- Foreign Direct Investment –Reporting under FDI Scheme, Mandatory filing of form ARF, FCGPR and FCTRS on e-Biz platform and discontinuation of physical filing from February 8, 2016:
- With a view to promote the ease of reporting of transactions related to Foreign Direct Investment (FDI), the Reserve Bank of India, under the aegis of the e-Biz project of the Government of India has enabled online filing of the following returns with the Reserve Bank of India viz.
- Advance Remittance Form (ARF) which is used by the companies to report the FDI inflows to RBI;
- 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; and
- FCTRS Form which is submitted to RBI for transfer of securities between resident and person outside India.
- It has been decided that from February 8, 2016 the physical filing of forms ARF, FCGPR and FC-TRS will be discontinued and forms submitted in online mode only through e-Biz portal will be accepted.
- With a view to promote the ease of reporting of transactions related to Foreign Direct Investment (FDI), the Reserve Bank of India, under the aegis of the e-Biz project of the Government of India has enabled online filing of the following returns with the Reserve Bank of India viz.
- Regulatory Relaxations for Startups- Clarifications relating to Issue of Shares
- Reserve Bank of India vide Press Release dated February 2, 2016, had announced that in case of startups, certain permissible transactions under the existing regulatory framework shall be clarified. One of the issues related to issue of shares without cash payment by the investor through sweat equity or against any legitimate payment owed by the company remittance of which does not require any permission under FEMA, 1999.
- Accordingly, the following is clarified:
- Issue of shares without cash payment through sweat equity: Reserve Bank of India vide Notification No. FEMA.344/2015 RB dated June 11, 2015 has permitted Indian companies to issue sweat equity, subject to conditions, inter-alia, that the scheme has been drawn either in terms of regulations issued under the Securities Exchange Board of India Act, 1992 in respect of listed companies or the Companies (Share Capital and Debentures) Rules, 2014 notified by the Central Government under the Companies Act 2013 in respect of other companies.
- Issue of shares against legitimate payment owed: Reserve Bank of India vide Notification No. FEMA.315/2014-RB dated July 10, 2014, has permitted Indian companies to issue equity shares against any other funds payable by the investee company, remittance of which does not require prior permission of the Government of India or Reserve Bank of India under FEMA, 1999 subject to conditions relating to adherence to FDI policy including sectoral caps, pricing guidelines, etc. and applicable tax laws.
- Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Amendment) Regulations, 2016: RBI vide Notification No. FEMA.361/2016-RB dated February 15, 2016 has amended the Foreign Exchange Management (Transfer or issue of Security by a Person Resident outside India) Regulations, 2000:
- in Regulation 2, the existing clause (viia) shall be substituted, namely:“(viia) Non-Resident Indian (NRI) means an individual resident outside India who is citizen of India or is an ‘Overseas Citizen of India’ cardholder within the meaning of section 7 (A) of the Citizenship Act, 1955.”
- Regulation 5 (3) shall be substituted, namely“(i) A Non- Resident Indian (NRI) may acquire securities or units on a Stock Exchange in India on repatriation basis under the Portfolio Investment Scheme, subject to the terms and conditions specified in Schedule 3.
(ii) A Non- Resident Indian (NRI) may acquire securities or units on a non-repatriation basis, subject to the terms and conditions specified in Schedule 4.
- Schedule 3 shall be substituted namely – Terms and Conditions for acquisition of Securities or Units by a Non-Resident Indian (NRI) on a Stock Exchange in India on Repatriation basis under the Portfolio Investment Scheme
- Schedule 4 shall be substituted namely – Terms and conditions for acquisition of Securities or units by a Non-Resident Indian (NRI), on Non-Repatriation basis
- Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Second Amendment) Regulations, 2016: RBI vide Notification No.FEMA.362/2016-RB dated February 15, 2016 has issued the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Second Amendment) Regulations, 2016 with regard to:
- Defining the term manufacture
- Amendment to the term ownership and control
- Amendment to guidelines for establishment of Indian companies/ transfer of ownership or control of Indian companies, from resident Indian citizens to non-resident entities, in sectors under government approval route
- Amendment to the conditions for downstream investments by Indian companies/LLPs
- Amendment to the annexure specifying the foreign investments caps and entry route in various sectors
- Amendment to Schedule 9 – regarding downstream investment in an LLP
- Amendment to Schedule 11 – regarding investment by a person resident outside India in an Investment Vehicle
- Foreign Exchange Management (Acquisition and Transfer of Immovable Property outside India) Regulations, 2015: RBI vide Circular No. 43/2015-16 [(1)/7(R)] dated February 04, 2016 has amended the Foreign Exchange Management (Acquisition and Transfer of Immovable Property outside India) Regulations, 2015:
- In terms of these Regulations, acquisition or transfer of any immovable property outside India by a person resident in India would require prior approval of Reserve Bank except in the following cases:
- Property held outside India by a foreign citizen resident in India;
- Property acquired by a person on or before 8th July, 1947 and held with the permission of Reserve Bank;
- Property acquired by way of gift or inheritance from:
- persons referred to in (b) above;
- persons referred to in section 6(4) of the Act;
- Property purchased out of funds held in Resident Foreign Currency (RFC) account held in accordance with the Foreign Exchange Management (Foreign Currency Accounts by a person resident in India) Regulations, 2015;
- Property acquired jointly with a relative who is a person resident outside India provided there is no outflow of funds from India;
- Property acquired by way of inheritance or gift from a person resident in India who acquired such property in accordance with the foreign exchange provisions in force at the time of such acquisition
- An Indian company having overseas offices may acquire immovable property outside India for its business and residential purposes provided total remittances do not exceed the following limits prescribed for initial and recurring expenses, respectively:
i) 15 per cent of the average annual sales/ income or turnover of the Indian entity during the last two financial years or up to 25 per cent of the net worth, whichever is higher; - For the purpose of these regulations, ‘relative’ in relation to an individual means husband, wife, brother or sister or any lineal ascendant or descendant of that individual.
- The new regulations have been notified vide Notification No. FEMA 7(R)/2015-RB dated January 21, 2016 c.f. G.S.R. No. 95(E) dated January 21, 2016 and shall come into force with effect from January 21, 2016.
ii) 10 per cent of the average annual sales/ income or turnover during the last two financial years.
- In terms of these Regulations, acquisition or transfer of any immovable property outside India by a person resident in India would require prior approval of Reserve Bank except in the following cases:
