Executive Summary:
This notification from the Reserve Bank of India outlines the seventh amendment to the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000. It introduces a new regulation, 10A, concerning deferred payments in share transfers between resident buyers and non-resident sellers (or vice versa). The amendment is effective from the date of publication in the official Gazette, May 20, 2016.
Key Points / Main Content:
* **Regulation Title:** Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Seventh Amendment Regulations, 2016.
* **Effective Date:** From the date of publication in the Official Gazette.
* **New Regulation 10A (Deferred Payment for Share Transfers):**
* Applies to share transfers between resident buyers and non-resident sellers (or vice versa).
* Allows up to 25% of the total consideration to be paid on a deferred basis.
* The deferral period cannot exceed 18 months from the date of the transfer agreement.
* An escrow arrangement for the deferred amount (not exceeding 25% of the total consideration) is permitted for up to 18 months.
* Alternatively, if full consideration is paid upfront, the seller may provide an indemnity for up to 25% of the total consideration for up to 18 months.
* The total consideration paid must comply with applicable pricing guidelines.
Impact Analysis:
* **Resident Buyers and Non-Resident Sellers:**
* Impact: These parties now have the option to structure share transfer agreements with deferred payment terms, providing flexibility in managing funds and risk.
* Action Required: Ensure that any deferred payment arrangements comply with the 25% limit, 18-month timeframe, and applicable pricing guidelines.
* **The Reserve Bank of India:**
* Impact: The RBI is responsible for overseeing and enforcing these regulations, contributing to the management of foreign exchange within India.
* Action Required: Continue to monitor and enforce compliance with the Foreign Exchange Management Act, 1999, and its amendments.
Key Entities Referenced
Reserve Bank of India : The central bank of India, responsible for regulating the foreign exchange market.
Foreign Exchange Management Act, 1999 : Indian legislation that provides the legal framework for the regulation of foreign exchange in India.
Foreign Exchange Management Transfer or Issue of Security by a Person Resident outside India Regulations, 2000 : Regulations issued by the Reserve Bank of India under the Foreign Exchange Management Act, 1999, governing the transfer or issue of security by a person resident outside India.
Mumbai, Maharashtra : The city in India where the Central Office of the Reserve Bank of India is located.
Foreign Exchange Department : A department of Reserve Bank of India.
FEMA. 3682016RB : Notification number related to Foreign Exchange Management.
G.S.R. 537E : A reference number related to government notifications in India.
SHEKHAR BHATNAGAR : Chief General Manager-in-Charge at Reserve Bank of India.
See Full Document Text
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सा.का.िन. स.ं 158(अ) दनाकं 02.03.2001 सा.का.िन. स.ं 713(अ) दनाकं 14.11.2007
सा.का.िन. स.ं 175(अ) दनाकं 13.03.2001 सा.का.िन. स.ं 737(अ) दनाकं 29.11.2007
सा.का.िन. स.ं 182(अ) दनाकं 14.03.2001 सा.का.िन. स.ं 575(अ) दनाकं 05.08.2008
सा.का.िन. स.ं 4(अ) दनाकं 02.01.2002 सा.का.िन. स.ं 896(अ) दनाकं 30.12.2008
सा.का.िन. स.ं 574(अ) दनाकं 19.08.2002 सा.का.िन. स.ं 851(अ) दनाकं 01.12.2009
सा.का.िन. स.ं 223(अ) दनाकं 18.03.2003 सा.का.िन. स.ं 341(अ) दनाकं 21.04.2010
