Notification No.FEMA.279/2013-RB dated 10th July, 2013 notified vide G.S.R.No.591 (E) dated 4th September, 2013
Notification No.FEMA.280 /2013-RB dated 10th July, 2013 notified vide G.S.R.No.531 (E), dated 5th August, 2013.
Purchase of shares on the recognised stock exchanges in accordance with SEBI (Substantial Acquisition of Shares and Takeover) Regulations
Presently, FIIs, QFIs and NRIs can acquire shares on recognised stock exchanges in terms of Schedule 3, 4, 5 and 8 of FEMA Notification No. 20. However, non-residents are not permitted to acquire shares on stock exchanges under FDI scheme under Schedule 1 of FEMA Notification No. 20.
This circular permits non-residents including NRIs to acquire shares of a listed Indian company on the stock exchange through a registered broker under FDI scheme if:
i. The non-resident investor has already acquired and continues to hold the control in accordance with SEBI (Substantial Acquisition of Shares and Takeover) Regulations.
ii. The amount of consideration for transfer of shares to non-residents consequent to purchase on the stock exchange must be paid as below:
a. by way of inward remittance through normal banking channels, or
b. by way of debit to the NRE/FCNR account of the person concerned maintained with an authorised dealer/bank; c. by debit to non-interest bearing Escrow account (in Indian rupees) maintained in India;
d. the consideration amount may also be paid out of the dividend payable by the Indian investee company, in which the said nonresident holds control as (i) above, provided the right to receive dividend is established and the dividend amount has been credited to specially designated non-interest bearing rupee account for acquisition of shares on the floor of a stock exchange.
iii. The pricing for subsequent transfer of shares to the non-resident shareholder shall be in accordance with the pricing guidelines under FEMA.
iv. The original and resultant investments must be in line with the extant FDI policy and FEMA regulations.
