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Procedural Aspects in Inbound

Investments

07 November 2015

Impact Seminar on

‘Inbound Investment –

Policies, Opportunities & Challenges’

By NIRC of ICSI

Vijay Gupta ACMA, FCA, FCS



Agenda

Inbound Investment Schemes (only snap shot)FDI/ECB Policy references

FIPB

Reporting of FDI Inflow

Reporting of Issue of Shares

Transfer of sharesDownstream Investments

Annual Return of Liabilities & Assets

Schedule 4 of FEMA 20

FPIs & NRIs under Portfolio Investments Scheme

Limited Liability PartnershipRemittances

External Commercial Borrowings

Compounding



FEM (Transfer or Issue of Security by a Person ResidentOutside India) Regulations, 2000:‘FEMA 20’

Sch. 1 Foreign Direct Investment (‘FDI’) Scheme

Sch. 2

& 2A

Purchase/Sale of shares or convertible debentures or warrants of

an Indian Company byRegistered Foreign Portfolio Investor(RFPI)under Foreign Portfolio Investment (FPIs) Scheme (Registered

FIIs under Sch. 2 subsumed with Sch. 2A)

Sch. 3 Purchase/Sale of Shares and/or Convertible Debentures by anNRI

on a stock exchange in India on repatriation and/or non-

repatriation basis under Portfolio Investment Scheme

Sch. 4 Purchase and Sale of Shares or Convertible Debentures or

Warrants] byNRI, onNon-repatriation basis

Sch. 5 Purchase and Sale ofSecurities other than Shares or Convertible

Debentures of an Indian company by a person resident outside

India

Sch. 6 Investment in an Indian venture capital undertaking by a

registered Foreign Venture Capital Investor

Sch. 7 Indian depository receipts by eligible companies resident outside

India

Sch. 8 Scheme for investment byQualified Foreign Investorsin equity

shares (Subsumed under Sch. 2A)Sch.9 Scheme for Acquisition/Transfer by a person resident outside



Foreign Investment in India- SchematicRepresentation

ForeignInbound Investments

Foreign DirectInvestments

ForeignPortfolioInvestments

Foreign VentureCapital

Investments

OtherInvestments(G-Sec, NCDs,

etc.)

Investments onNon-

Repatriable basis

FIIs/

QFIs/RFPIsSch. 2,2A, 8

AutomaticRoute

Govt.Route

NRIs/PIOsSch. 3

SEBI Regd.FVCIs/AIFsSch. 6

FIIs/RFPIs, NRIs,

PIO, QFIsLong Term Investors

Sch. 5

NRIs,PIOsSch. 4

VCF, IVCUsPersons Resident

Outside India

CompanySch. 1, 10

LLPSch. 9



FDI/ECB Policy

Foreign Exchange Management (Transfer or Issue of Security by a Person Resident

outside India) Regulations, !!! FEMA 20

Foreign Exchange Management ("orro#ing or $ending in Foreign Exchange) Regulations,

!!! FEM% !& Department of Industrial Policy and Promotion, Ministry of Commerce & Industry,

Government of India (DIPP)Circular on Consolidated FDI Policy (last updated on May 12,

2015)

RBI Master Circular onForeign Investments in India dated 01 July 2015 (updated on

16 July 2015)

External Commercial Borrowings and Trade Creditsdated 01 July 2015(updated on 06

October 2015)

RBI FAQs - Foreign Investments in India10.02.2015

No FAQs on ECB

FIPB Review books2014,2011-2013; 2010; 2009; 2008;FAQs by FIPB for eFiling

Annual Return on Foreign Liabilities and Assets (FLA return)18 June 2014 – for LLP also

FDI inflows -FIPB/SIA; Acquisition of Existing Shares; & Automatic Route of RBI: WebsiteofDIPP.nic.in

ECB/FCCB data under Automatic/Approval Routes: Monthly Press Release by RBI

In case of anyconflict between FDI Circular and FEMA Regulations, the relevant FEMA

Notification will prevail. The procedural instructions are issued by the Reserve Bank of

India vide A.P.Dir. (Series) circulars

Read Circulars, latest Master Circulars, FAQs as Regulations may not be amendedsimultaneously by Notification.



Kinds of Investment

• Automatic Route – no prior approval from the RBI/ Government

• Approval Route – prior approval of the FIPB required (no separate RBIapproval)

Mode of Investment

• Greenfield: Setting up a new JV/ WOS (fresh issueof shares)

• Brownfield: Relating to existing investments/ business activities:

Foreign Direct Investmentinto an Indian company

BrownfieldInvestment

Share

PurchaseGift of shares Share swap

Rights/ Bonus

issue/ ESOP/Sweat Equity

Merger/Demerger/ Amalgamation/Reconstruction

Conversion of ECB/ pre-incorp

payables/ import payables, royalty,other legitimatedues etc.



Types of instruments:‘Capital’Equity shares

Fully, compulsorily & mandatorily convertiblePreference Shares

Fully, compulsorily & mandatorily convertibleDebenturesDifferential voting rightsshares as to

dividend, voting or otherwisePermitted

Non-convertible, optionally convertible or

partially convertible instruments

considered as debt

To comply withECB norms

Warrants:Upfront 25% of consideration; Conversion in 18 months

Upfront pricing/ conversion formula

Partly paid ‘Equity Shares’ only:Upfront 25% of consideration including premium;

Full payment in 12 months; NAListed Indian company:issue size exceeds rupees

five hundred crore and the issuer complies with Regulation 17 of the SEBI (Issue ofCapital and Disclosure Requirements(ICDR)) Regulations regarding monitoring

agency.Listed Indian company:issue size exceeds rupees five hundred crore and

the issuer complies with Regulation 17 of the SEBI (Issue of Capital and Disclosure

Requirements(ICDR)) Regulations regarding monitoring agency.

Optionality clauses:Buy-back of securities at the price prevailing/value determined at the time



Issue of Non convertible/ redeemable bonus

preference shares or debentures

To non-resident shareholders, including the

depositories that act as trustees for the ADR/GDR

holders, by way of distribution as bonusfrom itsgeneral reserves under a Scheme of Arrangement

approved by a Court in India under the provisions of

the Companies Act, as applicable, subject tono-

objection from the Income Tax Authorities.



FEMA & Valuation

Only Certification by SEBI registered

MerchantBanker/

Chartered Accountant

Valuation & Certification by SEBI registeredMerchant Banker/Chartered Accountant

Preferential Allotment Pricing Guideline under SEBI (ICDR) Regulations 2009:“Price not less than the higher of Avg. weekly high and low closing price over a trailing six month period, or a trailingtwo week period, from the "relevant date of transaction.”

“Relevant Date” means date thirty days prior to the date of GM of shareholders

Price of shares shall not beless than the fair

value worked out as perany internationallyaccepted pricingmethodology

for valuation of shareson arm’s length basis

Price of shares shall not bemore than the fair

value worked out as perany internationallyaccepted pricingmethodology

for valuation of shareson arm’s length basis

Market Price as perSEBI Preferential Allotment

Internationallyaccepted pricingMethodology for

valuation of shares on

arm’s length basis

Listed Company Unlisted Company

FDIIssue of shares Transfer of shares from

Resident to Non-Resident Transfer of shares fromNon-Resident to Resident

Convertible instruments:Based on conversion formula which has to be determined /fixed upfront. Price at the time of conversion should not beless than the fair value worked out, at the time of issuance ofthese instruments.

NRIs on non-repatriation basis under Schedule4 of FEMA 20:No express provision for valuation

Pricing not applicable for transfers between twoNon-Residents

SEZs against import of capital goods intoequityshares:Committee of Development Commissioner

Non-residents (including NRIs):Subscription to itsMemorandum of Association:Made at face valuesubject to their eligibility to invest under the FDIscheme



ISSUE OF INSTRUMENTSIssue of Right Shares – equity, preference & debentures

Pricing of Right issue

Listed Price as determined under SEBI

UnlistedNot less than price at which theoffer on right basis is made to

resident shareholders

Additional allocation of rights share

by residents to non-residents

Subject to sectoral cap

Issue of Bonus Shares

Subject to sectoral cap, Companies Act & SEBI

Acquisition of shares under Scheme of Merger/

Demerger/Amalgamation/Reconstruction of two or moreIndian

companies Subject to sectoral cap

Not engaged in prohibited activities

The transferee or the new company files a report within 30 days

with the Reserve Bank giving full details of the shares held by persons

resident outside India in the transferor and the transferee or the newcom an, before and after the merer/amalamation/reconstruction,



Issue of shares under ESOP/Sweat equity

Indian company may issue “employees’ stock option” and/or “sweat equity

shares” toits employees/directors or employees/directors of its holding

company or joint venture or wholly owned overseas subsidiary/subsidiaries who are resident outside India, provided that :

a) The scheme has been drawn either in terms of regulations issued under the

Securities Exchange Board of India Act, 1992 or theCompanies (Share

Capital and Debentures) Rules, 2014notified by the Central Government

under the Companies Act 2013, as the case may be.

b) The “employee’s stock option”/ “sweat equity shares” issued to non-resident

employees/directors under the applicable rules/regulations are in

compliance with thesectoral capapplicable to the said company.

c) Issue of “employee’s stock option”/ “sweat equity shares” in a company

where foreign investment is under theapproval routeshall require prior

approval of the Foreign Investment Promotion Board (FIPB) of Government ofIndia.

d) Issue of “employee’s stock option”/ “sweat equity shares” under the

applicable rules/regulations to an employee/director who is a citizen of

Bangladesh/Pakistanshall require prior approval of the Foreign Investment

Promotion Board (FIPB) of Government of India.



