973 (46 of 1973), the Reserve Bank, being of the opinion that it is necessary and expedient in the public interest so to do, exempts from the operation of the provisions of sub-section (5) of the said section, transfer of any share, bond debenture of a company registered in India, made by a person, who is a citizen of India a person of Indian igin and resident outside India an Overseas Cpate Body, in favour of a person who is a citizen of India a person of Indian igin and resident in India, in favour of a company a body cpate incpated under any law in fce in India.

9 Provided that - the terms and conditions of the permission granted by the Reserve Bank to the designated branch of an authised dealer on behalf of the transfer under clause (b) of sub-section (1) of Section 29 of the Act; the transfer had purchased such share, bond debenture from the stock market through a member of a recognised stock exchange in India and delivery of the share, bond debenture so purchased has been taken by him on his behalf by the concerned authised dealer its nominee; such share, bond debenture is sold in the stock market through a member of a recognised stock exchange in India and the sale transaction is effected at the ruling market price as determined on the flo of the stock exchange by nmal bid and offer method and through the same designated branch of the authised dealer through which such share, bond debenture was earlier purchased; and (iv) the sale proceeds are paid to the said designated branch of the authised dealer. Explanation: I. A person (not being a citizen of Pakistan Bangladesh),shall be deemed to be of 'Indian igin', if - he, at any time, held Indian passpt; he either of his parents any of his grandparents was a citizen of India by virtue of the Constitution of India the Citizenship Act, 1955 (57 of 1955); that person is the spouse of an Indian citizen of a person of Indian igin (not being a citizen of Pakistan Bangladesh).

10 II III. The expression "designated branch of an authised dealer" shall mean that branch of an authised dealer which has been approved by the Reserve Bank f purchasing shares, bonds debentures on behalf of the transfer. The expression 'Overseas Cpate Body' means any overseas company, partnership firm, society and other cpate body predominantly owned directly indirectly to the extent of atleast 60 per cent by NRIs and includes any overseas trust in which not less than 60 per cent beneficial interest is held by NRIs directly indirectly, but, irrevocably. Notification No. F.E.R.A.151/93-RB dated 26th April 1993 Gifting of Shares/Bonds/Debentures by NRIs In exercise of the powers conferred by sub-section (6) of Section 19 of the Feign Exchange Regulation Act, 1973 (46 of 1973), the Reserve Bank, being of the opinion that it is necessary and expedient in the public interest so to do,hereby exempts from the operation of the provisions of sub-section (5) of the said section, transfer, by way of gift, of any share, bond debenture of a company registered in India by a person resident outside India who is a citizen of India a person of Indian igin to a citizen of India a person of Indian igin and resident in India : Provided that - such share, bond debenture was held by the transfer with the permission of the Reserve Bank; and such transfer is between relatives as defined in Section 6 of the Companies Act, 1956 (1 of 1956). Explanation: A person (not being a citizen of Pakistan Bangladesh), shall be deemed to be of 'Indian igin', if - he, at any time, held Indian passpt;

11 he either of his parents any of his grandparents was a citizen of India by virtue of the Constitution of India the Citizenship Act, 1955 (57 of 1955); that person is the spouse of an Indian citizen of a person of Indian igin (not being a citizen of Pakistan Bangladesh). Notification No.F.E.R.A.180/98-RB dated 13th January 1998 Permission f issue of equity shares to feign invests under Automatic Route of Reserve Bank In pursuance of clause (a) and clause (d) of sub-section (1) of Section 19 read with clause (b) of sub-section (1) of Section 29 of the Feign Exchange Regulation Act, 1973 (46 of 1973), the Reserve Bank is pleased to permit a company incpated in India - (a) (b) which is engaged proposing to engage in an activity specified in the list f the time being in fce published by the Ministry of Industry, Government of India, as Annexure III to the Statement on Industrial Policy, 1991 (hereinafter referred to as "the said Annexure III"); which is a Trading Company primarily engaged in expt, and is registered as an Expt/Trading/Star Trading House, with the Ministry of Commerce, Government of India, to issue equity shares subject to the conditions mentioned in para 3, to a person who is not a citizen of India (whether resident in India not) to a company (other than a banking company) which is not incpated under any law in fce in India, and to send such shares out of India, to their place of residence incpation as the case may be; Provided that a company, existing on the date of this Notification, which is not engaged in the said Annexure III activities shall be eligible to issue shares, if it embarks upon expansion programme predominantly in the said Annexure III activities, subject to the condition that the feign equity raised by issue of equity shares to feign invest is utilised f such expansion; Provided further that in the case of a newly set-up Trading Company primarily engaged in expt, issue of shares shall be subject to the condition that registration as an Expt/Trading/Star Trading House is obtained befe remittance of dividend to the feign invest.

12 2. The general permission granted herein shall not apply to in respect of - a) a person who is a citizen of, a company incpated in, Pakistan Bangladesh; (b) a company being - i) unit manufacturing items which require industrial licence; ii) iii) iv) nit manufacturing items which require industrial licence; unit manufacturing any item of aerospace and defence equipments whether specifically entioned not; and unit manufacturing any item related to production use of atomic energy including carrying out of any process, preparaty ancillary to such production use, under the Atomic Energy Act, 1962; v) 100% Expt Oriented Unit and unit in Expt Processing Zones. 3. The general permission granted herein to issue shares (hereinafter referred to as "feign investment") is subject to the following conditions, namely: the feign investment shall not in aggregate exceed 50%, 51% 74% of the equity capital of the issuer company, as indicated in the said Annexure III; where the issuer company is a Trading Company, feign investment therein shall not exceed 51% of its equity capital; in the case of issue of shares by an existing company, (a) (b) Board Resolution has been passed in connection with preferential allotment of shares, if any, to feign invest, indicating the issue price; Special Resolution has been passed under Section 81(1A) of the Companies Act, 1956, wherever applicable, in connection with such preferential allotment, indicating the issue price;

13 (c) in the case of a listed company, the price f the issue is wked out accding to SEBI guidelines and is duly certified by the Company's Statuty Audits; and in the case of any other company, calculation of fair value of shares (as per erstwhile CCI guidelines) is made by an independent Chartered Accountant; (iv) (v) (vi) vii) viii) approval, wherever necessary, from any authity, statuty otherwise, required f the project, is obtained by the company; payment f the shares to be issued to the feign invest has been received by remittance from abroad through nmal banking channels; remittance of dividend in respect of industries specified in the Annexure hereto, shall be subject to the condition of balancing of dividend over a period of seven years to be reckoned in the case of an existing company, from the date of issue of shares, and in any other cases, from the date of commencement of production; no disinvestment of shares by the feign invest shall be made without the previous permission of the Reserve Bank; the issuer company files with the Regional Office of Reserve Bank, not later than thirty days from the date of issue, the following - a) one copy of Fm FC (RBI) duly completed containing NIC code and description of activity in accdance with the said Annexure III; b) iginal Feign Inward Remittance Certificate (FIRC) evidencing receipt of funds; c) Memandum and Articles of Association of the issuer company; d) iginal certificate by a Chartered Accountant, containing particulars of shares issued, date of issue, number of shares, and the issue price; e) certified copy each of Board Resolution, Special Resolution, Statuty Audit's Certificate, the Chartered Accountant's calculation, referred to in para 3 above; f) such other particulars and documents as may be required specified by the Reserve Bank from time to time.

