Date: 2022-04-12Category: Extra OrdinaryState: Union GovernmentCountry: India
Amendment to the Foreign Exchange Management (Non Debt Instruments) Rules 2019 consequent to DPIITs Press Note 1(2022 series) relating to review of FDI Policy for permitting foreign investment in LIC and other modifications
## Report on the Foreign Exchange Management (Non-debt Instruments) Amendment Rules, 2022
**1. Executive Summary:**
This report analyzes the Foreign Exchange Management (Non-debt Instruments) Amendment Rules, 2022, as published in the Gazette of India on April 12, 2022. This amendment modifies the Foreign Exchange Management (Non-debt Instruments) Rules, 2019, focusing on definitions, employee stock options, mergers/amalgamations, and specific regulations related to the Life Insurance Corporation of India (LIC) and insurance companies. The key changes aim to clarify existing rules, broaden the scope of certain provisions (e.g., extending the timeframe in rule 2(i)), and address specific operational aspects related to foreign investment in Indian companies and LIC.
**2. Introduction:**
The purpose of this report is to provide an informative overview and analysis of the Foreign Exchange Management (Non-debt Instruments) Amendment Rules, 2022 (hereinafter referred to as "the Amendment"), based solely on the text published in the Gazette of India, Extraordinary, Part II, Section 3, Subsection ii, dated April 12, 2022. This report aims to provide clarity on the changes introduced by the Amendment and their potential impact.
**3. Policy Overview:**
* **Original Policy:** Foreign Exchange Management (Non-debt Instruments) Rules, 2019.
* **Core Objectives (as inferred from the text):**
* To regulate and manage foreign exchange investments in non-debt instruments within India.
* To clarify and update existing regulations related to foreign investment.
* To address specific requirements and conditions for foreign investment in particular sectors and entities, such as the insurance sector and LIC.
**4. Background and Rationale:**
This Amendment likely arises from the need to refine and update the existing Foreign Exchange Management (Non-debt Instruments) Rules, 2019 to address evolving market practices, legal interpretations, and specific situations encountered in the implementation of the original rules. The changes related to Employee Stock Options (ESOPs), mergers, and investment in LIC suggest a response to specific operational challenges and a desire to align the regulations with current legal and economic realities.
**5. Key Provisions / Changes:**
The Amendment introduces several key changes to the Foreign Exchange Management (Non-debt Instruments) Rules, 2019:
* **Rule 2 (Definitions):**
* **Change:** Extends the timeframe in clause (e) from "five years" to "ten years".
* **Effect:** Affects the definition of a term to which this timeframe applies, this extended timeframe likely impacts the types of instruments that can be classified as non-debt instruments by providing more flexibility.
* **Change:** Modifies the Explanation in clause (k) regarding equity shares.
* **Effect:** Clarifies that equity shares include partly paid shares, and defines convertible debentures, preference shares, and share warrants. It also allows equity instruments to contain an optionality clause subject to a minimum lock-in period.
* **Change:** Substitutes the Explanation in clause (s) concerning beneficial interest.
* **Effect:** Stipulates that if a person resident outside India is declared as having beneficial interest, it will be counted as foreign investment even if the investment is made by a resident Indian citizen.
* **Change:** Substitutes clause (y) defining "Indian company."
* **Effect:** Broadens the definition of "Indian company" to include bodies corporate established under Central or State Acts. Clarifies that it does not include societies, trusts, or entities excluded under the FDI Policy.
* **Change:** Inserts clause (ama) defining "Share Based Employee Benefits."
* **Effect:** Introduces a definition for Share Based Employee Benefits relating to equity instruments issued to employees or directors of the Indian company, holding company, or subsidiaries who are resident outside India.
* **Change:** Inserts clause (ana) defining "subsidiary."
* **Effect:** Defines "subsidiary" according to the Companies Act, 2013.
* **Rule 8 (Employee Stock Options, Sweat Equity Shares, and Share Based Employee Benefits):**
* **Change:** Substitutes the existing rule.
* **Effect:** Details the conditions under which an Indian company can issue employee stock options, sweat equity shares, and Share Based Employee Benefits to employees/directors resident outside India. These conditions include compliance with SEBI regulations, sectoral caps, prior government approval for companies under the approval route, and restrictions on citizens of Bangladesh or Pakistan.
* **Rule 19 (Mergers and Amalgamations):**
* **Change:** Substitutes subrule 1.
* **Effect:** Specifies the conditions under which a transferee or new company may issue equity instruments to existing shareholders of the transferor company resident outside India, following a scheme of compromise, arrangement, merger, amalgamation, or demerger approved by the NCLT or other competent authority. Conditions include compliance with entry routes, sectoral caps, and investment limits, with a provision for government approval if sectoral caps are breached. Notes that government approval is not required in sectors under the automatic route.
* **Change:** Inserts "compromise or arrangement or" in subrule 2.
* **Effect:** Adds to the description of schemes to which the rule applies.