E A t



Escrow AccountFor open offers / exit offers and delisting of

shares

AD Category – I banks can

open Escrow account and

Special account of non-

resident corporateNon-interest bearing Escrow accounts in Indian

Rupees in India on behalf of residents and/or

non-residents, towardspayment of share

purchase consideration and/or provideEscrow

facilities for keeping securitiesto facilitate FDItransactions

Permitted to open and

maintain, without prior

approval of RBI

Escrow accounts for securities bySEBI

authorised Depository Participants

Permitted to open and

maintain, without RBI

approval

Fund or non-fund based facilities Not permitted

Issue of fresh shares to the non-residents Applicable

Transfer of shares from/to the non-residents Applicable

Validity of Escrow Account Maximum 6 months

Termsof Escrow account Shall be laid down strictly in



Prior permission of the Reserve Bank

(i) Transfer from residents to non-residents by way of sale: Non-resident acquirer proposes

deferment of paymentof the amount of consideration. In case approval is granted for the

transaction, the same should be reported in FormFC-TRS to the AD Category – I bank, within 60 days from the date of receipt of the full and final amount of consideration.

(ii) A person resident in India, who intends to transfer any security, by way of gift to a

person resident outside India. Gift doesnot exceed 5 per cent of the paid-up

capitalof the Indian company / each series of debentures / each mutual fund

scheme; Sectoral cap limit is not breached; The transferor (donor) and the proposed

transferee (donee) are close relatives as defined in Section 6 of the Companies Act,

1956; Value of security to be transferred together with any security already

transferred by the transferor, as gift, to any person residing outside India doesnot

exceedthe rupee equivalent ofUSD 50,000 per financial year.

(iii) Transfer of shares from NRI to NR requires the prior approval of the Reserve Bank of

India.

(iv) Transfer is at a price which falls outside the pricing guidelines specified by the Reserve Bank



e-FIPB___Revised filing procedure

Once the e-filing of the application is completed, the application needs to file/courier onlySINGLE copy of the printed version of the online application, along with the dulyauthenticated copy of the documents attached with the application.

Global Reach-Apply from anywhere in the world! Access your status from anywhere in the

world! Transact while on a move!

E-communication - communication between the applicant, FIPS and other ministries/departments is online.

Quicker communication- All the correspondence including updates/ decisions arecommunicated through SMS/emails

Quicker processing-FIPS forwards the application online to the concerned ministries forprocessing, queries are raised online eliminating physical delivery and loss of time due topostal delays.

Less Paperwork- Single signed copy only needed (for record) instead of present multiplesets of the application.

SMS/email alert-Regular alerts are sent to the applicants related to the queries raised by

the administrative ministries, inclusion of the proposal in the scheduled FIPS meeting anddecisions.

Time saving-E-correspondence between applicant and ministries and also betweenministries themselves avoids delays adding to speed and efficiency.

Transparency and security:all transactions and correspondences are recorded online andare secure.

Query module- Any doubts? A user can raise a query online which shall be replied by therelevant ministry.



i f fl



Form Supporting Time

period

Action by

Regional Office

concerned

Non-compliance

Advance Reporting

Form thru ADBank for

shares/FCCD/FCP

S/Warrants

FIRC/s/ Debit

certificateevidencing

receipt of

remittance

KYC report on

non-resident

investor

Not later

than 30days from

the date of

receipt

Allotment of

UniqueIdentification

Number (UIN) for

the amount

reported

Contravention

under FEMA

Attract penal

provisions

Remittance received from entity other than foreign investors - KYC and documentation:

Investor name matches with FIRC/ KYC: If different – NoC from Remitter and Investor, Nature of

relationship between Remitter and Investor, Letter form Investor, Board resolution of Investee

Company

No KYC if debit to NRE/ FCNR(B)

AD Bank letter/ debit certificate for NRE/ FCNR(B) transfer: Name, account type, amount, dateof debit

Amount in INR/FC matches with FIRC/Bank certificate

Copy of approval letter if under Approval Route

In FIRC: Name of beneficiary; remitter bank; remitter; date of credit; INR equivalent; Purpose of

remittance mentioned in FIRC

For each upfront/ call payment




FDI – NIC Codes Reporting under FDI Scheme

Indian companies are required to report the NIC Codes in theFCGPR and FCTRS forms as per theNIC 2008 version,henceforth. Auniform State and District code list for reporting of detailsof foreign direct investment by Indian companies in FormFCGPR. The list can be accessed on the RBI website

(www.rbi.org.in - FEMA – State and District Code List).

Mapping of Activities/ Sectors by DIPP-http://dipp.nic.in/English/acts_rules/Press_Notes/Mapping_NIC2008_05January2015.pdf.

Circular No. 6 dated July 18, 2014




Time frame for issue of shares

Equity/Capital instruments should beissued within 180days (subject to Companies Act 2013)from the date ofreceipt of the inward remittance or by debit to the NRE/FCNR(B) account/ Escrow account

Else refunded to non-resident investor

Non-compliance will attract contravention of FEMAIn execptional cases, RBI may permit refund/allotment beyond180 days on merit of each case



FIRC issues

Abstract from A.P. (DIR Series) Circular No.96 Dated 20th January, 2014Note should, however, be taken that KYC in respect of the remitter, whereverrequired, is a joint responsibility of the bank that has received the remittance as well as the bank that ultimately receives the proceeds of the remittance. Whilethe first bank will be privy to the details of the remitter and the purpose of theremittance, the second bank, will have access to complete information from therecipient’s perspective. Besides, theremittance receiving bank is required toissue FIRC to the bank receiving the proceeds to establish the fact thefunds had been remitted in foreign currency.

Abstract from RBI/2010-11/315-DPSS (CO) EPPD No. 1309 / 04.03.01 / 2010-11 dated December 13, 2010 Credit to NRE account through RTGS / NEFT /NECS / ECS – Issuance ofForeign Inward Remittance Certificate (FIRC):FIRC should not be issued against remittance for credit to NRE account.

If the proceeds of inward remittance received are remitted in foreign currencyitself to the beneficiary’s banker, then FIRC is to be issued by the bank whichhas received the proceeds in foreign exchange, i.e., the bank which converts theforeign currency into rupees is required to issue FIRC.



Customer's Request Letter cum declaration & undertaking Form –Receipt of the inward remittance in foreign currency

Date:

To,

The Branch Manager

ICICI Bank Ltd.

___________________

Dear Sir/Madam,

This is with reference to your email/letter dated ____________ regardingreceipt of the inward

remittance in foreign currency for an amount of ___________________ .

We request you to credit the same to our account as per the details given below.

Name & addressof remitter/

investor

Amount (in

foreign

currency

Purpose of

remittance

Account

Number

Entry Route

( Automatic or under

Govt. approval)*

*In case the entry route is Government approval route,copy of FIPB approvalis being enclosed

herewith.

We confirm that we havecomplied with all the applicable rules and regulations issued

under Foreign Exchange Management Act, 1999 (“FEMA”) by RBI from time to time on



We further confirm, declare and undertake that:

S/

N

Facet :Response [Please

indicate Yes, No, or

Not Applicable (NA)]

I. Theoverseas remitter/investor Mr. / M/s _____ ______________ (name

& address) is aneligible remitter/investorunder FDI scheme and isnot a citizen and/or is an entity registered in Pakistan & Bangladesh.

:

II. As the overseas remitter/investor iseither a citizen or an entity

registered inBangladesh or Pakistan, a copy of approval of Foreign

Investment Promotion Board (FIPB) of Government of India is enclosed

herewith.

:

III. As overseas remitter/investor is an erstwhile OCBsincorporatedoutside India, approval of the Government of India (if the investment is

through the Government Route) or approval of the Reserve Bank (if the

investment is through the Automatic Route) is enclosed. Erstwhile

OCB should submit a certification from RBI that it is not in the

adverse list being maintained with the RBI.

:

IV. We arenot engagedin anyprohibited activities/sectors listed as per

current FDI Policy of Government of India.

:

V. That the equity instruments shall beissued within 180 daysfrom the

date of receipt of the inward remittance or by debit to the NRE/FCNR

(B) account of the non-resident investor. In case, the equity

instruments are not issued within 180 days from the date of receipt of

the inward remittance or date of debit to the NRE/FCNR (B) account,

the amount of consideration so received would be refunded

immediately to the non-resident investor by outward remittancethrough normal banking channels or by credit to the NRE/FCNR(B)

:



S/

N

Facet :Response [Please

indicate Yes, No, or

Not Applicable (NA)]

VI. After issue of shares (including bonus and shares issued on rights

basis and shares issued on conversion of stock option under ESOPscheme)/convertible debentures/convertible preference shares, we

shall file Form FC-GPR through you to the RBI not later than 30

days from the date of issue of shares.

:

VII.Foreign Direct investment in Partnership Firm/Proprietary

Concern (applicable only if the investee entity is a Partnership

Firm/ Proprietary Concern):

“We declare that the inward remittance is by way of contribution to

the capital of our partnership firm/our proprietary concern onnon-

repatriation basis and our partnership firm/ proprietary concern is

not engaged in any agricultural /plantation or real estate

business (i.edealing in land and immovable property witha view

to earning profit or earning income there from) or print media sector.

The existing regulations issued by SEBI/RBI & FEMA regulations on

Foreign Direct Investment in India have been complied with.”

:

• We request you to kindlyissue FIRC forthe above FDI remittance, and authorize you to debit

bank’s charges for issuance of FIRC.

• We enclose herewith dulysigned Advance Reporting Form (ARF)and request you to report the

above FDI remittance to the RBI along with KYC form of the remitter and a copy of FIRC.

Yours faithfully,

For ____________

i i



Customer letterto include belowstated declarationsand

documents for FDI through the following mode:

Foreign investment towards issue of ADRs / GDRs

“Wedeclare that the inward remittanceis towards issue of ADRs/ GDRs and we areeligible to issue ADRs / GDRs in accordance with the Scheme for issue of Foreign CurrencyConvertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism Scheme ,1993 and subsequent guidelines issued by Ministry of Finance , Government of India. Theexisting regulations issued by SEBI, FEMA and RBI Guidelines on the investment have beencomplied with.” Foreign investment towards issue of sharesunder ESOPs (Employee Stock Option

Scheme) We declare that the inward remittance is towards issue of shares under ESOPs (EmployeeStock Option Scheme) .The existing regulations issued by SEBI FEMA and RBI Guidelineson the investment have been complied with.