सा.का.िन. स.ं 225(अ) दनाकं 18.03.2003 सा.का.िन. स.ं 821(अ) दनाकं 10.11.2012
सा.का.िन. स.ं 558(अ) दनाकं 22.07.2003 सा.का.िन. स.ं 606(अ) दनाकं 03.08.2012
सा.का.िन. स.ं 835(अ) दनाकं 23.10.2003 सा.का.िन. स.ं 795(अ) दनाकं 30.10.2012
सा.का.िन. स.ं 899(अ) दनाकं 22.11.2003 सा.का.िन. स.ं 796(अ) दनाकं 30.10.2012
सा.का.िन. स.ं 12(अ) दनाकं 07.01.2004 सा.का.िन. स.ं 797(अ) दनाकं 30.10.2012
सा.का.िन. स.ं 278(अ) दनाकं 23.04.2004 सा.का.िन. स.ं 945(अ) दनाकं 31.12.2012
सा.का.िन. स.ं 454(अ) दनाकं 16.07.2004 सा.का.िन. स.ं 946(अ) दनाकं 31.12.2012
सा.का.िन. स.ं 625(अ) दनाकं 21.09.2004 सा.का.िन. स.ं 38(अ) दनाकं 22.01.2013
सा.का.िन. स.ं 799(अ) दनाकं 08.12.2004 सा.का.िन. स.ं 515(अ) दनाकं 30.07.2013
सा.का.िन. स.ं 201(अ) दनाकं 01.04.2005 सा.का.िन. स.ं 532(अ) दनाकं 05.08.2013
सा.का.िन. स.ं 202(अ) दनाकं 01.04.2005 सा.का.िन. स.ं 341(अ) दनाकं 28.05.2013
सा.का.िन. स.ं 504(अ) दनाकं 25.07.2005 सा.का.िन. स.ं 344(अ) दनाकं 29.05.2013
सा.का.िन. स.ं 505(अ) दनाकं 25.07.2005 सा.का.िन. स.ं 195(अ) दनाकं 01.04.2013
सा.का.िन. स.ं 513(अ) दनाकं 29.07.2005 सा.का.िन. स.ं 393(अ) दनाकं 21.06.2013
सा.का.िन. स.ं 738(अ) दनाकं 22.12.2005 सा.का.िन. स.ं 591(अ) दनाकं 04.09.2013
सा.का.िन. स.ं 29(अ) दनाकं 19.01.2006 सा.का.िन. स.ं 596(अ) दनाकं 06.09.2013
सा.का.िन. स.ं 413(अ) दनाकं 11.07.2006 सा.का.िन. स.ं 597(अ) दनाकं 06.09.2013
सा.का.िन. स.ं 712(अ) दनाकं 14.11.2007 सा.का.िन. स.ं 681(अ) दनाकं 11.10.2013¹Hkkx IIµ[k.M 3(i)º Hkkjr dk jkti=k % vlk/kj.k 3
सा.का.िन. स.ं 682(अ) दनाकं 11.10.2013 जी.एस.आर. स.ं 799(अ) दनाकं 13.11.2014
सा.का.िन. स.ं 818(अ) दनाकं 31.12.2013 जी.एस.आर. स.ं 800(अ) दनाकं 13.11.2014
सा.का.िन. स.ं 805(अ) दनाकं 30.12.2013 जी.एस.आर. स.ं 829(अ) दनाकं 21.11.2014
सा.का.िन. स.ं 683(अ) दनाकं 11.10.2013 जी.एस.आर. स.ं 906(अ) दनाकं 22.12.2014
सा.का.िन. स.ं 189(अ) दनाकं 19.03.2014 जी.एस.आर. स.ं 914(अ) दनाकं 24.12.2014
सा.का.िन. स.ं 190(ई) दनाकं 19.03.2014 जी.एस.आर. स.ं 30(अ) दनांक 14.01.2015
सा.का.िन. स.ं 270(अ) दनाकं 07.04.2014 जी.एस.आर. स.ं 183(अ) दनाकं 12.03.2015
सा.का.िन. स.ं 361(अ) दनाकं 27.05.2014 जी.एस.आर. स.ं 284(अ) दनाकं 13.04.2015
सा.का.िन. स.ं 370(अ) दनाकं 30.05.2014 जी.एस.आर. स.ं 484(अ) दनाकं 11.06.2015
सा.का.िन. स.ं 371(अ) दनाकं 30.05.2014 जी.एस.आर. स.ं 745(अ) दनाकं 30.09.2015
सा.का.िन. स.ं 435(अ) दनाकं 08.07.2014 जी.एस.आर. स.ं 759(अ) दनाकं 06.10.2015
सा.का.िन. स.ं 400(अ) दनाकं 12.06.2014 जी.एस.आर. स.ं 823(अ) दनाकं 30.10.2015
सा.का.िन. स.ं 436(अ) दनाकं 08.07.2014 जी.एस.आर. स.ं 858(अ) दनाकं 16.11.2015
सा.का.िन. स.ं 487(अ) दनाकं 11.07.2014 जी.एस.आर. स.ं 165(अ) दनांक 15.02.2016
सा.का.िन. स.ं 632(अ) दनाकं 02.09.2014 जी.एस.आर. स.ं 166(अ) दनांक 15.02.2016
सा.का.िन. स.ं 798(अ) दनाकं 13.11.2014 जी.एस.आर. स.ं 369(अ) दनांक 30.03.2016
RESERVE BANK OF INDIA
(Foreign Exchange Department)
(CENTRAL OFFICE)
NOTIFICATION
Mumbai, the 20th May, 2016
No. FEMA. 368/2016-RB
Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India)
(Seventh Amendment) Regulations, 2016
G.S.R. 537(E).—In exercise of the powers conferred by clause (b) of sub-section (3) of Section 6 and
Section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999), the Reserve Bank of India hereby
makes the following amendments in the Foreign Exchange Management (Transfer or Issue of Security by a
Person Resident outside India) Regulations, 2000 (Notification No. FEMA. 20/2000-RB, dated 3rd May, 2000)
namely:-
1. Short Title and Commencement
(i) These Regulations may be called the Foreign Exchange Management (Transfer or Issue of Security by a
Person Resident outside India) (Seventh Amendment) Regulations, 2016.
