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Date: 2014-11-21 Category: Extra Ordinary State: Union Government Country: India

These Regulations shall be called the Foreign Exchange Management (Transfer or Issue of Any Foreign Security) (Fifth Amendment) Regulations, 2014.

Issued by Reserve Bank of India · Foreign Exchange Department

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Executive Summary & Key Takeaways

Executive Summary: This notification issued by the Reserve Bank of India introduces the Foreign Exchange Management (Transfer or Issue of any Foreign Security) Fifth Amendment Regulations, 2014. It amends the 2004 regulations regarding foreign security investments, effective from the date of publication in the Official Gazette. Key changes include defining "Alternative Investment Fund" and updating regulations for investment by Mutual Funds, Venture Capital Funds, and Alternative Investment Funds. Key Points / Main Content: * **Short Title and Commencement:** * These regulations are called the "Foreign Exchange Management (Transfer or Issue of Any Foreign Security) Fifth Amendment Regulations, 2014." * The regulations come into force from the date of their publication in the Official Gazette. * **Amendment to Regulation 2:** * A new clause (ba) is inserted to define "Alternative Investment Fund" (AIF) as a fund defined under the Securities and Exchange Board of India (SEBI) Alternative Investment Funds Regulations, 2012. * **Amendment to Regulation 26:** * The existing Regulation 26 is replaced. * The purchase of foreign securities by Mutual Funds (MF), Venture Capital Funds (VCF), and Alternative Investment Funds (AIF) is subject to these regulations and any terms and conditions notified by the Reserve Bank and SEBI. Impact Analysis: * **Mutual Funds, Venture Capital Funds, and Alternative Investment Funds:** * *Impact:* These entities are now subject to revised regulations concerning the purchase of foreign securities. The definition of AIF is formally included. * *Action Required:* MFs, VCFs, and AIFs should review their investment strategies to ensure compliance with the amended regulations and any additional terms and conditions issued by the Reserve Bank and SEBI. * **Reserve Bank of India (RBI) and Securities and Exchange Board of India (SEBI):** * *Impact:* RBI and SEBI are jointly responsible for overseeing and potentially issuing further terms and conditions related to these regulations. * *Action Required:* RBI and SEBI may need to collaborate on formulating and communicating any additional guidelines or requirements for MFs, VCFs, and AIFs related to foreign security investments. * **Investors in Mutual Funds, Venture Capital Funds and Alternative Investment Funds:** * *Impact:* Investors are indirectly impacted as the funds they invest in must adhere to new regulations which could alter investment strategies. * *Action Required:* No immediate action is required but should be aware of possible adjustments to fund strategies.

Key Entities Referenced

Reserve Bank of India: The central bank of India, responsible for regulating the foreign exchange market. Foreign Exchange Management Act, 1999: An act of the Parliament of India to consolidate and amend the law relating to foreign exchange with the objective of facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange market in India. Foreign Exchange Management Transfer or Issue of any Foreign Security Regulations, 2004: Regulations pertaining to the transfer or issue of foreign securities under the Foreign Exchange Management Act. New Delhi: The capital of India and location where the notification was issued. Securities and Exchange Board of India: The regulator of the securities market in India. Alternative Investment Fund: A fund as defined under the Securities and Exchange Board of India Alternative Investment Funds Regulations, 2012 Mumbai, Maharashtra: City in Maharashtra where the Reserve Bank of India's Central Office is located. Mutual Funds: A type of investment fund that pools money from multiple investors to purchase securities.
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Eीिनवासन, मुFय महा(cid:5)बंधक पपपपाााादददद ****टटटट,,,,पपपपणणणणीीीी:::: मूल िविनयमावली भारत सरकार के सरकारी राजप0 के भाग II, खंड 3,,,, उप----खंड (i) म) 19 नवंबर,,,, 2004 के सा....का....िन.... स..ं.. 757((((अ)))) (cid:14)ारा (cid:5)कािशत और तदपु रांत िन*न िलिखत (cid:14)ारा संशोिधत क(cid:10) गई थी ::::— सा....का....िन.... सं. 220 (अ) "दनांक अ(cid:5)लै 7, 2005, सा....का....िन.... सं.609(अ) "दनांक अग>त 28, 2009, सा....का....िन.... सं. 337(अ) "दनांक मई 27, 2005, सा....का....िन.... सं. 607(अ) "दनांक अग>त 3, 2012, सा....का....िन.... सं. 552(अ) "दनांक अग>त 31, 2005, सा....का....िन.... सं. 609(अ) "दनांक अग>त 3, 2012, सा....का....िन.... सं. 535(अ) "दनाकं िसतंबर 6, 2006, सा....का....िन.... सं. 947(अ) "दनांक "दसंबर 31, 2012, सा....का....िन.... सं.13(अ) "दनांक जनवरी 5, 2008, सा....का....िन.... सं. 345(अ) "दनांक मई 29, 2013, सा....का....िन.... सं. 209(अ) "दनांक माच(cid:30) 25, 2008, सा....का....िन.... सं. 516(अ) "दनांक जुलाई 30, 2013, सा....का....िन.... सं. 676(अ) "दनांक िसतंबर 24, 2008, सा....का....िन.... सं. 529(अ) "दनांक अग>त 05, 2013, सा....का....िन.... सं. 756(अ) "दनांक अ(cid:20)ूबर 31, 2008, सा....का....िन.... सं. 552(अ) "दनांक अग>त 14, 2013 सा....का....िन.... सं. 108(अ) "दनांक फरवरी 20, 2009, सा....का....िन.... सं. 323(अ) "दनांक मई 07, 2014 सा....का....िन.... सं. 301(अ) "दनांक मई 1, 2009, सा....का....िन.... सं. 489(अ) "दनांक जुलाई 11, 2014 सा....का....िन.... सं. 441(अ) "दनांक जून 23, 2009, RESERVE BANK OF INDIA (Foreign Exchange Department) (CENTRAL OFFICE) NOTIFICATION Mumbai, the 12th November, 2014 Foreign Exchange Management (Transfer or Issue of any Foreign Security) (Fifth Amendment) Regulations, 2014 G.S.R. 828(E).—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:—¹Hkkx IIµ[k.M 3 (i)º Hkkjr dk jkti=k % vlk/kj.k 3 1. Short Title and Commencement (i) These Regulations shall be called the Foreign Exchange Management (Transfer or Issue of Any Foreign Security) (Fifth Amendment) Regulations, 2014. (ii) They shall come into force from the date of publication in the Official Gazette. 2. Amendment to Regulation 2 In Regulation 2, after clause (b), the following new clause shall be inserted, namely:— "(ba) ‘Alternative Investment Fund’ means a fund as defined under the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012;” 3. Amendment to Regulation 26 The existing Regulation 26 shall be substituted with the following, namely:— “26. Investment by Mutual Funds and other Funds The purchase of foreign securities by Mutual Funds, Venture Capital Funds and Alternative Investment Funds shall be subject to these regulations, and such other terms and conditions as may be notified by the Reserve Bank and Securities and Exchange Board of India (SEBI) from time to time.” [No. FEMA 326/RB-2014] C. D. SRINIVASAN, 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. 609(E) dated August 28, 2009, G.S.R. No. 337(E) dated May 27, 2005, G.S.R. No. 607(E) dated August 3, 2012, G.S.R. No. 552(E) dated August 31, 2005, G.S.R. No. 609(E) dated August 3, 2012, G.S.R. No. 535(E) dated September 6, 2006, G.S.R. No. 947(E) dated December 31, 2012, G.S.R. No. 13(E) dated January 5, 2008, G.S.R. No. 345(E) dated May 29, 2013, G.S.R. No. 209(E) dated March 25, 2008, G.S.R. No. 516(E) dated July 30, 2013, G.S.R. No. 676(E) dated September 24, 2008, G.S.R. No. 529(E) dated August 05, 2013, G.S.R. No.756(E) dated October 31, 2008, G.S.R. No. 552(E) dated August 14, 2013, G.S.R. No. 108(E) dated February 20, 2009, G.S.R. No. 323(E) dated May 07, 2014 and G.S.R. No. 301(E) dated May 1, 2009, G.S.R. No. 489(E) dated July 11, 2014. G.S.R. No. 441(E) dated June 23, 2009, Printed by the Manager, Government of India Press, Ring Road, Mayapuri, New Delhi-110064 and Published by the Controller of Publications, Delhi-110054.

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