ESOP is to be submitted to Mr./Ms.______________ who is an employee (not resident inPakistan) of our firm ____________/of our JV/WOS firm ______________/ of our subsidiary

firm______________ and the face value of the shares to be alloted under the scheme to thenon-resident employee does not exceed 5 percent of the paid up capital of the issuingcompany. For ____________

Authorized Signatory

ReportingofIssueofShares



Form Supporting Time

period

Action by

Regional Office

concerned

Non-compliance

Form FC-

GPR duly

filled up andsigned by

MD/Director/

Secretary of

Company

A certificate from

Company Secretary

Acertificate from SEBIregistered Merchant

Banker or Chartered

Accountant for

valuation

Not later

than 30

days fromthe date of

issue

Taking on record

the shareholding

pattern

Contravention

under FEMA

Attract penal

provisions

Reconciliation of shareholding pattern at RBI end (Fresh issue, transfers,

reduction, merger, transfers from NR to NR etc.) – Previous RBI Acks, dulyapproved Form FC-TRS

Routed through Bank; Latest format; FDI registration number if existing

company with FDI; State & District Code; Constitution of NR/Address/ Date of

incorporation; Surplus/ Shortage; UIN details

Inapplicable clauses duly authenticatedOn conversion to equity, only plain paper reporting is to be made.

Reporting of Issue of SharesReporting of Issue of Fresh Shares /Partly paid shares/Bonus /Rights Shares/ESOP/ Convertible Debentures / Convertible Preference Shares /Conversion ofECB / Royalty / Lumpsum Technical Know-how Fee / Import of Capital Goods by SEZs /Pre-operative/Pre-incorporation Expenses/Legitimate dues/

Amalgamation/ Merger

C i fh h h h /3



Conversion of shares other than cash…1/3

TransactionNature of

permissionConditions to be fulfilled

Conversion of ECB

due for payment ornot into shares

/convertible

debentures

General

permission

• Activity covered under Automatic

Route, or obtained FIPB approval•Post conversion equity within the

sectoral cap

• Pricing Guidelines adhered to

Against lump sum

technical know-howfee, royalty into

e'uity referenceshares

General

permission

•Subject to entry route, sectoral cap

& Pricing Guidelines• Compliance with applicable tax laws

Share Swap -

shares

FIPB

approval

•Irrespective of the amount,

valuation of shares to be made by aMerchant Banker registered with

SEBI or an Investment Banker

outside India registered with

appropriate regulatory authority in

the host country

•FIPB approval for Indian leg of FDI

C i fh th th h 2/3



Conversion of shares other than cash …2/3

Import of capital

goods/machinery/equipment

(excluding second hand) intoequity shares

Import in accordance with Exim Policy

Independent valuation by third party entity,

preferably by an independent valuer from the

country of import along with

documents/certificates issued by the customs

authorities towards assessment of the fair-

value of such imports

Beneficial ownership and identity of the

Importer Company as well as overseas entity

Conversions into FDI being done within 180

days from date of shipment of goods

Second-hand machinery excluded from the

purview of this provision

Pre-operative/pre-

incorporation expenses

(including payments of rent

etc.) intoequity sharesCurrent Account Rules: Remittancesexceeding *+e er cent of in+estmentbrought into India or S- .!!,!!!#hiche+er is higher, by an entity in India by

#ay of reimbursement of re/incororationexenses

FIRC for remittance for expenditure incurred

Verification and certification by statutory

auditor

Payments made directly to company.

Payments made through third parties citing

the absence of a bank account or similar such

reasons not allowed Capitalization within 180 days

FDI IssueofequitysharesundertheFDISchemeagainst



FDI - Issue of equity shares under the FDI Scheme against

Legitimate Dues…. 3/3

Issue ofequity shares against any other funds (Legitimate Dues) payable by theinvestee company, remittance of which does not require prior permission of theGovernment of India or Reserve Bank of India under FEMA, 1999 or any rules/regulations framed or directions issued thereunder, provided that: i. The equity shares shall be issued in accordance with the extant FDIguidelines on sectoral caps, pricing guidelines etc. as amended by Reserve bank of India, from time to time;

Explanation: Issue of shares/convertible debentures that require Governmentapproval in terms of paragraph 3 of Schedule 1 of FEMA 20 orimport duesdeemed as ECB or trade credit or payable against import of second handmachinery shall continue to be dealt in accordance with extantguidelines;

ii. The issue of equity shares under this provision shall besubject to tax laws

as applicable to the funds payable and the conversion to equity should be netof applicable taxes.

Circular No.31 dated September 17, 2014



Conversion of ECB into EquityIn case the ECB liability, denominated in foreign currency and / or import of capital goods, etc. issought to be converted by the company, it will be in order to apply the exchange rate prevailing onthe date of the agreement between the parties concerned for such conversion. Reserve Bank willhave no objection if the borrower company wishes to issue equity shares for a rupee amount less

than that arrived at as mentioned above by a mutual agreement with the ECB lender. It may benoted that the fair value of the equity shares to be issued shall be worked out with reference to thedate of conversion only. FEMA1.It is under Automatic Route – no prior or post approvals required from RBI/FIPB.2.ECB, due for payment or not, eligible to be converted into equity if ECB was taken in compliance with ECB regulations.

3.Equity shares can be issued to the ECB Lender entity.4. To obtain consent from ECB lender for such conversion; supported by Indian Company’s BoardResolution.

5. A Chartered Accountant's Certificate complying with RBI Pricing/Valuation guidelines. Theactual issue price of shares shall not be less than the price determined on the basis of valuationreport.

6. A Chartered Accountant's Certificate certifying the amount outstanding on the date ofconversion.

7.Reporting under Form FC-GPR. No intimation for Inward Remittance Report required to befurnished to RBI; as not applicable being conversion of ECB.8.Forfull conversion: Reporting of the conversion of ECB into equity, in ECB-2 Return. The words “ECB wholly converted to equity” should be clearly indicated on top of the ECB-2 form.Once reported, filing of ECB-2 in the subsequent months is not necessary.

9.In case ofpartial conversionof ECB, the company shall report the converted portion in FormFC-GPR to the Regional Office concerned as well as in Form ECB-2 clearly differentiating theconverted portion from the non-converted portion. The words "ECB partially converted to equity"shall be indicated on top of the Form ECB-2. In the subsequent months, the outstanding balance of ECB shall be reported in Form ECB-2 to DSIM.



Conversion of ECB into EquityCompanies Act 2013: 1. Valuation Report by a an independent Chartered Accountant in practice having aminimum experience of ten years who shall submit a valuation report to the company

giving justification for the valuation. The actual issue price of shares shall not be lessthan the price determined on the basis of valuation report.

2. To hold Board meeting to convene EGM for conversion of ECB.

3. To pass aSpecial Resolution in a general meeting. To hold Extra-Ordinary generalmeeting of shareholders. To File with RoC Form MGT.14 u/s 117(3(a).

4. After EGM, to hold Board meeting for allotment of shares by means of resolutions passedat meetings of the Board; and not by resolution by circulation – section 179(3)(c).

5. To file with RoC Form MGT.14 u/s 179(3(c) read with section 117(3)(g).

6. To maintain a complete record of such offers and acceptances in Form No. PAS-5.

7.File with RoC a Return of Allotment in FormPAS-3 with list of allottees stating theirnames, address, occupation, if any, and number of securities allotted to each of theallottees and the list shall be certified by the signatory of the Form PAS-3 as beingcomplete and correct as per the records of the company; along with the valuation report by independent chartered accountant in practice having a minimum experience of ten years.



Pledge of shares of company incorporated in India Any person being apromoter of a company registered in India (borrowing company),

which has raised external commercial borrowing,may pledge the shares of the

borrowing company or that of its associate resident companies for the purpose of

securing the external commercial borrowing (ECB) raised by the borrowing

company

Shares of an Indian companyheld by the non-resident investorcan bepledged in

favour of an Indian bank in India to secure thecredit facilities being extended to

theresident investee company forbona fide business purposes

Shares of the Indian companyheld by the non-resident investor can bepledged in

favour of an overseas bank to secure thecredit facilities being extended to the

non-resident investor / non-resident promoterof theIndian companyor its

overseas group company.

Any person being anon-resident investorof a company registered in India andlistedon a recognised stock exchange/sin India (resident investee company), may pledge

the shares of that company,infavour of a Non-Banking Financial Company in

India, to secure the credit facilities being extended to thatresident investee

company for bonafide business purposes, subject to the AD bank satisfying itself of

the compliance of the conditions stipulated by the Reserve Bank, from time to time, in

this regard

FCGPR



FC-GPRReporting of issue of sharesForm FC-GPR has to be duly filled up and signed by ManagingDirector/Director /Secretary of the Company and submitted to the AuthorisedDealer of the company, who will forward it to the concerned Regional Office ofthe Reserve Bank. The following documents have to be submitted along withForm FC-GPR:(i) A certificate from ourCompany Secretary certifying that(a) all the requirements of the Companies Act, 1956 have been complied with;(b) terms and conditions of the Government approval, if any, have beencomplied with;

(c) the company is eligible to issue shares under these Regulations; and

(d) the company has all original certificates issued by authorised dealers inIndia evidencing receipt of amount of consideration in accordance withparagraph 8 of Schedule 1 to Notification No. FEMA 20/2000-RB datedMay 3, 2000.

(ii) A certificate from SEBI registered Merchant Banker /Chartered Accountant indicating the manner of arriving at the price of the shares issued to the persons

resident outside India.

