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FEM (Transfer or issue of security by a person resident outside India) Regulations, 2000 |
Pg. 8 |
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i) |
NRIs may purchase and sell shares/convertible debentures under the Portfolio Investment Scheme through a branch designated by an Authorised Dealer for the purpose and duly approved by the Reserve Bank of India |
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ii) |
the paid-up value of shares of an Indian company, purchased by each NRI [***]1both on repatriation and on non-repatriation basis, does not exceed 5 percent of the paid-up value of shares issued by the company concerned; |
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iii) |
the paid-up value of each series of convertible debentures purchased by each NRI [***]1both on repatriation and non-repatriation basis does not exceed 5 percent of the paid-up value of each series of convertible debentures issued by the company concerned; |
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iv) |
the aggregate paid-up value of shares of any company purchased by all NRIs [***]1does not exceed 10 percent of the paid up capital of the company and in the case of purchase of convertible debentures the aggregate paid-up value of each series of debentures purchased by all NRIs [***]1does not exceed 10 percent of the paid-up value of each series of convertible debentures; |
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Provided that the aggregate ceiling of 10 per cent referred to in this clause may be raised to 24 per cent if a special resolution to that effect is passed by the General Body of the Indian company concerned; |
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v) |
the NRI [***]1investor takes delivery of the shares purchased and gives delivery of shares sold; |
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vi) |
payment for purchase of shares and/or debentures is made by inward remittance in foreign exchange through normal banking channels or out of funds held in NRE/FCNR account maintained in India if the shares are purchased on repatriation basis and by inward remittance or out of funds held in NRE/FCNR/NRO/NRNR/NRSR account of the NRI [***]1concerned maintained in India where the shares/debentures are purchased on non-repatriation basis; |
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vii) |
[***]2 |
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2. |
Report to Reserve Bank form LEC7 |
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3[The link office of the designated branch of an authorised dealer referred to in paragraph 1 shall furnish to the Chief General Manager, RBI, ECD, Central Office, Mumbai, a report on daily basis on PIS transactions undertaken by it, such report to be furnished on line or on floppy or in hard copy in a format supplied by Reserve Bank.] [Threshold Limit Enhanced]4 |
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3 |
Remittance/credit of sale/maturity proceeds of shares and/or debentures. |
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The net sale/maturity proceeds (after payment of taxes) of shares and/or debentures of an Indian company purchased by NRI or OCB under this scheme, may be allowed by the designated branch of an authorised dealer referred to in paragraph 1, |
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a) |
to be credited to NRO account of the NRI/OCB investor where the payment for purchase of shares and/or debentures sold was made out of funds held in NRO account or where the shares and/or debentures were purchased on non-repatriation basis, or |
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b) |
at the NRI or OCB investor’s option, to be remitted abroad or credited to his/its NRE/FCNR/NRO account of the NRI, where shares and/or debentures were purchased on repatriation basis
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[ See Regulation 5 (3) (ii)] |
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Purchase and sale of shares/ convertible debentures by a Non-resident Indian (NRI) [***]6 on non-repatriation basis |
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1. |
Prohibition on purchase of shares/ convertible debentures of certain companies. |
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No purchase of shares or convertible debentures of an Indian company shall be made under this Scheme if the company concerned is a Chit Fund or a Nidhi company or is engaged in agricultural/plantation activities or real estate business or construction of farm houses or dealing in Transfer of Development Rights. |
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Explanation -For the purpose of this paragraph, real estate business shall not include development of township, construction of residential/ commercial premises, roads, bridges, etc. |
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2. |
Permission to purchase and/or sell shares/ convertible debentures of an Indian company. |
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Subject to paragraph 1, a Non-resident Indian [***]6 may, without any limit, purchase on non-repatriation basis, shares or convertible debentures of an Indian company issued whether by public issue or private placement or right issue. Provided that the person to whom the shares are being transferred, has obtained prior permission of Central Government to acquire the shares if he has previous venture or tie up in India through investment in shares or debentures or a technical collaboration or a trade mark agreement or investment by whatever name called in the same field or allied field in which the Indian company whose shares are being transferred is engaged.5
Provided further that this restriction shall not apply to the transfer of shares to International financial institutions such as Asian Development Bank(ADB), International Finance Corporation(IFC), Commonwealth Development Corporation (CDC), Deutsche Entwicklungs Gescelscchaft(DEG) and transfer of shares of an Indian company engaged in Information Technology sector. |
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3. |
Method of payment for purchase of shares/ convertible debentures. |
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The amount of consideration for purchase of shares or convertible debentures of an Indian company on non-repatriation basis, shall be paid by way of inward remittance through normal banking channels from abroad or out of funds held in NRE/FCNR /NRO/NRSR/NRNR account maintained with an authorised dealer or as the case may be with an authorised bank in India: |
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