Under the Foreign Exchange Management (Transfer or Issue of any Foreign Security) Regulations, 2000 notified by Reserve Bank of India vide Notification No.FEMA 19/2000-RB dated 3.5.2000, various Regulations have been made to regulate acquisition and transfer of a foreign security by a person resident in India. These have been amended from time. Thus, an NRI returning to India and becoming a resident in India in particular should know the regulations regarding investment in Overseas Joint Ventures and Wholly Owned Subsidiaries as also investment in shares and securities issued outside India. As mentioned in Chapter 16, topic 3 an NRE account has to be converted to RFC account by a returning NRI. Hence, this account plays an important role in addition what is mentioned in RFC account above. It has also been mentioned in Regulation No.4 about the general permission being granted to the residents including the returning NRIs for purchase/acquisition of securities out of funds held in RFC accounts; issued as bonus shares on existing holding of foreign currency shares and sale of shares/securities so acquired. Likewise, general permission has been granted to a person resident in India for purchase of securities out of their foreign currency resources outside India as also for sale of securities so acquired. For this purpose, the Regulations have been divided into two parts, namely Part I dealing with direct investment outside India and Part II dealing with investment in foreign securities other than by way of direct investment. Part I of these Regulations contains various limits for direct investment abroad. Part II contains various regulations regarding investment in foreign securities other than by way of direct investment upto various limits as given in said regulations in detail. It has also been laid down in th regulations in Part 2 that the Reserve Bank would consider application from residents for acquisition of foreign securities in various cases like acquisition of qualification shares for becoming a director of a company outside India, purchase of foreign securities under ADRs/GDRs Stock Option Scheme, by resident employees of Indian Software Companies including working directors provided purchase consideration does not exceed US Dollars 50,000 or its equivalent in a block of five calendar years. The Reserve Bank vide its Circular No.3 (A.P DIR Series) dated 22nd June, 2000 issued guidelines regarding Indian Direct Investment by Joint Ventures JV/Wholly owned Subsidiaries (WOS) outside India. Reference may also be made to A.P. (Dir series)(2002-2003) Circular No. 107 dated 19-6-2003. For the latest provisions and relaxations, please refer to the latest RB! Regulations. |