(iii)Board resolution duly certified by Company Secretary: “Since the date ofincorporation, the Company ______ Limited has not carried out any activity which is not FDI compliant. Further the Company is doing and in future also willdo only such activity which is allowed under FDI Policy issued by DIPP, Ministry

of Commerce and Industry, Govt. of India.”

CERTIFICATETO BEFILED BYTHE COMPANY SECRETARYOFTHEINDIAN



CERTIFICATE TO BE FILED BY THE COMPANY SECRETARYOF THE INDIANCOMPANY ACCEPTING THE INVESTMENT: (As per Para 9 (1) (B) (i) of Schedule 1 to Notification No. FEMA 20/2000-RBdated May 3, 2000)In respect of the abovementioned details, we certify the following :

1. All the requirements of the Companies Act, 1956 have been complied with.2. Terms and conditions of the Government approval, if any, have been complied with.3. The company is eligible to issue shares / convertible debentures/others underthese Regulations.4. The company has all original certificates issued by AD Category – I banks in India,evidencing receipt of amount of consideration in accordance with paragraph 8 ofSchedule 1 to Notification No. FEMA 20/2000-RB dated May 3, 2000.

Note:If the company doesn’t have full time Company Secretary, a certificatefrom practicing Company Secretary may be submitted.

(Name & Signature of theCompany Secretary) (Seal)

DECLARATION TO BE FILED BY THE AUTHORISED REPRESENTATIVE OF THE

LIMITED LIABILITY PARTNERSHIP: A certificate from theChartered Accountant/Cost Accountant/approved valuer from the panel maintained by the Central Government, indicating the manner ofarriving at the fair price of the capital contribution/profit shares issued to thepersons resident outside India.



Branch document checklist- Filing form FC-GPR Track No:

Key Customer: Yes/No

Product:

Name of customer:______________________________________________________

Case Ref No.: _____________________________________________

Rating : _______________________

Branch: ___________________

Sol ID_________

Sr. No Guideline/Documentation Required Yes/No Remarks

1 Customer request letter for filing of form FC-GPR with

signature verification2 Completely filled up &duly signedForm FC-GPR

3 A certificate from Statutory Auditors/ SEBI

registered Category I Merchant Banker/Chartered

Accountant indicating the manner of arriving at the

price of share issued to the foreign investor

4 KYC reportof the remitter/ investor as perRBI format5 Copy ofFIRC for the funds received

6 Company secretary certificateof the Indian party

accepting the investment

7 Additional Documents Required as per the nature of

investment (Ref: annexure 127)

8 Debit authority letterfrom the customer for collecting AD Bank charges

i



FC-GPR-Scrutiny

Company Secretary’s Certificate• Submit in original• All the clauses in the certificate must be as per format/ any conditionality mentioned• Registration number of Practicing CS

• Indian company’s name indicated? (if issued not as a continuation page of FCGPR)• If name of investor/s, the number of shares issued / date of issue mentioned in the

certificate, whether they tally with FCGPR Chartered Accountant’s certificate• Submit in original• Subscribe to MoA/ Rights/ Bonus – No CA valuation certificate

• Valuation based on latest balance sheet and as per erstwhile CCI guidelines (allotment <7.4.2010)• Valuation based on Discounted Free Cash Flow (DCF) Method (allotment=> 7.4.2010)• W.E.F 15.7.2014, for unlisted – Internationally accepted methodology• Fair Value has to be indicated clearly• Indian company’s name is appearing in the certificate• Valuation of equity share as on the date/ near to the date of issue is required – CCPS/

CCDs/ warrants

• Date of issue of CA certificate be nearest to the date of issue of shares. • ESOPs – plain paper reporting for stock options- at the time of issue shares FCGPR within 30 days- not more than 5% of capital and scheme as per SEBI guidelines

• Merger/ Amalgamation – Court order - FCGPR (not to exceed sectoral cap – activitypermitted as per FDI policy)

• ECB conversion in to Equity – CA certificate for outstanding ECB, copy of ECB-2

returns



FCGPR-For checking and reporting to RBI (For Issue ofShares)

Documents required for initial reporting to RBI: Certified copy of FIRC.

KYC of the overseas remitter. Letter from customer addressed to RBI for inward remittance received. Initial reporting format duly filled. In case where customer failed to report receipt of inward remittance to RBI through A.D., within 30 days from the date of receipt of remittance, a separate request letter clarifyingthe reason for delay and also requesting RBI to condone the delay on account of latesubmission should be forwarded along with subsequent intimation of inward remittance.

Documents required along with FC GPR Form Part A:

KYC of the overseas remitter (Certified Copy from Remitting Bank.) as per the prescribedformat mentioned in the circular.

Certified copy of FIRC. CA VALUATION CS certificate for application of funds.Certified copy of Board Resolutionfor issuance of shares.

Acknowledgment from R.B.I. for report of inward remittanceOR UIN LETTER ISSUEDBY RBI

If the remittance is under approval route, copy of the FIPB/DIPP approval. Companies failing to Issue shares/ Convertible debentures within 180 days from thedate of receipt of consideration needs to return the consideration to the foreign investorsor seeks RBI’s approval for extension of period for issue of shares/debentures.

MOA of the company required



Reporting under ESOPs for allotment of equity shares

An Indian company issuing sweat equity shares / employees’ stock option /

shares issued against exercise of stock option to its employees/directors oremployees/directors of its holding company or joint venture or wholly owned

overseas subsidiary/subsidiaries who are resident outside India shall furnish to

the Regional Office concerned of the Reserve Bank of India under whose

jurisdiction the registered office of the company operates, within 30 days from

the date of issue of employees’ stock option or sweat equity shares, as per the

Form-ESOP (Annex -13 to Master Circular).

ForeignDirectInvestment-ReportingunderFDISchemeon



Foreign Direct InvestmentReporting under FDI Scheme onthe e-Biz platform

A.P. (DIR Series) Circular No.77 Dated 12th February, 2015 Advance Remittance Form (ARF) - used by the companies to report the foreign directinvestment (FDI) inflow to RBI; and

FCGPR Form - which a company submits to RBI for reporting the issue of eligible instruments

to the overseas investor against the above mentioned FDI inflow. The design of the reporting platform enables the customer tologin into the e-Biz portal,download the reporting forms (ARF and FCGPR),complete and thenupload the same ontothe portal using their digitally signed certificates.

The Authorised Dealer Banks (ADs) will be required todownload the completed forms, verifythe contents from the available documents, if necessary by calling for additional information

from the customer andthen upload the same for RBI to process and allot the UniqueIdentification Number (UIN). It has been decided that the ARF and FCGPR services of RBI will be operational on the e-Biz platform from February 19, 2015. The user manual for the twoservices is Annexed to this Circular. It may be noted that for the present, the online reporting on the e-Biz platform is an additionalfacility to the Indian companies to undertake their ARF and FCGPR reporting and themanualsystem of reporting as prescribed in terms of A.P. (DIR Series) Circular No.102 dated February11, 2014 would continue till further notice. Steps for a Business User for Application Submission on eBiz• Steps for Processing of Application by AD Bank – Advanced Foreign Remittance• Steps for Resubmission of Application• Steps for applicant to apply forrefund approval• Steps to process refund approval request• Steps for Processing of Application by AD Bank –FC-GPR

Transfer of shares -includes



Buyback, delisting, exit, open offer/substantialacquisition/SEBI SAST, capital reduction scheme…1/2

Transferor Transferee

Non-Resident (other than NRI

and erstwhile

OCB)

Non-Resident(including NRIs)

By way of sale orgift

Pricing norms not

applicable.

Under AutomaticRoute.

With FIPB approval

if sector under

approval route.

NRIs NRIs By way of sale orgift

Pricing norms not

applicable.

Under AutomaticRoute.

With FIPB approval

if sector under

approval route.

Non-Resident Person resident

in India

By way of sale or

gift

Pricing norms

applicable.

Under Automatic

Route.



Transfer of shares …2/2

Transferor Transferee

NRI and

erstwhile

OCB

Non-Resident

Pricing norms not

applicable.

By way of sale or

gift

Prior permission

of RBI.

With FIPB approval

if sector under

approval route.

Resident Non-Resident

including NRIs

Pricing norms

applicable.

Activities falling under Automatic

Route. With FIPB approval if sector

under approval route.

Transfer of Shares by Resident which requires Governmentapproval:

(i) Companies engaged in sector falling under the Government Route. (ii)

Transfer of shares resulting in foreign investments in the Indian

company, breaching the sectoral cap applicable.

Non-Resident can sell shares on a recognized Stock Exchange in Indiathrough a stock broker registered with stock exchange or a merchant banker



FCTRS ForcheckingandreportingtoRBI(Forthe



FCTRS- For checking and reporting to RBI (For theSale of Shares)

Transfer of shares from Non -Resident to Resident.

Request Letter/ debit authority for making a remittance Form A2 & FEMA Declaration as per Bank’s prescribed format Consent letter duly signed by the Seller. Board resolution from remiter if a Company/POA to Broker Consent letter from Buyer Share holding pattern of theIndiancompany (pre & post buy-back)

• CA VALUATION OF SHARES OR COPY OF BROKER'S NOTE IF SALE ISMADE ON STOCK EXCHANGE.

Copy of reporting done to RBI for obtaining the approval. RBI registration no. stating that the shares held was on repatriation basis. Form 15 CA & CB Form FC-TRS (4 sets signed by non-resident)

ID proof of person signing FCTRS form. POA or Board resolution authorizing person to sign FCTRS form.

DECLARATION FROM THE BUYER TO THE EFFECT THAT HE IS ELIGIBLE TO ACQUIRE SHARES / COMPULSORILY AND MANDATORILYCONVERTIBLE PREFERENCE SHARES / DEBENTURES UNDER FDI POLICY

AND PRICING GUIDELINES HAVE BEEN COMPLIED WITH.

h ki d i ( h l f



FCTRS- For checking and reporting to RBI (For the Sale ofShares)

In case of shares transferred from Resident to Non –Resident

Request Lettercum debit authority for our vetting charges. Consent letter duly signed by the Seller. Consent letter from Buyer Share holding pattern of theIndiancompany ( pre & post buy-back)

CA VALUATION OF SHARES OR COPY OF BROKER'S NOTE IF SALE ISMADE ON STOCK EXCHANGE.

