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December 2011

A.P. (DIR Series) Circular No. 45, dated 16-11- 2011 Foreign Direct Investment — Reporting of issue/transfer of ‘participating interest/ right’ in oil fields to a non-resident as a Foreign Direct Investment transaction.

By Gaurang Gandhi, Chartered Accountant
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Presently, transfer of equity shares/fully and mandatorily convertible debentures/fully and mandatorily convertible preference shares (hereinafter referred to as ‘shares’) of an Indian company, from a person resident outside India (non-resident) to a person resident in India (resident) or vice versa, has to be reported to an Authorised Dealer within 60 days of transactions. Similarly, receipt of consideration for issue of shares as well as the issue of shares of an Indian company, to a non-resident has to be reported to RBI through an Authorised Dealer within 30 days from the date of the respective transaction.

This Circular provides that issue/transfer of ‘participating interest/rights’ in oil fields to a non-resident will be treated as a Foreign Direct Investment (FDI) transaction under the FDI policy and FEMA regulations. Hence, transfer of ‘participating interest/rights’ will be reported as ‘other’ category under Para 7 of revised Form FC-TRS (the same is Annexed to this Circular) and issuance of ‘participating interest/rights’ will be reported as ‘other’ category of instruments under Para 4 of Form FC-GPR.

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