(ii) They shall come into force from the date of publication in the official Gazette.
2. New Regulation
In the Principal Regulations, after Regulation 10, the following shall be inserted, namely:-
“10A. In case of transfer of shares between a resident buyer and a non-resident seller or vice-versa, not more
than twenty five per cent of the total consideration can be paid by the buyer on a deferred basis within a4 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(i)]
period not exceeding eighteen months from the date of the transfer agreement. For this purpose, if so
agreed between the buyer and the seller, an escrow arrangement may be made between the buyer and
the seller for an amount not more than twenty five per cent of the total consideration for a period not
exceeding eighteen months from the date of the transfer agreement or if the total consideration is paid
by the buyer to the seller, the seller may furnish an indemnity for an amount not more than twenty five
per cent of the total consideration for a period not exceeding eighteen months from the date of the
payment of the full consideration:
Provided the total consideration finally paid for the shares must be compliant with the applicable
pricing guidelines.”
[F. No. 1/7/2016-EM]
SHEKHAR BHATNAGAR, Chief General Manager-in-Charge
Foot Note : The Principal Regulations were published in the Official Gazette vide G.S.R. No. 406(E) dated
May 8, 2000 in Part II, Section 3, sub-Section (i) and subsequently amended as under:-
G.S.R.No. 158(E) dated 02.03.2001 G.S.R.No. 896(E) dated 30.12.2008
G.S.R.No. 175(E) dated 13.03.2001 G.S.R.No. 851(E) dated 01.12.2009
G.S.R.No. 182(E) dated 14.03.2001 G.S.R.No. 341 (E) dated 21.04.2010
G.S.R.No. 4(E) dated 02.01.2002 G.S.R.No. 821 (E) dated 10.11.2012
G.S.R.No. 574(E) dated 19.08.2002 G.S.R.No. 606(E) dated 03.08.2012
G.S.R.No. 223(E) dated 18.03.2003 G.S.R.No. 795(E) dated 30.10.2012
G.S.R.No. 225(E) dated 18.03.2003 G.S.R.No. 796(E) dated 30.10.2012
G.S.R.No. 558(E) dated 22.07.2003 G.S.R. No. 797(E) dated 30.10.2012
G.S.R.No. 835(E) dated 23.10.2003 G.S.R.No. 945 (E) dated 31.12.2012
G.S.R.No. 899(E) dated 22.11.2003 G.S.R. No.946(E) dated 31.12.2012
G.S.R.No. 12(E) dated 07.01.2004 G.S.R. No.38(E) dated 22.01.2013
G.S.R.No. 278(E) dated 23.04.2004 G.S.R.No.515(E) dated 30.07.2013
G.S.R.No. 454(E) dated 16.07.2004 G.S.R.No.532(E) dated 05.08.2013
G.S.R.No. 625(E) dated 21.09.2004 G.S.R. No.341(E) dated 28.05.2013
G.S.R.No. 799(E) dated 08.12.2004 G.S.R.No.344(E) dated 29.05.2013
G.S.R.No. 201(E) dated 01.04.2005 G.S.R. No.195(E) dated 01.04.2013
G.S.R.No. 202(E) dated 01.04.2005 G.S.R.No.393(E) dated 21.06.2013
G.S.R.No. 504(E) dated 25.07.2005 G.S.R.No.591(E) dated 04.09.2013
G.S.R.No. 505(E) dated 25.07.2005 G.S.R.No.596(E) dated 06.09.2013
G.S.R.No. 513(E) dated 29.07.2005 G.S.R.No.597(E) dated 06.09.2013
G.S.R.No. 738(E) dated 22.12.2005 G.S.R.No.681(E) dated 11.10.2013
G.S.R.No. 29(E) dated 19.01.2006 G.S.R.No.682(E) dated 11.10.2013
G.S.R.No. 413(E) dated 11.07.2006 G.S.R. No.818(E) dated 31.12.2013
G.S.R.No. 712(E) dated 14.11.2007 G.S.R. No.805(E) dated 30.12.2013
G.S.R.No. 713(E) dated 14.11.2007 G.S.R.No.683(E) dated 11.10.2013
G.S.R.No. 737(E) dated 29.11.2007 G.S.R.No.189(E) dated 19.03.2014
G.S.R.No. 575(E) dated 05.08.2008¹Hkkx IIµ[k.M 3(i)º Hkkjr dk jkti=k % vlk/kj.k 5
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