Form FC-TRS (4 sets signed by non-resident) ID proof of person signing FCTRS form. POA or Board resolution authorizing person to sign FCTRS form.

DECLARATION FROM THE BUYER TO THE EFFECT THAT HE ISELIGIBLE TO ACQUIRE SHARES / COMPULSORILY AND MANDATORILY

CONVERTIBLE PREFERENCE SHARES / DEBENTURES UNDER FDIPOLICY AND THE EXISTING SECTORAL LIMITS AND PRICINGGUIDELINES HAVE BEEN COMPLIED WITH.

FIRC copy KYC of the Remitter



DiscloseinBalanceSheet



Disclose in Balance Sheet

An Indian company taking on record in its books any

transfer of its shares or convertible debenture by way of

sale from a resident to a non-resident and a non-resident

to a resident shalldisclose in its balance sheetfor the

financial year, in which the transaction took place, the

details of valuation of share or convertible debentures, the

pricing methodology adopted for the same as well as the

agency that has given/certified the valuation.

If Contravened? To bring the difference form the foreign investor to

comply with pricing guidelines and also to apply for

compounding for contravention of pricing guidelines?

Online filing of the Foreign Currency Transfer of Shares



(FCTRS) A.P. (DIR Series) Circular No.9 Dated 21st August, 2015 The design of the reporting platform enablesthe customer to login into the eBiz portal,download the reporting form (FCTRS), complete and then upload the same onto the portal

using their digitally signed certificates.

The Authorised Dealer Banks (ADs) will be required to download the completed forms, verifythe contents from the available documents and if necessary, call for additional information fromthe customer and thenupload the same for RBI to process and allot the Unique IdentificationNumber (UIN). The FCTRS services of RBI will be made operational on the e-Biz platform from August 24, 2015. The user manual for this service is Annexed to this Circular.

It may be noted that for the present, the online reporting on the e-Biz platform is an additionalfacility to the Indian residents to undertake their FCTRS reporting and themanual system ofreporting as prescribed in terms of A.P. (DIR Series) Circular No.6 dated July 18, 2014 wouldcontinue till further notice. The following are users and their roles in eBiz application:Business User: Register on eBiz portal; Submit application; Make Payment; Provide clarification sought bythe department; View status updates sent by department

AD Bank User: Process the application; Forward to RBI RO; Raise objection if required; Update status;Issue certificate Department User: Process the application; Raise objection if required; Provide approval; Update status

D t I t t



Downstream Investments

• Investment by Foreign ‘Owned’ and/ or‘Controlled’ Indian company into anotherIndian company

• Covers fresh investment and acquisition ofexisting shares

• Regarded asIndirect FDI

• Pricing guidelines applicable to Direct FDI will equally apply

• Investment/ consideration for transfer > Fair

Value

• Compliance: Filing of intimation with SIA, DIPPand FIPB within 30 days from date ofinvestment

• Downstream buy-backs also covered by pricingguidelines

• Buy-back price < Current Fair Value• Valuation needs to be done by a Chartered Accountant or SEBI Regd. Merchant Banker

• Anomaly: Downstream investment throughacquisition of shares from NR

• Indian company can record share transfer only

on receiving acknowledged Form FC-TRS

Foreign Co

Indian Co

DownstreamIndian Co

> 50%

1% to 100%

IndirectFDI/‘Control’



Indirect FDI/ControlEarlier: A company is considered as‘Controlled’ by resident Indian citizens ifthe resident Indian citizens and Indian companies, which are owned andcontrolled by resident Indian citizens, have the power to appoint amajority ofits directors in that company.

Revised:‘Control’ shall include the right to appoint a majority of thedirectors orto control the management or policy decisions including by

virtue of their shareholding or management rights or shareholdersagreements or voting agreements.

A company is considered as‘Owned’ by resident Indian citizens ifmore than50% of the capitalin it is beneficially owned by resident Indian citizensand / or Indian companies, which are ultimately owned and controlled byresident Indian citizens.

Aviation Sector: Substantial ownership and effective control of which is vested in Indian nationals

SEBI: Right of first refusal and tag along rights do not amount to changein CONTROL as per Takeover Regulations

In sector which are not prohibited (e.g. retail), Indian operatingcompanies owned & controlled by Indians, invest downstream into retail

businesses, whether multi-brand, single brand or e-commerce.

Indirect cases:



Prohibited sectors: Not permitted.

RBI Master Circular: TheFDI recipient Indian company at the first level which isresponsible for ensuring compliance with the FDI conditionalities likeno indirect foreigninvestment in prohibited sector, entry route,sectoral cap/conditionalities, etc. for thedownstream investment made by in the subsidiary companies at second level and soon and so forth would obtain a certificate to this effect from its statutory auditor on anannual basis as regards status of compliance with the instructions on downstreaminvestment and compliance with FEMA provisions.

Indirect foreign investment via Indian Owned & Controlled Company: Telecom, I&B,Print Media, Single brand retail Trading, Multi Brand Retail Trading, Media,Pharmaceuticals, Construction and development projects/Real estate

Downstream investments by Indian companies will be subject to the following conditions:(i) Such a company is tonotify SIA, DIPP and FIPB of its downstream investment in theform available athttp://www.fipbindia.com within 30 days of such investment,even if capital instruments have not been allotted along with the modality of investmentin new/existing ventures (with/without expansion programme);

(ii) Downstream investment by way of induction of foreign equity in an existing IndianCompany to beduly supported by a resolution of the Board of Directors as also a

shareholders agreement, if any;(iii) Issue/transfer/pricing/valuation of shares shall be in accordance with applicableSEBI/RBI guidelines;

(iv) For the purpose of downstream investment, the Indian companies making thedownstream investments would have to bring in requisite funds from abroad andnotleverage funds from the domestic market. This would, however, not precludedownstream companies, with operations, from raising debt in the domestic market.Downstream investments through internal accruals are permissible.

Certificate from Statutory Auditor for



yDownstream Investment

TheFDI recipient Indian company at the first levelresponsible forensuring compliance with the FDI conditionalitieslike no indirect foreign

investment in prohibited sector, entry route, sectoral cap / conditionalities,etc. for the downstream investment made by in the subsidiarycompanies at second level and so on and so forth would obtain acertificate to this effect from itsstatutory auditor on an annual basisasregards status of compliance with the instructions on downstreaminvestment and compliance with FEMA provisions.

The fact that statutory auditor has certified that the company is incompliance with the regulations as regards downstream investment and otherFEMA prescriptions will be duly mentioned in theDirector’s reportin the

Annual Report of the Indian company.

In case statutory auditor has given aqualified report, the same shall beimmediately brought to the notice of the RBI, Foreign Exchange Department

(FED),Regional Office(RO) of RBI in whose jurisdiction the RegisteredOffice of the company is located and shall alsoobtain acknowledgementfrom the RO of having intimated it of the qualified auditor report.

RO shall file theaction taken reportto the Chief General Manager-in-Charge, Foreign Exchange Department,Reserve Bank of India, CentralOffice, Central Office Building, Shahid Bhagat Singh Road, Mumbai 400001.

Annual Return of Liabilities & Assets



ua etu o ab tes& ssets A.P. (DIR Series) Circular No. 45 & 133 dated 15 March, 2011 & 20 June 2012,

FAQs 18 June 2014

By Indian Companies:Capture statistics relating to Foreign Direct Investment, both

inward and outward To be filed electronically

Submitted by July 15 of every year to the RBI, Mumbai

To be submitted by all Indian companies which havereceived FDI and/or made FDI

abroad in theprevious year(s) including the current year

Coverage:

1 Methodology for valuation of foreign liabilities and foreign assets1 Nature of activities principal line of business as %, with NIC code(NIC Codes in

the FCGPR and FCTRS forms as per the NIC 2008 version)

1 Name & country of non-resident investor under FDI

1 Financial derivatives, Money market instruments

1 Trade credits, loans, Currency & Deposits

1 ODI and Portfolio investment overseas1 Contingent foreign liabilities

1 Disinvestments in India and Abroad

The filled in Excel based FLA return should be forwarded through theofficial email id

of any authorized person like CFO, Director, Company Secretaryetc.

Acknowledgement

AnnualReturnonForeignLiabilities&Assets(FLA



Annual Return on Foreign Liabilities & Assets(FLAReturn) (1/2)

Due date of filing FLA Return July 15every year

Eligible Companies Indian companies which have

received FDIand/or made ODIin

the previous year(s) including the

current year i.e. who holds foreign

Assets or Liabilities in their Balance

Sheets as on 31 March

No outstanding investment in respect ofinward and outward FDI as on end-March of

reporting year

Ned not submitFLA Return

If a company has received only share

application money and does not have any

FDI/ODI outstanding as on end-March ofthe reporting year

Need not submitFLA Return

If the company has not ‘received any fresh

FDI and/or ODI’ in the latest year but the

company has outstanding FDI and/or ODI

Required to submitFLA Return

Registered Partnership Firms (Registered Required to send a request mail toet a dumm CIN number which

FLAReturn(2/2)



FLA Return (2/2)

Is it required to submit Annual

Performance Report (APR) for ODI,

where FLA Return has been

submitted ?

Yes. FLA Return and APR are two

different Returns as per different FEMA

Notifications

Who is responsible to file FLA

Return? From whose mail ID, the

FLA Return should be e-mailed?

Filled-in Excel based FLA return should

be forwarded through theofficial email

ID of any authorized person like CFO,

Director, Company Secretary etc.

Format of FLA Return Updated FLA return to bedownloaded

from RBI’s websiteevery year by end of

May

Where accounts are not audited

before July 15

FLA Return to be submitted based on

unaudited (provisional) account

Revisions from the provisional

information given by company after

accounts get audited

Revised FLA Return based on audited

accounts can befiled by September

end

Non-filing of return before due date Violation under FEMA, Penalt or

PartnershipFirm /ProprietaryFirm



Partnership Firm / Proprietary Firm

By NRI and PIO:

Onnon-repatriation basis:

(Not engaged in any agricultural/plantation

or real estate business /print media sector)

√

Onrepatriation basis

Subject to prior permission of RBI in

consultation with the Government of India.

Generally not permitted by FIPB

Other than NRIs/PIO:

Subject to prior approvalof RBIin

consultation with the Government of India.Generally not permitted by FIPB

Schedule4ofFEMA20



Schedule 4 of FEMA 20

NRIs may without any limit, purchaseon non-repatriation basis, shares or convertible

debentures of an Indian company issued whether bypublic issue or private placementor

right issue

Other thanchit fundor anidhi companyor is engaged inagricultural/plantation activitiesor

real estate businessor construction of farm houses or dealing in Transfer of Development Rights

By way of inward remittance through normal banking channels from abroad or out of funds held

in NRE/FCNR/NRO account

Sale/maturity proceeds (net of applicable taxes) of shares or convertible debentures shall be

credited only to NRO account

Investment by NRIs under Schedule 4 of FEMA 20 will bedeemed to be domestic investment

at par with the investment made by residents.Press Note No.7 dated 3rd June, 2015

‘Non-Resident Indian’ (NRI) means an individual resident outside India who is a citizen of India or is an ‘Overseas

Citizen of India’ cardholder within the meaning of section 7 (A) of the Citizenship Act, 1955. ‘Persons of Indian Origin’

cardholders registered as such under Notification No.26011/4/98 F.I, dated 19.8.2002, issued by the Central

Government are deemed to be ‘Overseas Citizen of India’ cardholders.

Vide The Citizenship (Amendment) Act 2015 w.e.f. 06 January 2015 read PN7 dated 03 June 2015

FPIs & NRIs



FPIs

Individual holding Below10% of the capital

Aggregate limit for FIIs 24%of the capital

Aggregate limit of24% can beincreased to the sectoral

cap/statutory ceiling

Special Resolution of Shareholders Prior intimation to RBI

Certificate from theCompany Secretary

stating compliance of FEMA and FDI

Policy

Aggregate underFDI and PortfolioInvestment Scheme

within the above caps

IPOs only PermittedNRIsNRIs through designated ADs up to5 % of the paid- up capital

Aggregate limit of 10%can be

raised to 24 per cent

Special Resolution of Shareholders

Prior intimation to RBI Certificate from theCompany Secretary

stating compliance of FEMA and FDI

Policy

Shares purchased underPortfolio

Investment Scheme cannot be

transferred by way of sale under

ExceptNRIs can transfer shares acquired

under PIS toclose relatives

Indian Investee Company eligible to raise the aggregate cap



of 24% for RFPI

An Indian company can raise the 24 per cent ceiling to the sectoral cap /statutory ceiling, as applicable, by passing a resolution by its Board of Directors

followed by passing a Special Resolution to that effect by their General Body.Indian company raising the aggregate RFPI investment limit of 24 per cent to thesectoral cap/ statutory limit, as applicable to the respective Indian company,should necessarily intimate the same to the Reserve Bank of India, immediately,as hitherto, along with a Certificate from theCompany Secretary stating thatall the relevant provisions of the extant Foreign Exchange Management Act, 1999regulations and the Foreign Direct Policy, as amended from time to time, have been complied with. The Indian Company thus raising the aggregate cap for RFPI investment shouldinform Reserve Bank of India, Foreign Exchange Department, Central Office,Shahid Bhagat Singh Marg, Fort, and Mumbai 400001. The intimation shouldnecessarily be accompanied by (a) a resolution passed by Board of Directors of

the Company enhancing the FII aggregate cap, (b) A special Resolution to theeffect passed by the shareholders of the Company (c) a certificate from theCompany Secretary stating that all the relevant provisions of the extant ForeignExchange Management Act, 1999 regulations and the Foreign Direct Policy, asamended from time to time, have been complied with, (d) a certificate from theCompany Secretary stating that all the resident shareholders of the investeecompany are ‘owned and controlled’ by residents.

Indian Investee Company eligible to raise the aggregate capi i



of 10% for Portfolio Investments by SEBI registered NRI/PIO

This limit for investment by NRI/PIO under Portfolio investment scheme can beincreased by the Indian company from 10 per cent to 24 per cent by passing a

General Body resolution. Indian company raising the aggregate NRI investmentlimit of 10 per cent to 24 per cent, should necessarily intimate the sameimmediately to Reserve Bank of India, Foreign Exchange Department, CentralOffice, Shahid Bhagat Singh Marg, Fort, Mumbai 400001. The intimation shouldnecessarily be accompanied by (a) a resolution passed by Board of Directors ofthe Company enhancing the FII aggregate cap, (b) A special Resolution to theeffect passed by the shareholders of the Company (c) a certificate from theCompany Secretary stating that all the relevant provisions of the extant ForeignExchange Management Act, 1999 regulations and the Foreign Direct Policy, asamended from time to time, have been complied with, (d) a certificate from theCompany Secretary stating that all the resident shareholders of the investeecompany are ‘owned and controlled’ by residents

LimitedLiabilityPartnerships(LLPs)



Limited Liability Partnerships (LLPs)

FDI in LLPs:

Prior approval from FIPB Sectors/activities where100% FDI allowed

No FDI-linked performance related conditions (such as ‘Non Banking Finance

Companies’ or ‘Development of Townships, Housing, Built-up infrastructure and

Construction-development projects’, or ‘Retail sector’ etc.)

Only by way ofcash consideration

Indian company having FDI (direct or indirect irrespective of % of such foreign

investment), permitted to make downstream investment in LLP only if both the

company as well as the LLP is operating insectors where 100% FDI allowed, through

automatic route

Designated Partner – Resident in India under LLP Act and FEMA

Restrictions to LLPs with FDI:

Not in agricultural/plantation activity, print media or real estate business

Not eligible to make any downstream investment

Not permitted to avail ECBs

RFPIs/FIIs/QFIs and FVCIs not permitted to invest in LLPs

Conversion of a company with FDI, into an LLP, allowed only if above stipulations are met

and with theprior approval of FIPB

FDI in an LLP



FDI in an LLP either by way of capital contribution or by way of acquisition /transfer of ‘profit shares’, would have to be more than or equal to the fair price as worked out with any valuation norm which is internationally accepted/ adoptedas per market practice (hereinafter referred to as “fair price of capital

contribution/profit share of an LLP”) and a valuation certificate to that effectshall be issued by a Chartered Accountant or by a practicing Cost

Accountant or byan approved valuer from the panel maintained by the CentralGovernment.

Form FOREIGN DIRECT INVESTMENT-LLP-(II)

Declaration regarding transfer of capital contribution/profit shares of anLimited Liability Partnership from resident to non- resident / non-residentto resident Certificate indicating fair value of shares from theChartered Accountant/Cost

Accountant/ approved valuer from the panel maintained by the CentralGovernment.

LLP



LLP

Reporting Requirements Receipt of consideration for capital contribution

or profit share – Within 30 daysFormForeign Direct Investment – LLP(I) Copies of FIRCKYC report of non-resident investorRBI will allot UIN for each remittance

Transfer of capital contribution or profit share between Non-Resident and Resident – Within 60daysForm Foreign Direct Investment – LLP(II)

Non-Resident to Non-Resident transferFIPB approval requiredNo specific reporting specified

Remittance



RemittanceSale proceeds of shares is ‘remittance of asset’ governed by The Foreign Exchange

Management (Remittance of Assets) Regulations 2000 under FEMA.

Bank can allow remittance of sale proceeds of a security (net of applicable taxes) to theseller of shares resident outside India, provided the security has been held on repatriation

basis, the sale of security has been made in accordance with the prescribed guidelines

and NOC / tax clearance certificate from the Income Tax Department has been produced.

Repatriation of Dividend: Without any restrictions (net of applicable taxes) being Current

Account Transactions. The rate of dividend on convertible preference shares issuedunder these Regulations shallnot exceed 300 basis points over the Prime Lending

Rate of State Bank of India prevailing as on the date of the Board meeting of the

company in which issue of such shares is recommended.Dividend on shares pending

FCGPR registration is permitted.

Repatriation of Interest: Without any restrictions (net of applicable taxes) being Current

Account Transactions. Bench mark ceiling applicable for Preference Shares apply to

interest as well.

Credit of sale proceeds of Foreign Direct Investments in India to NRE / FCNR(B) accounts

permitted

Form 15CA/15CB 1/2



Form 15CA/15CB ….. 1/2

Form 15CB not required: Part A of Form No.15CA, if the amount ofpayment does not exceed fifty thousand rupees and the aggregate of

such payments made during the financial year does not exceed twolakh fifty thousand rupees.

Form 15CB also not required if remittance is covered bySPECIFIED LIST

SPECIFIED LIST where Form 15CA/15CB not required …2/2



Form A-2 code Nature of payment

S0001 Indianinvestment abroad-in equity capital(shares)

S0002 Indianinvestment abroad-in debt securities

S0003 Indianinvestment abroad-in branches and wholly owned subsidiaries

S0004 Indianinvestment abroad-in subsidiaries and associates

S0005 Indianinvestment abroad-inreal estate

S0011 Loans extended to Non-Residents

S0202 Payment- for operating expenses of Indian shipping companies operating abroad.

S0208 Operating expenses of Indian Airlines companies operating abroad

S0212 Booking of passages abroad -Airlines companies

S0301 Remittance towards business travel.

S0302 Travel under basic travel quota (BTQ)

S0303 Travel for pilgrimage

S0304 Travel for medical treatment

S0305 Travel for education (including fees, hostel expenses etc.)