14 ANNEXURE [See paragraph 3(vi) of the Notification] LIST OF 22 SPECIFIED INDUSTRIES IN THE CONSUMER GOODS SECTOR IN WHICH DIVIDEND BALANCING IS APPLICABLE 1. Manufacture of food and food products. 2. Manufacture of dairy products. 3. Grain mill products. 4. Manufacture of bakery products. 5. Manufacture and refining of sugar (vacuum pan sugar facties). 6. Production of common salt. 7. Manufacture of Hydrogenated oil (Vanaspati). 8. Tea processing 9. Coffee. 10. Manufacture of beverages, tobacco and tobacco products. 11. Distilling, rectifying and blending of spirits, wine industries, malt liqus and malt, production of country liqus and toddy. 12. Soft drinks and carbonated water industry. 13. Manufacture of Cigar, Cigarettes, Cheroot and cigarette tobacco. 4. Manufacture of wood and wood products, furniture and fixtures. 15. Manufacture of leather and fur/leather products. 16. Tanning, curing, finishing, embossing and japanning of leather. 17. Manufacture of footwear (excluding repair) except vulcanized f moulded rubber plastic footwear. 18. Manufacture of footwear made primarily of vulcanized moulded products. 19. Prophylactics (rubber contraceptive). 20. Mot cars. 21. Entertainment Electronics (VCRs, Colour TVs, CD Players, Tape Recders). 22. White goods (Domestic Refrigerats, Domestic Dishwashing Machines, Programmable omestic Washing Machines, Microwave Ovens, Airconditioners).. Note:- Remittance of dividend should be covered by earnings of the company from expt of items covered by the feign collabation agreement. Remittance of dividend can also be covered from earnings through expt of items not mentioned in the agreement provided these are in the list of industries mentioned in the said Annexure III. The amount of dividend payment may be covered by expt earnings of such items recded in years pri to the payment of dividend in the year of payment of dividend.

15 Notification No.F.E.R.A.182/98-RB dated 10th February 1998 Permission f issue of security in respect of feign investment approved under SIA/FIPB Route In pursuance of clause (a) and clause (d) of sub-section (1) of Section 19 read with clause (b) of sub-section (1) of Section 29 of the Feign Exchange Regulation Act, 1973 (46 of 1973), the Reserve Bank is pleased to permit a company incpated in India, which holds a valid SIA/FIPB approval f feign investment in India, to issue security subject to the conditions mentioned in para 2, to a person who is not a citizen of Indian (whether resident in India not) to a company (other than a banking company) which is not incpated under any law in fce in India; and to send such security out of India, to their place of residence incpation, as the case may be; Provided that no security shall be issued to a person who is a citizen of, to a company incpated in, Pakistan Bangladesh. Explanation: "SIA/FIPB approval" means the approval granted f feign investment by the Government of India, Ministry of Industry, Department of Industrial Policy & Promotion, Secretariat f Industrial Assistance, by the Feign Investment Promotion Board. 2. The general permission granted herein to issue security (hereinafter referred to as "feign investment") is subject to the following conditions, namely: conditions stipulated in the SIA/FIPB approval are duly complied with; the Board of the issuer company has satisfied itself about compliance with all prerequisites including those stipulated in SIA/FIPB approval, f issue of securities and receipt of remittance from abroad and has recded its satisfaction by passing a resolution to that effect; in the case of issue of security by an existing Company, (a) (b) Board Resolution has been passed in connection with preferential allotment of security, if any, to feign invest, indicating the issue price; Special Resolution has been passed under Section 81(1) of the Companies Act, 1956, wherever applicable, in connection with such preferential allotment, indicating the issue price;

16 (c) in the case of a listed company, the price f the issue is wked out accding to SEBI guidelines and is duly certified by the Company's statuty audits; and in the case of any other company, calculation of fair value of security (as per erstwhile CCI guidelines) is made by an independent Chartered Accountant; (iv) approve, whenever necessary, from any authity, statuty otherwise, required f the project, is obtained by the company; (v) payment f the security to be issued to the feign invest has been received by remittance from abroad through nmal banking channels; (vi) the issuer company files with the Regional Office of Reserve Bank, not later than thirty days from the date of issue, the following - a) one copy of Fm ISD duly completed; b) certified copy of SIA/FIPB approval; c) iginal Feign Inward Remittance Certificate (FIRC) evidencing receipt of funds; d) Memandum and Articles of Association of the issuer Company; e) iginal certificate by a Chartered Accountant, containing particulars of security issued, date of issue, number of security and the issue price; f) certified copy each of the Board Resolution, Special Resolution, Statuty Audit's Certificate, the Chartered Accountant's calculation, referred to in items and above; g) such other particulars and documents as may be required specified by the Reserve Bank from time to time.