Corrigendum to FEMA 362/2016-RB, dated 15/2/2016

Dated 12th April, 2016 | Copy of | Corrigendum |

In the Notification of Reserve Bank of India, Foreign Exchange Department No.FEMA.362/2016-RB, dated February 15, 2016 bearing G.S.R.No.166 (E) and published in the Official Gazette of Government of India-Extraordinary-Part-II, Section 3, Sub-Section (i) (hereinafter referred as Gazette Notification)

2. In Paragraph 2(B)

i. (a) (ia) shall be substituted by the following

“(ia) ‘Control’ shall include the right to appoint a majority of the directors or to control the management or policy decisions including by virtue of their shareholding or management rights or shareholders agreements or voting agreements.

For the purpose of Limited Liability Partnership, ‘control’ shall mean right to appoint majority of the designated partners, where such designated partners, with specific exclusions to others, have control over all the policies of Limited Liability Partnership.”

ii. (c) (v) shall be substituted by the following

“(v) It is clarified that Foreign investment shall include all types of foreign investments i.e. FDI, investment by FIIs, FPIs, QFIs, NRIs, ADRs, GDRs, Foreign Currency Convertible Bonds (FCCB) and fully, mandatorily & compulsorily convertible preference shares/debentures, regardless of whether the said investments have been made under Schedule 1, 2, 2A, 3, 6, 8, 9 and 10 of FEMA (Transfer or Issue of Security by Persons Resident Outside India) Regulations, 2000.”

iii. (d)(ii)(a) shall be substituted by the following:

“a. Such a company/LLP is to notify SIA, DIPP and FIPB of its downstream investment in the form available at http://www.fipb.gov.in within 30 days of such investment, even if capital instruments have not been allotted, along with the modality of investment in new/existing ventures (with/without expansion programme);”

3. In para 2 (C) (ii) shall be substituted by the following:

i. “(ii) in paragraph 2, in sub-paragraph 4, after clause (iv), the following shall be added, namely:

“(v) by way of swap of shares, provided the company in which the investment is made is engaged in an automatic route sector, subject to the condition that irrespective of the amount, valuation of the shares involved in the swap arrangement will have to be made by a Merchant Banker registered with SEBI or an Investment Banker outside India registered with the appropriate regulatory authority in the home country.

Note: A company engaged in a sector where foreign investment requires Government approval may issue shares to a non-resident through swap of shares only with approval of the Government.”

4. In para 2(C)(iv)

a. The existing S.No.6.1 of Annex B of Schedule 1 shall be substituted by the following:

d. The existing paragraph F.5.2 (3) (c) shall be substituted by the following:

“(c) FIIs/FPIs investing in CICs shall not seek a representation on the Board of Directors based upon their shareholding.”

5. The other contents of the Gazette Notification shall remain unchanged.

Sd/-
(Shekhar Bhatnagar)
Chief General Manager-in-charge

G.S.R.417(E)
F.No.1/3/EM-2016
Issued by:
Reserve Bank of India
(Foreign Exchange Department)
(Central Office)
Mumbai