S0401 Postal services

S0501 Construction of projects abroad by Indian companies including import of goods at

project site

S0602 Freight insurance- relating to import and export of goods

S1011 Payments for maintenance of offices abroad

S1201 Maintenance of Indian embassies abroad

S1 202 Remittances by foreign embassies in India

S1301 Remittance by non-residents towards family maintenance and-savings

S1302 Remittancetowards personal gifts and donations

S1303 Remittancetowards donations to religious and charitable institutions abroad

S1304 Remittance towards grants and donations to other Governments and charitableinstitutions established by the Governments.

Remittance on winding up/liquidation ofC i



Companies

AD Bank have been allowed toremit winding up proceedsof companies in

India, which are under liquidation, subject topayment of applicable taxes.

Liquidation may be subject toany order issued by the court winding up

the company or the official liquidator in case of voluntary windingup under

the provisions of the Companies Act, 2013. AD Category – I banks shall allow

the remittance provided the applicant submits:

i. No objection or Tax clearance certificate from Income TaxDepartment for the remittance.

ii. Auditor's certificateconfirming that all liabilities in India have been

either fully paid or adequately provided for.

iii. Auditor's certificate to the effect that the winding upis in accordance

with the provisions of the Companies Act, 2013.iv. In case of winding up otherwise than by a court, an auditor's certificate

to the effect that there isno legal proceedings pendingin any court in

India against the applicant or the company under liquidation and there is

no legal impediment in permitting the remittance.

Access of funds from abroad



by Indian Companies

External Commercial Borrowings (ECB):Commercial

loansin the form of bank loans, buyers’ credit, suppliers’credit, securitized instruments (e.g. floating rate notes andfixed rate bonds, non-convertible, optionally convertible orpartially convertible preference shares) availed of from non-resident lenders with aminimum average maturity of 3

years

Automatic Route

Approval Route

Foreign Currency Convertible Bonds (FCCBs)

Preference shares

Foreign Currency Exchangeable Bond (FCEB) 2.

COMPLIANCEWITHECBGUIDELINES



COMPLIANCE WITH ECB GUIDELINESCOMPLIANCE WITH ECB GUIDELINES

Primary responsibility: Borrower concerned

Designated AD bank; To ensure that raising / utilisation of ECB is in compliance with ECB guidelines at

the time of certification.

REPORTING ARANGEMENTS

Forallotment of Loan Registration Number (LRN), borrowers are required to submitForm 83, in

duplicate, certified by theCompany Secretary (CS) orChartered Accountant (CA) to the designated AD

bank. Copies of loan agreement and offer documents for FCCB are not required to be submitted with Form

83. One copy is to be forwarded by the designated AD bank to the Director, Balance of Payments Statistics

Division, Department of Statistics and Information Management (DSIM), Reserve Bank of India, Bandra-Kurla Complex, Mumbai – 400 051.

Borrower can draw-down loan only after obtaining LRN from DSIM, Reserve Bank.

Borrowers are required to submitECB-2 Return certified by the designated AD bank onmonthly basis so

as toreach DSIM, Reserve Bank within seven working days from the close of month to which it

relates.

Dissemination of Information

Information with regard to name of borrower, amount, purpose and maturity of ECB under both Automatic

and Approval routes are put on Reserve Bank’s website, on a monthly basis, with a lag of one month to

which it relates.

DataonECB/FCCBforthemonthofSeptember2015



Data on ECB/FCCB for the month of September 2015

I AUTOMATIC ROUTE*

ECB/

FCCB

Borrower Equivalent

Amount in USD

Purpose Maturity Period

(Appx)

Maturity Period

(Appx)

1 ECB Rose Plastic India PrivateLimited

3,93,199Working Capital 7 Years 10 Months 7 Years 10 Months

2 ECB Hindustan Petroleum

Corporation Limited #

25,00,00,000Modernisation 5 Years 3 Months 5 Years 3 Months

3 ECB CPF (India) Private Limited 2,00,00,000Import of Capital

Goods

5 Years 5 Years

4 ECB The Great Eastern Shipping

Campany Limited

2,94,00,000Refinancing of Earlier

ECB

8 Years 1 Month 8 Years 1 Month

5 ECB Intelligent Pure Water

Technologies Private

Limited #

11,50,778Rupee Expenditure

Loc.CG


6 ECB Saurer Textile Solutions

Private Limited

33,70,277New Project 9 Years 7 Months 9 Years 7 Months

7 ECB Nippon Carbide India

Private Limited

6,04,065General Corporate

Purpose


8 ECB Zydus Technologies Limited 3,38,55,990Refinancing of Rupee

loans

4 Years 8 Months 4 Years 8 Months

54 ECB Sarla Performance FibersLimited

40,00,000Overseas Acquisition 5 Years 5 Years

Automatic Route Total 1,13,45,56,703

* Based on Form 83 submitted for allotment of Loan Registration Number

#Confirmation sought from the AD bank regarding compliance with ECB guidelines

II APPROVAL ROUTE*

1 ECB Global Vectra Helicor 87,00,000Im ort of Caital 10 Years 1 Month 10 Years 1 Month

DELEGATIONOFPOWERSTOAUTHORISEDDEALERS(AD)



DELEGATION OF POWERS TO AUTHORISED DEALERS (AD)ECBs raised under the automatic or approval routes (a) Changes/modifications in the drawdown/repayment schedule:(Irrespective of thenumber of occasions) associated with change in the average maturity period or not and / or

with changes (increase/decrease) in the all-in-cost. (b) Changes in the currency of borrowing:Proposed currency of borrowing is freelyconvertible. (c) Change of the AD bank:Subject to No-Objection Certificate (NOC) from the existingdesignated AD bank and after due diligence.

(d) Changes in the name of the Borrower Company:Subject to production of supportingdocuments evidencing the change in the name from the Registrar of Companies. (e) Transfer of ECB:From one company to another on account of re-organisation at the borrower’s level in the form of merger / demerger / amalgamation / acquisition duly as perthe applicable laws / rules after satisfying themselves that the company acquiring the ECBis an eligible borrower.

(f) Change in the recognized lender:Subject to ensuring that the original lender as wellas the new lender is recognised lender as per extant ECB guidelines, there is no change inthe other terms and conditions of the ECB.

(g) Change in the name of Lender: After satisfying themselves with the bonafides of thetransactions and ensuring that the ECB continues to be in compliance with applicableguidelines.

DELEGATIONOFPOWERSTOAUTHORISEDDEALERS(AD)



DELEGATION OF POWERS TO AUTHORISED DEALERS (AD)(h) Cancellation of LRN:Directly approach DSIM forcancellation of LRN for ECBs availed,subject to ensuring thatno draw down for the said LRN has taken place and themonthly ECB-2returns till date in respect of the LRN have been submitted to DSIM.

(i) Change in the end-use of ECB proceeds:Subject to ensuring that the proposedend-use ispermissible under the automatic route as per the extant ECB guidelines, there is no change inthe other terms and conditions of the ECB, and the monthly ECB-2 returns till date in respect ofthe LRN have been submitted to DSIM.

Change in the end-use of ECBs availed under the approval route will continue to be referred to theForeign Exchange Department, Central Office, Reserve Bank of India, as hitherto.

(j) Reduction in amount of ECB:(Irrespective of the number of occasions) with or without anychanges in draw-down and repayment schedules, average maturity period and all-in-cost.

(k) Change in all-in-cost of ECB:Changes (decrease/increase) in all-in-cost of the ECBsirrespective of the number of occasions.

Note:i. Subject to ensuring that therevised average maturity period and or all-in-cost is/are inconformity with the applicable ceilings / guidelines and the changes areeffected during

the tenure of the ECB and the ECB continues to be in compliance with applicable guidelines.

ii. The changes in the terms and conditions of ECB and / or any other changes allowed should bereported to the Department of Statistics and Information Management (DSIM) of the ReserveBankthrough revised Form 83 at the earliest, in any case not later than 7 days from thechanges effected. While submitting revised Form 83 to the DSIM, thechanges should bespecifically mentioned in the communication. Further, thesechanges should also getreflected in the ECB 2 returns appropriately.

Form-83(ReportingofloanagreementdetailsunderForeignExchangeManagementAct,



(Reporting of loan agreement details under Foreign Exchange Management Act,1999) To be submitted in dulicate by the borro#er to designated %uthorised -ealer(%-) for all categories and any amount of external commercial borro#ing (E3")0%fter examining conformity #ith the extant E3" guidelines, the %- may ro+ide

re'uisite details in Part F of the Form and for#ard one coy (within 7 days fromthe date of signing loan agreement between borrower and lender ) for allotmentof $oan Registration 4umber ($R4) to5 The -irector, "alance of PaymentsStatistics -i+ision, -eartment of Statistics and Information Management(-SIM), Reser+e "an6 of India, 3/7/8 "andra/9urla 3omlex, Mumbai 1 :!! !;.

"orro#er has gi+en #ritten underta6ing to %- to the e<ect that it has beensubmitting E3"/ Returns regularly to R"I in resect of ast E3"F33" loans)

We hereby certify that the particulars given above are true and correct to the bestof our knowledge and belief and no material information has been withheldand/or misrepresented. Furthermore, theECB is in compliance with the extantECB guidelines. Place:___ ___________________________________________________(Signature of the Authorised Official of the Company)Date: ___________ Stamp Name: ______________________ Designation:______________Place:_____________ _____________________________________(Signature of Company Secretary/ Chartered Accountant)Date:_______________ Stamp Name: _________________________________________

Registration No.:______________________________



For allotment of Loan Registration Number (LRN), borrowers are required tosubmitForm 83, in duplicate, certified by theCompany Secretary (CS) orChartered Accountant (CA)to the designated AD bank.