* **Schedule I (Investment in certain sectors):**
* **Change:** Substitutes the Explanation in paragraph 2(f) regarding "real estate business."
* **Effect:** Redefines "real estate business" to exclude activities like development of townships, construction of residential/commercial premises, infrastructure projects, and REITs.
* **Change:** Modifies entries under the heading "Insurance" within the table.
* **Effect:** Introduces specific regulations for the Life Insurance Corporation of India (LIC), including a 20% automatic route for foreign investment, subject to the LIC Act, 1956 and Insurance Act, 1938 as applicable. Clarifies that terms used will have the same meaning as specified in the rules under the Insurance Act, 1938.
**6. Target Audience and Stakeholders:**
Based on the provided text, the following are the main stakeholders affected by the Amendment:
* Indian companies receiving foreign investment, particularly those issuing equity instruments, ESOPs, or undergoing mergers/amalgamations.
* Foreign investors in Indian companies, including those holding equity shares, convertible debentures, or preference shares.
* Employees and directors of Indian companies (and their holding companies/subsidiaries) who are resident outside India and are beneficiaries of Share Based Employee Benefits schemes.
* The Life Insurance Corporation of India (LIC) and potential foreign investors in LIC.
* The Insurance Regulatory and Development Authority of India (IRDAI).
* The Securities and Exchange Board of India (SEBI).
* The National Company Law Tribunal (NCLT).
**7. Implementation Aspects (Inferred):**
* **Responsible agency/bodies:**
* The Central Government (Ministry of Finance, Department of Economic Affairs) is the primary body responsible for issuing and implementing these rules.
* The Securities and Exchange Board of India (SEBI) for regulations related to share warrants and ESOPs.
* The Insurance Regulatory and Development Authority of India (IRDAI) for foreign investment in the insurance sector.
* The National Company Law Tribunal (NCLT) for approving schemes of compromise, arrangement, merger, amalgamation, or demerger.
* **Timelines and procedures:**
* The rules came into force on the date of their publication in the Official Gazette (April 12, 2022).
* Indian companies need to ensure compliance with the amended rules when issuing equity instruments, ESOPs, and undertaking mergers/amalgamations.
* Companies under the approval route require prior government approval for ESOPs.
**8. Expected Outcomes / Impact of Changes:**
The likely intended outcomes of these changes include:
* Enhanced clarity and consistency in the regulation of foreign investment in non-debt instruments.
* Facilitation of foreign investment by clarifying definitions and procedures.
* Streamlined processes for mergers and amalgamations involving foreign investment.
* Increased flexibility for companies in structuring employee stock option plans.
* Facilitation of foreign investment into LIC, subject to the provisions of the LIC Act and the Insurance Act.
**9. Conclusion:**
The Foreign Exchange Management (Non-debt Instruments) Amendment Rules, 2022, represent a significant update to the regulatory framework governing foreign investment in India. The changes focus on clarifying definitions, streamlining processes, and addressing specific requirements for foreign investment in sectors like insurance. By providing greater clarity and flexibility, the Amendment is expected to facilitate foreign investment and promote economic growth. The implications of these changes should be carefully considered by Indian companies, foreign investors, and other stakeholders in the Indian economy.
Key Entities Referenced
New Delhi: Location of policy issuance.
Foreign Exchange Management Act, 1999: Act under which the powers are conferred to the Central Government for making rules.
Central Government: The governing body making the rules as per the Foreign Exchange Management Act, 1999.
Foreign Exchange Management Nondebt Instruments Rules, 2019: The rules being amended by this notification.
Companies Act, 2013: Indian legislation referenced for defining companies, subsidiaries and other aspects of corporate law.
Securities and Exchange Board of India Act, 1992: Act under which regulations are issued related to employee stock options and other provisions.
Securities and Exchange Board of India: Regulatory body referred for regulations related to share warrants.
National Company Law Tribunal: Authority competent to approve schemes of compromise or arrangement or merger or amalgamation of Indian companies.
Insurance Act, 1938: Act related to insurance companies.
Insurance Regulatory and Development Authority of India: Authority issuing regulations related to foreign investment in Indian Insurance Companies and intermediaries or insurance intermediaries.
Real Estate Investment Trusts: REITs, investment trusts registered and regulated under the SEBI REITs Regulations 2014.
SEBI REITs Regulations 2014: Regulations governing Real Estate Investment Trusts.
Life Insurance Corporation of India: Specific company subject to provisions of the Life Insurance Corporation Act, 1956.
Life Insurance Corporation Act, 1956: Act governing the Life Insurance Corporation of India.
