Reserve Bank of India
Foreign Exchange Department
Central Office,
Mumbai-400 001
Notification No. FEMA. 263/RB-2013
Dated March 05, 2013
Foreign Exchange Management (Transfer or Issue of any
Foreign Security) (Amendment) Regulations, 2013
In exercise of the powers conferred by clause (a) of sub-section (3) of Section
6 and sub-section (2) of Section 47 of the Foreign Exchange Management Act, 1999
(42 of 1999), the Reserve Bank hereby makes the following amendments in the
Foreign Exchange Management (Transfer or Issue of Any Foreign Security)
Regulations 2004 (Notification No. FEMA 120/RB-2004 dated July 7, 2004), as
amended from time to time, (hereinafter called the Principal Regulations or the
Notification) namely:-
1. Short Title & Commencement:-
(i) These Regulations shall be called the Foreign Exchange Management (Transfer
or Issue of Any Foreign Security) (Amendment) Regulations, 2013.
(ii) They shall come into force from the date of publication in Official Gazette
2. Insertion of New Regulation 20A
In Part II, after Regulation 20, the following Regulation shall be inserted:
“20A. Acquisition or Setting up of a JV or WOS abroad by resident individual
A resident individual (single or in association with another resident individual
or with an ‘Indian Party’ as defined in this Notification) satisfying the
criteria as per Schedule V of this Notification, may make overseas direct
investment in the equity shares and compulsorily convertible preference shares
of a Joint Venture (JV) or Wholly Owned Subsidiary (WOS) outside India.”
3. Insertion of New Schedule V
After Schedule IV, the following Schedule shall be inserted:
“Schedule V [See Regulation 20A]
A. Overseas Direct Investments by Resident Individuals
1. Resident individual is prohibited from making direct investment in a JV or
WOS abroad which is engaged in the real estate business or banking business or
in the business of financial services activity.
2. The JV or WOS abroad shall be engaged in bonafide business activity.
3. Resident individual is prohibited from making direct investment in a JV / WOS
[set up or acquired abroad individually or in association with other resident
individual and / or with an Indian party] located in the countries identified by
the Financial Action Task Force (FATF) as "non co-operative countries and
territories" as available on FATF website www.fatf-gafi.org or as notified by
the Reserve Bank.
4. The resident individual shall not be on the Reserve Bank’s Exporters Caution
List or List of defaulters to the banking system or under investigation by any
investigation / enforcement agency or regulatory body.
5. At the time of investments, the permissible ceiling shall be within the
overall ceiling prescribed for the resident individual under Liberalised
Remittance Scheme as prescribed by the Reserve Bank from time to time.
[Explanation: The investment made out of the balances held in EEFC / RFC account
shall also be restricted to the limit prescribed under LRS.]
6. The JV or WOS, to be acquired / set up by a resident individual under this
Schedule, shall be an operating entity only and no step down subsidiary is
allowed to be acquired or set up by the JV or WOS.
7. For the purpose of making investment under this Schedule, the valuation shall
be as per Regulation 6(6)(a) of this Notification.
8. The financial commitment by a resident individual to / on behalf of the JV or
WOS, other than the overseas direct investments as defined under Regulation 2(e)
read with Regulation 20A of this Notification, is prohibited.
B. Post Investment Changes
Any alteration in shareholding pattern of the JV or WOS may be reported to the
designated AD within 30 days including reporting in the Annual Performance
Report as required to be submitted in terms of Regulation 15 of this
Notification.
C. Disinvestment by Resident Individuals
1. A resident individual, who has acquired / set up a JV or WOS under the
provisions of this Schedule, may disinvest (partially or fully) by way of
transfer / sale or by way of liquidation / merger of the JV or WOS.
2. Disinvestment by a resident individual shall be allowed after one year from
the date of making first remittance for setting up or acquiring the JV or WOS
abroad.
3. The disinvestment proceeds shall be repatriated to India immediately and in
any case not later than 60 days from the date of disinvestment and the same may
be reported to the designated AD.
4. No write off shall be allowed in case of disinvestments by the resident
individuals.
D. Reporting Requirements
- The resident individual, making overseas direct investments under the
provisions of this Schedule, shall submit Part I of the Form ODI, duly
completed, to the designated authorised dealer, within 30 days of making the
remittance.
- The investment, as made by a resident individual, shall be reported by the
designated authorised dealer to the Reserve Bank in Form ODI Part I and II
within 30 days of making the remittance.
- The obligations as required in terms of Regulation 15 of this Notification
shall also apply to the resident individuals who have set up or acquired a JV or
WOS under the provisions of this Schedule.
- The disinvestment by the resident individual may be reported by the
designated AD to the Reserve Bank in Form ODI Part IV within 30 days of receipt
of disinvestment proceeds.”
(Rashmi Fauzdar)
Chief General Manager
Foot Note:
The Principal Regulations were published in the Official Gazette of GOI vide
G.S.R. No 757 (E) dated November 19, 2004 – in Part II, Section 3, Sub-section (i)
and subsequently amended vide :-
G.S.R. No. 220 (E) dated April 7, 2005,
G.S.R. No. 337 (E) dated May 27, 2005,
G.S.R. No. 552 (E) dated August 31, 2005,
G.S.R. No. 535 (E) dated September 6, 2006,
G.S.R. No.13 (E) dated January 5, 2008,
G.S.R. No. 209(E) dated March 25, 2008,
G.S.R. No.676 (E) dated September 24, 2008,
G.S.R. No.756 (E) dated September 31, 2008,
G.S.R. No.108 (E) dated February 20, 2009,
G.S.R. No. 301(E) dated May 1, 2009,
G.S.R. No. 441(E) dated June 23, 2009,
G.S.R. No. 609(E) dated August 28, 2009,
G.S.R. No. 607(E) dated August 3, 2012,
G.S.R. No. 609(E) dated August 3, 2012 and
G.S.R. No. 947(E) dated December 31, 2012.