ECB-2Reporting of actual transactions of External Commercial Borrowings (ECB) underForeignExchangeManagementAct1999(forallcategoriesandanyamountof



Foreign Exchange Management Act, 1999 (for all categories and any amount ofloan) Return for the month of ___________

Submitted #ithin 2 #or6ing days from the close of the month through thedesignated %uthorised -ealer to the -irector, -eartment of Statistics and

Information Management (-SIM), "alance of Payments Statistics -i+ision,Reser+e "an6 of India, 3/ 78, "andra/9urla 3omlex, "andra (East), Mumbai/:!! !;.0

If there is no transaction during a articular eriod, a Nil Return should besubmitted0

TheCompany Secretary / Chartered Accountant must scrutinise relatedoriginal documents and ensure that thereturn is completeand in order as per

ECB guidelines issued by Government/RBI, before forwarding it to RBI.Certificate from Company Secretary / Chartered Accountant

We hereby certify that the ECB availed in terms of approval granted byGovernment or RBI or under approval route / automatic route isduly accountedin the books of accounts. Further, ECB proceeds have been utilised by the borrower for the purpose of ____________________________________. We have verified

all the related documents and records connected with theutilisation of ECBproceeds and found these to be in order andin accordance with the terms andconditions of the loan agreement and with the approval granted by GoI (MoF) orRBI or under approval route / automatic route and is inconformity with theapplicable ECB Guidelines. Authorised Signatory : ____________________________Name & Address : __________________________________

Place : _____________ Registration No. : __________________________________

Calculation of Average Maturity- An Illustration



Loan Amount = USD 2 million

Date of drawal/

repayment

(MM/DD/YY)

Drawal Repayment Balance No. of Days**

balance with

the borrower

Product= (Col.4 *

Col. 5)/ (Loan

amount * 360)Col. 1 Col. 2 Col. 3 Col. 4 Col. 5 Col. 6

11/05/2007 0.75 0.75 24 0.0250

05/06/2007 0.50 1.25 85 0.1476

31/08/2007 0.75 2.00 477 1.3250

27/12/2008 0.20 1.80 180 0.450027/06/2009 0.25 1.55 180 0.3875

27/12/2009 0.25 1.30 180 0.3250

27/06/2010 0.30 1.00 180 0.2500

27/12/2010 0.25 0.75 180 0.1875

27/06/2011 0.25 0.50 180 0.1250

27/12/2011 0.25 0.25 180 0.0625

27/06/2012 0.25 0.00

Average Maturity 3.2851

** Calculated by =DAYS360 (first date, second date, 360) 28



RoutingoffundsraisedabroadtoIndia



Routing of funds raised abroad to India

It has come to our notice thatsome Indian companies are accessing overseas market fordebt funds through overseas holding / associate / subsidiary / group companies. Ithas also been reported thatsuch borrowings are raised at rates exceeding the ceilingapplicable in terms of extant FEMA regulations and that the funds so raised arerouted to the Indian companies which accounts for sole/major operations of thegroup.Different modalities/structures are resorted to for channeling such funds forIndian operations including investment in rupee bonds floated by the Indian company. On a review of the matter in light of the existing regulatory framework, it isclarified asunder:

i. Indian companies or their AD Category – I banks arenot allowed to issue any director indirect guarantee or create any contingent liability or offer any security inany form for such borrowings by their overseas holding / associate / subsidiary /group companies except for the purposes explicitly permitted in the relevantRegulations.

ii. Further, funds raised abroad by overseas holding / associate / subsidiary / groupcompanies of Indian companies with support of the Indian companies or their ADCategory – I banks as mentioned at (i) abovecannot be used in India unless itconforms to the general or specific permission granted under the relevantRegulations.

iii.Indian companies or their AD Category – I banks using or establishing structures whichcontravene the above shall render themselves liable forpenal action as prescribedunder FEMA, 1999.

Circular No. 41 dated November 25, 2014

Security for External Commercial Borrowings...1/2



2. Under the extant ECB guidelines, thechoice of security to be provided to the overseas lender /supplier for securing ECB is left to the borrower. With a view to liberalising, expanding the options ofsecurities and consolidating various provisions related to creation of charge over securities for ECB at oneplace, it has been decided that AD Category-I banks may allow creation of charge on immovable assets,movable assets, financial securities and issue of corporate and / or personal guarantees in favour of

overseas lender / security trustee, to secure the ECB to be raised / raised by the borrower, subject tosatisfying themselves that:

(i) the underlying ECB is in compliance with the extant ECB guidelines,(ii) thereexists a security clause in the Loan Agreement requiring the ECB borrower to create charge,

in favour of overseas lender / security trustee, on immovable assets / movable assets / financialsecurities / issuance of corporate and / or personal guarantee, and

(iii)No objection certificate, wherever necessary, from theexisting lenders in India has been obtained.

3. Once aforesaid stipulations are met, the AD Category-I bank may permit creation of charge on immovableassets, movable assets, financial securities and issue of corporate and / or personal guarantees, during thecurrency of the ECB with security co-terminating with underlying ECB,subject to the following:

(a) Creation of Charge onimmovable assets:i. Such security shall besubject to provisions contained in the Foreign Exchange Management

( Acquisition and Transfer of Immovable Property in India) Regulations, 2000.ii. The permission shouldnot be construed as a permission to acquire immovable asset (property) in

India, by the overseas lender / security trustee.iii. In theevent of enforcement / invocation of the charge,the immovable asset / property will have

to be sold only to a person resident in India and the sale proceeds shall be repatriated to liquidatethe outstanding ECB.

(b) Creation of Charge onMovable AssetsIn the event of enforcement / invocation of the charge, the claim of the lender, whether the lender takes overthe movable asset or otherwise, will be restricted to the outstanding claim against the ECB.Encumberedmovable assets may also be taken out of the country.

Security for External Commercial Borrowings...2/2



(c) Creation of Charge overFinancial Securitiesi. Pledge of shares of the borrowing company held by the promoters as well as in

domestic associate companies of the borrower will bepermitted.Pledge on otherfinancial securities, viz. bonds and debentures, Government Securities,

Government Savings Certificates, deposit receipts of securities and units of theUnit Trust of India or of any mutual funds, standing in the name of ECB borrower/promoter, will also be permitted.

ii. In addition, security interest overall current and future loan assets and all currentassets including cash and cash equivalents, including Rupee accounts of the

borrower with AD Category-I banks in India, standing in the name of the borrower/promoter, can be used as security for ECB. The Rupee accounts of the borrower/promoter can also be in the form of escrow arrangement or debt service

reserve account.iii. In case ofinvocation of pledge, transfer of financial securities shall be in accordance with theextant FDI/FII policy including provisions relating to sectoral cap and pricingas applicable read with the Foreign Exchange Management (Transfer or Issue ofSecurity by a Person Resident outside India) Regulations, 2000.

(d) Issue ofCorporate or Personal Guarantee

i. A copy ofBoard Resolution for the issue of corporate guarantee for the companyissuing such guarantee, specifying name of the officials authorised to execute suchguarantees on behalf of the company or in individual capacity should be obtained.

ii. Specific requests from individuals to issue personal guarantee indicating details of theECB should be obtained.

iii. Such security shall besubject to provisions contained in the Foreign ExchangeManagement (Guarantees) Regulations, 2000.

Circular No. 55 dated January 01, 2015



Foreign Exchange (Compounding Proceedings) Rules, 2000 (the Rules) -Compounding of Contraventions under FEMA, 1999 ...2/2



The work ofthree divisions of Foreign Investment Division(FID) viz.Liaison/ Branch/ Project

office(LO/ BO/ PO) division, Non Resident Foreign Account Division (NRFAD) and Immovable

Property (IP) Division has been transferred to FED, CO Cell, Reserve Bank of India, 6, Sansad Marg,

New Delhi- 110001 with effect from July 15, 2014. Accordingly, the officers attached to the FED, CO

Cell, New Delhi office are now authorised to compound thecontraventions as under:Sr.

No.

FEMA Notification Brief Description of Contravention

1 FEMA 7/2000-RB, dated 3-5-

2000

Contraventions relating to acquisition and transfer of

immovable property outside India

2 FEMA 21/2000-RB, dated 3-5-

2000

Contraventions relating to acquisition and transfer of

immovable property in India

3 FEMA 22/2000-RB, dated 3-5-2000

Contraventions relating toestablishment in India ofBranch office, Liaison Office or project office

4 FEMA 5/2000-RB, dated 3-5-

2000

Contraventions falling under Foreign Exchange

Management (Deposit) Regulations, 2000

The powers to compound the contraventions have been delegated toall Regional Offices (except

Kochi and Panaji) andFED, CO Cell, New Delhi respectively without any limit on the amount

of contravention. Kochi and Panaji Regional offices can compound the above contraventions foramount of contravention below Rupees one hundred lakh (Rs.1,00,00,000/-). The contraventions of

Rupees one hundred lakh (Rs.1,00,00,000/-) or more under the jurisdiction of Panaji and Kochi

Regional Offices and all other contraventions of FEMA will continue to be compounded at Cell for

Effective Implementation of FEMA (CEFA), Mumbai, as hitherto.

Accordingly, applications for compounding the e contraventions e, up to the amount of contravention

stated therein may be submitted by the concerned entities to the respective Regional Offices under whose jurisdiction they fall or to FED, CO Cell, New Delhi respectively. Forall othercontraventions,



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Participants of the Seminar/Conference and for information

purposes only; and the contents are not to be construed in any

manner whatsoever as a substitute for professional advice or legal

opinion. No one should act on such information without appropriate

professional advice after a thorough examination of particular

situation. Information contained herein is of a general nature and is

not intended to address the circumstances of any particular

individual or entity. While due care has been taken to ensure that

the information is current and accurate to the best of our knowledge

and belief, there can be no guarantee that such information is

accurate as of the date it is received or that it will continue to be

accurate in the future. These PPTs contain information that is

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Thank You Vijay Gupta311, Ansal Bhawan

16, Kasturba Gandhi Marg

New Delhi – 110001

Mobile: 9810083373

[email protected]