Ministry of Finance: The ministry under which Department of Economic Affairs is mentioned
Department of Economic Affairs: The department issuing the notification
Bangladesh: Country for which prior government approval is required for issuing employees stock option or sweat equity shares or Share Based Employee Benefits
Pakistan: Country for which prior government approval is required for issuing employees stock option or sweat equity shares or Share Based Employee Benefits
रजिस्ट्री स.ं डी.एल.- 33004/99 REGD. No. D. L.-33004/99
सी.जी.-डी.एल.-अ.-12042022-235070
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CG-DL-E-12042022-235070
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असाधारण
EXTRAORDINARY
भाग II—खण् ड 3—उप-खण्ड (ii)
PART II—Section 3—Sub-section (ii)
प्राजधकार स ेप्रकाजित
PUBLISHED BY AUTHORITY
स.ं 1715] नई दिल्ली, मगं लिार, अप्रलै 12, 2022/चत्रै 22, 1944
No. 1715] NEW DELHI, TUESDAY, APRIL 12, 2022/CHAITRA 22, 1944
जित्त मत्रं ालय
(आर्थकि काय िजिभाग)
नई दिल् ली, 12 अप्रैल, 2022
का.आ. 1802(अ.).—केंद्रीय सरकार, जििेिी मुद्रा प्रबंध अजधजनयम, 1999 (1999 का 42) की धारा 46 की
उप-धारा (2) के खंड (कक) और (कख) द्वारा प्रित्त िजियों का प्रयोग करत े हुए एतद्द्वारा जििेिी मुद्रा प्रबधं (गरै -ऋण
जलखत) जनयम, 2019 में और संिोधन करने के जलए जनम्नजलजखत जनयम बनाती ह,ै अथाित्:
1. संजिप्त िीर्कि और प्रारंभ - (1) इन जनयमों का नाम जििेिी मुद्रा प्रबंध (गैर-ऋण जलखत) (संिोधन) जनयम, 2022 ह।ै
(2) ये रािपत्र में इनके प्रकािन की तारीख स ेप्रिृत्त होंगे।
2. जििेिी मुद्रा प्रबंधन (गरै -ऋण जलखत) जनयम, 2019 में (जिसे इसमें इसके पश्चात उि जनयम कहा गया है), जनयम 2
में, -
(i) खंड (ङ) म,ें "पांच िर्"ि िब्िों के स्ट्थान पर "िस िर्"ि िब्ि रखें।
(ii) खंड (ट) म,ें स्ट्पष्टीकरण म,ें खंड (i) के स्ट्थान पर, जनम्नजलजखत खंड रख,ें अथाित:् -
"(i) कंपनी अजधजनयम, 2013 या दकसी अन्य लागू कानून के उपबंधों के अनुसार, दकसी भारतीय कंपनी द्वारा िारी दकए
गए साम्या िेयरों म ें िह साम्या िेयर सम्मजलत ह,ैं जिनका भागतः संिाय दकया गया ह।ै "संपररितिनीय जडबेंचर" स े
पूणितया और आज्ञापकतः संपररितिनीय जडबेंचर अजभप्रेत ह,ैं जिनका पूणितया संिाय दकया गया ह।ै "अजधमानी िेयर" स े
पूणितया और आज्ञापकतः पररितिनीय अजधमानी िेयर ह ै जिनका पूणितया संिाय दकया गया ह।ै "िेयर िारंट" ि े िारंट ह ैं
2654 GI/2022 (1)2 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(ii)]
जिन्ह ें दकसी भारतीय कंपनी द्वारा भारतीय प्रजतभूजत और जिजनमय बोडि द्वारा िारी जिजनमयों, कंपनी अजधजनयम, 2013
या दकसी अन्य लाग ू कानून के अनुसार िारी दकया गया ह।ै दकसी साम्या जलखत म ें एक िर्ि की न्यूनतम लॉक-इन अिजध
या दकसी जिजिष्ट िेत्र के जलए यथाजिजहत अिजध, िो भी उच्चतर हो, के अध्यधीन कोई िैकजल्पकता खंड अतं र्ििष्ट हो सकता
ह,ै ककंतु बीमांदकत कीमत पर बाह्यगमन का कोई जिकल्प या अजधकार नहीं होगा;
(iii) खंड (ि) म,ें स्ट्पष्टीकरण के स्ट्थान पर, जनम्नजलजखत स्ट्पष्टीकरण रखा िाएगा, अथाित:् -
"स्ट्पष्टीकरण: - यदि दकसी व्यजि द्वारा कंपनी अजधजनयम, 2013 या दकसी अन्य लाग ू कानून, िैसा भी मामला हो, के
उपबंधों के अनुसार भारत से बाहर जनिासी दकसी व्यजि द्वारा धृत फायिाप्रि जहत के जिर्य म ेंकोई घोर्णा की िाती ह ैतो
दकसी भारतीय जनिासी नागररक द्वारा दकये गए जिजनधान के होते हुए भी उसकी गणना जििेिी जिजनधान के रूप में की
िाएगी;
(iv) खंड (भ) के स्ट्थान पर जनम्नजलजखत खंड रखें, अथाित:् -
"(भ)' '' भारतीय कंपनी' से कंपनी अजधजनयम, 2013 में यथा पररभाजर्त कोई कंपनी या दकसी केंद्रीय या राज्य अजधजनयम
द्वारा स्ट्थाजपत या गरित कोई जनगजमत जनकाय अजभप्रेत ह;ै िो भारत म ेंजनगजमत दकया गया ह।ै
रटप्पण:
(i) यह स्ट्पष्ट दकया िाता ह ै दक इन जनयमों म ें 'कंपनी' या 'जनिेिकताि कंपनी' या 'अंतररती कंपनी' या ‘अंतरणकताि कंपनी' के
संिभि में दकसी केंद्रीय या राज्य अजधजनयम द्वारा या उसके अधीन स्ट्थाजपत या गरित जनकाय का कोई संिभि भी िाजमल ह।ै
(ii) यह और स्ट्पष्ट दकया िाता ह ै दक यदि 'कंपनी' या 'भारतीय कंपनी' या 'जनिेिकताि कंपनी' या 'अंतररती कंपनी' या
'अंतरणकताि कंपनी' िब्ि कंपनी अजधजनयम, 2013 के अधीन जनगजमत कंपनी के संिभि में सापेि ह,ै ऐसे िब्ि का अथ ि उि
अजधजनयम के अधीन जनगजमत एक कंपनी, लेदकन कॉपोरेट जनकाय नहीं होगा।
(iii) यह भी स्ट्पष्ट दकया िाता ह ै दक 'भारतीय कंपनी' में कोई सोसाइटी, न्यास या कोई संस्ट्था िाजमल नहीं ह,ै जिसे
एफडीआई नीजत के तहत एक पात्र जनिेिकताि इकाई के रूप में बाहर रखा गया ह।ै "
(v) खंड (य ि) के पश्चात,् जनम्नजलजखत खडं अंतर्ििष्ट दकए िाएंग,े अथाित्:
''(य ि क)'' '"िेयर आधाररत कमिचारी लाभों" का अथि कमिचाररयों या जनिेिकों अथिा धाररत कंपनी अथिा संयुि उद्यम
या पूण ि स्ट्िाजमत्ि िाली जििेिी सहायक कंपनी या कंपजनयों के कमिचारी या जनिेिक िो भारत के बाहर रह रहे ह,ैं के जलए
साम्या जलखतों का जनगिम ह,ै िो एक भारतीय कंपनी द्वारा तैयार की गई िेयर आधाररत कमिचारी लाभ योिनाओं के
अनुसरण म ेंह'ै।
(vi) खंड (य ड) के पश्चात,् जनम्नजलजखत खंड अतं र्ििष्ट दकए िाएंग,े अथाित्: -
''(य ड क)-'' "सहायक कंपनी" का िही अथ ि होगा िो समय-समय पर यथा-संिोजधत, कंपनी अजधजनयम, 2013 म ें
जिजनर्िष्टि ह।ै '''
3. उि जनयमों म,ें जनयम 8 के स्ट्थान पर जनम्नजलजखत जनयम रखा िाएगा, अथाित:् -
"8. कमचि ारी स्ट्टॉक जिकल्पों, स्ट्िीट साम्या िये रों और िये र आधाररत कमचि ारी लाभों का भारत स े बाहर जनिासी
व्यजियों को जनगमि - कोई भारतीय कंपनी अपने ऐसे कमिचाररयों या जनिेिकों या धृजत कंपनी या संयुि उद्यम या पणू ि
स्ट्िाजमत्ि िाली जििेिी अनुसगं ी या अनुसंजगयों के ऐसे कमिचारी या जनििे कों को िो भारत से बाहर जनिासी हैं, “कमचि ारी
स्ट्टॉक जिकल्प”, “स्ट्िीट साम्या िये रों” और “िये र आधाररत कमचि ारी लाभ” का जनगमि कर सकेगी:
परंत ु यह दक -
(क) यह योिना या तो यथाजस्ट्थजत, भारतीय प्रजतभूजत और जिजनमय बोडि अजधजनयम, 1992 या कंपनी (िेयर पूंिी और
जडबेंचर) जनयम, 2014 के अधीन िारी जिजनयमों के ितों के अनुसार तैयार की िाती ह;ै
(ख) जनयमों या जिजनयमों के अधीन इस प्रकार िारी "कमिचारी स्ट्टॉक जिकल्प” या "स्ट्िीट साम्या िेयर" या “िये र आधाररत
कमचि ारी लाभ” उि कंपनी को लाग ूसेक्टोरल सीमा के अनुपालन म ें ह;ैं
(ग) ऐसा कंपनी िो अननुमोिन मागि के अधीन ह,ै जििेिी जिजनधान "कमिचारी स्ट्टाक जिकल्प" या "स्ट्िीट साम्या िेयर" या
“िये र आधाररत कमचि ारी लाभ” जनगिम दकया िाना ह,ै सरकार के पूिि अनुमोिन स े अपेिा दकया िाएगा;[भाग II—खण् ड 3(ii)] भारत का रािपत्र : असाधारण 3
(घ) बांग्लािेि या पादकस्ट्तान के नागररक से "कमिचारी स्ट्टाक जिकल्प” या "स्ट्िीट साम्या िेयर" का जनगिम सरकार के पूिि
अनुमोिन से दकया िाना अपेजित होगा:
परंत ुयह और दक ऐसा कोई व्यजि िो भारत स े बाहर का जनिासी ह ैऔर िो जिकल्प का प्रयोग कर रहा ह ै िो उसे तब
प्रित्त दकया गया था िब िह भारत में जनिासी व्यजि या गैर संप्रत्याितित आधार पर जिकल्प का प्रयोग करते हुए इस
प्रकार अर्िित साम्या जलखतों को धारण करेगा |
4. उि जनयमों म,ें जनयम 19 म,ें
(i) उप-जनयम (1) के स्ट्थान पर, जनम्नजलजखत उप-जनयम रखा िाएगा, अथाति ्:-
"(1) िहां िो या अजधक भारतीय कंपजनयों की समझौता या व्यिस्ट्था या जिलयन या समामेलन की स्ट्कीम या भारतीय
कंपनी के अजिलयन के माध्यम स े या अन्यथा पुन:संजनमािण, राष्ट्रीय कंपनी जिजध प्राजधकरण (एनसीएलटी) या कानून द्वारा
ऐसा करने के जलए सिम अन्य प्राजधकरण द्वारा अनुमोदित दकया गया है, िहा,ं यथाजस्ट्थजत, अंतररती कंपनी या नई कंपनी
जनम्नजलजखत ितों के अध्यधीन रहत े हुए, भारत के बाहर जनिासी अंतरक कंपनी के जिद्यमान धारकों को साम्या जलखतें
िारी कर सकेगी, अथाित:् -
(क) अंतरण या जनगिम, यथाजस्ट्थजत, प्रिेि मागि, सेक्टोरल सीमाओं या जिजनधान सीमाओं के और भारत स े बाहर दकसी
जनिासी व्यजि द्वारा जिजनधान की आनुर्ंजगक ितों के अनुपालन म ें ह:ै
परंत ु िहां प्रजतितता स े सेक्टर सीमाओं या आनुर्ंजगक ितों के भंग होने की संभािना ह,ै िहा ं अंतरक कंपनी या अंतररती
अथिा नई कंपनी केंद्रीय सरकार स े आिश्यक अनुमोिन प्राप्त कर सकेंगी;
(ख) अंतरक कंपनी या अंतररती कंपनी या नई कंपनी, भारत से बाहर जनिासी व्यजि द्वारा जिजनधान के जलए प्रजतजर्द्ध
दकसी सेक्टर म ेंकायि नहीं करेगी ।
रटप्पण: सरकारी अनुमोिन स्ट्िचाजलत माध्यम के अधीन सेक्टरों म ें जिलय और अजधग्रहणों के मामले म ें सरकारी अनुमोिन
आिश्यक नहीं होगा।
(ii) उप-जनयम (2) म,ें "िहां िो या अजधक भारतीय कंपजनयों के" िब्िों के पश्चात, "समझौता या व्यिस्ट्था या" िब्ि
अन्तः स्ट्थाजपत दकए िाएंगे।
5. उि जनयमों म,ें अनुसूची I म,ें
(i) परै ा 2 म,ें उप-पैरा (च) म,ें स्ट्पष्टीकरण के जलए, जनम्नजलजखत स्ट्पष्टीकरण रखा िाएगा, अथाित्: -
“स्ट्पष्टीकरण: इस जनयम के उद्देश्य के जलए, 'ररयल एस्ट्टेट कारबार' का अथि ह ै भूजम और अचल संपजत्त से लाभ अर्िित करन े
की िजृ ष्ट से व्यापार करना और इसमें टाउनजिप का जिकास, रेजसडेजन्ियल (जनिासी) या कमर्िियल (व्यािसाजयक) पररसर,
रोड या पुल का जनमािण, जििा संस्ट्थान, मनोरंिन सुजिधाए,ं िहर और िेत्रीय स्ट्तर की अिसंरचना, टाउनजिप, ररयल
एस्ट्टेट ब्रोककंग सेिाएं और सेबी (आरईआईटी) जिजनयम, 2014 के अधीन रजिस्ट्रीकृत और जिजनयजमत ररयल एस्ट्टेट जनिेि
रस्ट्ट (आरईआईटी) और संपजत्त के पट्टे पर दकराए अथिा आय अििन ररयल एस्ट्टेट कारबार में सजम्मजलत नहीं होंगे।;
(ii) सारणी म,ें -
(क) बीमा िीर्िक के अधीन,
(क) क्रम संख्या एफ.8.1 के पश्चात्, जनम्नजलजखत क्रमांक और प्रजिजष्टयां अन्तः स्ट्थाजपत की िाएगं ी, अथाति ्:-
(1) (2) (3) (4)
''एफ.8.1 क भारतीय िीिन बीमा जनगम 20% स्ट्िचाजलत'';
(ख) क्र.स.ं ''एफ.8.3'' और स्ट्तम्भ 2 के अधीन प्रजिजष्ट के स्ट्थान पर, क्रमि: जनम्नजलजखत क्र.स.ं और प्रजिजष्ट रखी िाएंगी,
अथाित:्-4 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(ii)]
(1) (2)
''एफ.8.3.1 भारतीय बीमा कंपजनयों और मध्यिती या बीमा मध्यिती पर लाग ूअन्य ित'ें';
(ग) खडं (ट) के स्ट्थान पर, जनम्नजलजखत खंड रखा िाएगा, अथाित्:-
"(ट) "इदिटी िेयर पूंिी", "प्रत्यि जििेिी जिजनधान" (एफडीआई), "जििेिी जनिेिक", "जििेिी पोटिफोजलयो जिजनधान ",
"भारतीय बीमा कंपनी", "भारतीय कंपनी", "अजनिासी अजस्ट्तत्ि", "लोक जित्तीय संस्ट्था", "जनिासी भारतीय नागररक" और
"कुल जििेिी जिजनधान " िब्िों का िही अथ ि होगा िो भारतीय बीमा कंपजनयों और मध्यिती या बीमा मध्यिती में जििेिी
जनिेि के संबंध म ें बीमा अजधजनयम, 1938 के अतं गति जनयमों में जनर्िष्टि दकया गया ह,ैं अथिा समय-समय पर भारतीय
बीमा जनयामक और जिकास प्राजधकरण द्वारा िारी जिजनयमों में यथा उपबंजधत हैं'';
(घ) क्र.स.ं एफ.8.3.1 के पश्चात्, जनम्नजलजखत क्र स ं और उसस ेसंबंजधत प्रजिजष्टयां अन्तः स्ट्थाजपत की िाएगं ी, अथाित:्-
"एफ.8.3.2" भारतीय िीिन बीमा जनगम (एलआईसी) पर लाग ूअन्य ित ें
(क) एलआईसी म ें जििेिी जनिेि िीिन बीमा जनगम अजधजनयम, 1956 (एलआईसी
अजधजनयम), समय-समय पर यथा-संिोजधत (एलआईसी अजधजनयम) प्रािधानों और बीमा
अजधजनयम, 1938 के समय-समय पर यथा-संिोजधत प्रािधानों, िैसा दक एलआईसी पर लाग ू
ह,ैं के अध्यधीन होगा |
(ख) क्रम सं एफ.8.3.1 के अधीन खण्ड (ङ) और (च) के प्रािधान, एलआईसी पर भी लागू होंगे
िैसे दक भारतीय बीमा कंपनी का संिभि एलआईसी के संिभि म ेंह।ै
(ग) क्रम सं एफ.8.3.1 के अधीन खंड (ट) म ेंसंिर्भित बातों का िही अथि होगा िो उसमें जनर्िष्टि
ह।ैं
स्ट्पष्टीकरण: इस क्रम स.ं के प्रयोिनाथ,ि भारतीय बीमा कंपनी या क्रमांक एफ.8.3.1 के अधीन
खंड (ट) म ें संिर्भित कंपनी के जलए कोई संिभ ि एलआईसी के जलए संिभ ि के रूप म ें माना
िाएगा।
[फा. स.ं 01/05/ईएम/2019]
आनंि मोहन बिाि, अपर सजचि
रटप्पण: मूल जनयम भारत के रािपत्र, असाधारण, भाग II, खंड 3, उपखंड (ii) में संख्यांक का.आ 3732 (अ), तारीख
17 अक्टूबर, 2019 के अधीन प्रकाजित दकए गए थे और बाि में जनम्नजलजखत अजधसूचना संख्यांक द्वारा संिोजधत दकए
गए थे:-
(i) का.आ. 4355 (अ), तारीख 5 दिसंबर 2019,
(ii) का.आ. 1278 (अ), तारीख 22 अप्रैल, 2020,
(iii) का.आ.. 1374 (अ), तारीख 27 अप्रैल, 2020,
(iv) का.आ. 2442 (अ), तारीख 27 िलु ाई, 2020,
(v) का.आ. 4441 (अ), तारीख 8 दिसंबर, 2020,
(vi) का.आ. 3206 (अ), तारीख 9 अगस्ट्त, 2021,
(vii) का.आ. 3411 (अ), तारीख 19 अगस्ट्त, 2021
(viii) का.आ. 4091 (अ), तारीख 5 अक्टूबर, 2021 और
(ix) का.आ. 4242 (अ), तारीख 12 अक्टूबर, 2021[भाग II—खण् ड 3(ii)] भारत का रािपत्र : असाधारण 5
MINISTRY OF FINANCE
(Department of Economic Affairs)
New Delhi, the 12th April, 2022
S.O. 1802(E).—In exercise of the powers conferred by clauses (aa) and (ab) of sub-section (2) of section 46 of
the Foreign Exchange Management Act, 1999 (42 of 1999), the Central Government hereby makes the following
rules further to amend the Foreign Exchange Management (Non-debt Instruments) Rules, 2019, namely:
1. Short title and commencement. — (1) These rules may be called the Foreign Exchange Management (Non-debt
Instruments) (Amendment) Rules, 2022.
(2) They shall come into force on the date of their publication in the Official Gazette.
2. In the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 (hereinafter referred to as the said
rules), in rule 2,-
(i) in clause (e), for the words “five years”, the words “ten years” shall be substituted ;
(ii) in clause (k), in the Explanation, for clause (i), the following clause shall be substituted, namely:-
“(i) Equity shares issued by an Indian Company in accordance with the provisions of the Companies Act, 2013 or
any other applicable law, shall include equity shares that have been partly paid. “Convertible debentures” means
fully and mandatorily convertible debentures which are fully paid. “Preference shares” means fully and mandatorily
convertible preference shares which are fully paid. “Share Warrants” are those issued by an Indian Company in
accordance with the regulations made by the Securities and Exchange Board of India, the Companies Act, 2013 or
any other applicable law. Equity instruments can contain an optionality clause subject to a minimum lock-in period
of one year or as prescribed for the specific sector, whichever is higher, but without any option or right to exit at an
assured price.”;
(iii) in clause (s), for the Explanation, the following Explanation shall be substituted, namely:-
“Explanation: - If a declaration is made by a person as per the provisions of the Companies Act, 2013 or any other
applicable law, as the case may be, about a beneficial interest being held by a person resident outside India, then
even though the investment may be made by a resident Indian citizen, the same shall be counted as foreign
investment;”;
(iv) for clause (y), the following clause shall be substituted, namely:-
“ (y) “Indian company” means a company as defined in the Companies Act, 2013 or a body corporate established
or constituted by or under any Central or State Act, which is incorporated in India;
Note:
(i) It is clarified that reference to 'company' or 'investee company' or 'transferee company' or 'transferor company' in
these rules also includes a reference to a body corporate established or constituted by or under any Central or State
Act.
(ii) It is further clarified that if the term 'Company ' or 'Indian company' or 'Investee company' or 'transferee
company' or 'transferor company' is qualified by a reference to a company incorporated under the Companies Act,
2013 such term shall mean a company incorporated under the said Act but not a body corporate.
(iii) It is also clarified that 'Indian company' does not include a society, trust or any entity, which is excluded as an
eligible investee entity under the FDI Policy.”;
(v) after clause (am), the following clause shall be inserted, namely :-
“(ama) “Share Based Employee Benefits” means issue of equity instruments to employees or directors or employees
or directors of the holding company or joint venture or wholly owned overseas subsidiary or subsidiaries who are
resident outside India, pursuant to Share Based Employee Benefits schemes formulated by an Indian Company”;
(vi) after clause (an), the following clause shall be inserted, namely :-
“(ana) “subsidiary” shall have the same meaning as is assigned to it in the Companies Act, 2013, as amended
from time to time”;6 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(ii)]
3. In the said rules, for rule 8, the following rule shall be substituted, namely:-
“8. Issue of Employees Stock Options , sweat equity shares and Share Based Employee Benefits to persons
resident outside India.- An Indian company may issue “employees’ stock option”, “sweat equity shares”, and “Share
Based Employee Benefits” to its employees or directors or employees or directors of its holding company or joint
venture or wholly owned overseas subsidiary or subsidiaries who are resident outside India:
Provided that. -
(a) the scheme has been drawn either in terms of regulations issued under the Securities and Exchange
Board of India Act, 1992 or the Companies (Share Capital and Debentures) Rules, 2014 or as per other applicable
law, as the case may be;
(b) the “employee’s stock option” or “sweat equity shares” or “Share Based Employee Benefits” so issued
under the applicable rules or regulations are in compliance with the sectoral cap applicable to the said company;
(c) the issue of “employee’s stock option” or “sweat equity shares” or “Share Based Employee Benefits” in
a company where foreign investment is under the approval route shall require prior government approval;
(d) issue of “employee’s stock option” or “sweat equity shares” or “Share Based Employee Benefits” to a
citizen of Bangladesh or Pakistan shall require prior government approval :
Provided further that an individual who is a person resident outside India exercising an option which was
issued when he or she was a person resident in India shall hold the shares so acquired on exercising the option on
a non-repatriation basis.”.
4. In the said rules, in rule 19,
(i) for sub-rule (1), the following sub-rule shall be substituted, namely:-
“ (1) Where a scheme of compromise or arrangement or merger or amalgamation of two or more Indian
companies or a reconstruction by way of demerger or otherwise of an Indian company, or transfer of undertaking
of one or more Indian company to another Indian company, or involving division of one or more Indian
company, has been approved by the National Company Law Tribunal (NCLT) or other authority competent to do
so by law, the transferee company or the new company, as the case may be, may issue equity instruments to the
existing shareholders of the transferor company resident outside India, subject to the following conditions,
namely:-
(a) the transfer or issue is in compliance with the entry routes, sectoral caps or investment limits, as the case may
be and the attendant conditionalities of investment by a person resident outside India :
Provided that where the percentage is likely to breach the sectoral caps or the attendant conditionalities,
the transferor company or the transferee or new company may obtain necessary approval from the Central
Government;
(b) the transferor company or the transferee company or the new company is not engaged in any sector
prohibited for investment by a person resident outside India.
Note: Government approval shall not be required in case of mergers and acquisitions taking place in sectors
under automatic route.”;
(ii) in sub-rule (2), after the words “where a scheme of”, the words “compromise or arrangement or” shall be
inserted.
5. In the said rules, in Schedule I,
(i) in paragraph 2, in sub-paragraph (f), for the Explanation, the following Explanation shall be substituted,
namely:-
“Explanation: For the purpose of this rule, 'real estate business' means dealing in land and immovable property with a
view to earning profit from there and does not include development of townships, construction of residential or
commercial premises, roads or bridges, educational institutions, recreational facilities, city and regional level
infrastructure, townships, real estate broking services and Real Estate Investment Trusts (REITs) registered and[भाग II—खण् ड 3(ii)] भारत का रािपत्र : असाधारण 7
regulated under the SEBI (REITs) Regulations 2014 and earning of rent or income on lease of the property, not
amounting to transfer.;
(ii) in the Table,-
(a) under the heading Insurance,
(A) after Sl. No. F.8.1, the following Sl. No. and entries shall be inserted, namely:-
(1) (2) (3) (4)
“F.8.1A Life Insurance Corporation of India 20% Automatic”;
(B) for Sl. No. “F.8.3” and the entry under column 2, the following Sl. No. and entry shall respectively be
substituted, namely :-
(1) (2)
“F.8.3.1 Other conditions applicable to Indian insurance companies and intermediaries or insurance
intermediaries”;
(C) For clause (k), the following clause shall be substituted, namely :-
“(k) Terms “Equity Share Capital”, ‟Foreign Direct Investment” (FDI), “Foreign Investors”, ‟Foreign Portfolio
Investment”, “Indian Insurance Company”, ‟Indian Company”, “Non-resident Entity”, “Public Financial
Institution”, “Resident Indian Citizen” and “Total Foreign Investment” shall have the same meaning as specified in
the rules under the Insurance Act, 1938 or in the regulations issued by Insurance Regulatory and Development
Authority of India from time to time, in respect of foreign investment in Indian Insurance Companies and
intermediaries or insurance intermediaries.”;
(D) after Sl No. F.8.3.1, the following Sl.No. and entries relating thereto shall be inserted, namely :-
(1) (2)
“F.8.3.2 Other conditions applicable to the Life Insurance Corporation of India (LIC)
(a) Foreign investment in LIC shall be subject to the provisions of the Life Insurance Corporation
Act, 1956, (LIC Act) as amended from time to time (LIC Act) and such provisions of the Insurance
Act, 1938, as amended from time to time, as are applicable to LIC
(b) Provisions of clauses (e) and (f) under Sl. No. F.8.3.1, shall also apply to LIC, as if reference
therein to an Indian Insurance Company is a reference to LIC.
(c) The terms referred to in clause (k) under Sl. No. F.8.3.1 shall have the same meaning as
referred to therein.
Explanation: For the purposes of this Sl. No., any reference to Indian insurance company or company
referred to in clause (k) under Sl. No. F.8.3.1, shall be construed as a reference to LIC.”.
[F. No. 01/05/EM/2019]
ANAND MOHAN BAJAJ, Addl. Secy.
Note: The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (ii),
vide number S.O.3732 (E), dated the 17th October, 2019 and subsequently amended vide notification
numbers: -
(i) S.O. 4355 (E), dated the 5th December 2019,8 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(ii)]
(ii) S.O. 1278 (E), dated the 22nd April, 2020,
(iii) S.O. 1374 (E), dated the 27th April, 2020,
(iv) S.O. 2442 (E), dated the 27th July, 2020,
(v) S.O. 4441 (E), dated the 8th December, 2020,
(vi) S.O. 3206 (E), dated the 9th August, 2021,
(vii) S.O. 3411 (E), dated the 19th August, 2021
(viii) S.O. 4091 (E), dated the 5th October 2021and
(ix) S.O. 4242 (E), dated the 12th October 2021
Uploaded by Dte. of Printing at Government of India Press, Ring Road, Mayapuri, New Delhi-110064
and Published by the Controller of Publications, Delhi-110054.