Notifications

Volume I

i) Existing sub-paragraph (i) of paragraph 10B.2 may be substituted as per slip 1.

ii) New paragraph 10A.9 may be inserted after the existing paragraph 10A.8 as per slip 2 and its entry made in Index of Chapter 10.

Volume II

In Appendix III, under Section 19, Notifications No.F.E.R.A.180/98-RB dated 13th January 1998 and F.E.R.A.182/98-RB dated 10th February 1998 may be replaced by the Notifications as amended upto 11th November 1998 as per slips 3 and 4 respectively.

i) in the said Notification, for the words ‘equity shares’ or ‘equity capital’ wherever they occur, the words ‘shares’ or ‘capital’, shall be substituted.

ii) in paragraph 3 of the said Notification,

(a) for clause (i), the following clause shall be substituted, namely:-

"(i) the foreign investment shall not in aggregate exceed 50%, 51%, 74% or 100% of the capital of the issuer company, an indicated in the said Annexure III;

Provided that in respect of the activity of generation and transmission of electric energy (being electric energy produced in hydro-electric power plants, coal/lignite based thermal power plants, oil based thermal power plants and gas based thermal power plants) the capital by way of foreign investment shall not exceed Rs.1500 crores;

Provided further that for the purpose of reckoning the extent of foreign investment under this clause, preference shares carrying a conversion option, shall be included".

(b) after clause (iii), the following clause shall be added, namely:-

"(iii a) in the case of issue of convertible equity shares, the valuation procedure shall conform to the guidelines issued by the Bank or SEBI, as the case may be;"

(c) in clause (iv), after the words ‘required for the project’, the words ‘or for issue of shares’, shall be inserted.

(d) after clause (v), the following clause shall be added, namely -

"(v a) the rate of dividend payable in respect of preference shares shall not exceed SBI Prime Lending Rate (prevailing on the date of the Board meeting in which issue of shares is recommended) plus 300 basis points".

(e) after clause (vii), the following clause shall be inserted, namely:-

Notification No.F.E.R.A.189/98 RB dated 11th November 1998

In pursuance of clause (a) and clause (d) of sub-section (1) of Section 19 read with clause (b) of sub-section (1) section 29 of the Foreign Exchange Regulation Act, 1973 (46 of 1973), the Reserve Bank directs that its notification No.F.E.R.A.182/98 RB dated 10th February 1998 as amended from time to time (hereinafter referred to as "the said Notification"), shall be amended in the following manner, namely:-

Slip 2
[AD/MA/2/1999]

10A.9 Reserve Bank has granted general permission under Sections 19(1)(d), 19(1)(a) and 29(1)(b) of the Foreign Exchange Regulation Act, 1973 to Indian companies for issue and exports of shares/securities to non-resident investors, and to non-resident investor to acquire shares/securities of Indian companies under various non-resident direct investment schemes. In terms of Reserve Bank Notification Nos.FERA 188 and 189/RB-98 dated 11th November 1998 it is obligatory on the part of Indian companies seeking non-resident investment to file a report containing the following particulars with the Regional Office of Reserve Bank not later than 30 days from the date of receipt of remittance.

This requirement is in addition to the submission of the prescribed declaration in form FC(RBI)/ISD(R)/ISD, as the case may be, alongwith the documents, within 30 days form the date of issue of shares.

Udyog Bhavan, New Delhi
dated the 13th June, 1998

Under the present policy, Indian companies undertaking generation and transmission of electric energy, produced in hydro-electric power plants, coal based power plants, oil based thermal power plants and gas based thermal power plants are eligible for automatic approval up to 74% foreign equity.

2. The Government has reviewed the existing guidelines for automatic approval for foreign equity for electric generation, transmission and distribution projects, and has decided to enlarge the provisions for automatic approval for such projects. Accordingly, projects for electric generation, transmission and distribution will be permitted foreign equity participation up to 100% on the automatic approval route provided the foreign equity in any such project does not exceed Rs.1500 crore. The categories which would qualify for such automatic approval are:

3. It is clarified that the facility for automatic approval as enumerated in paragraph 2 above, does not include generation, transmission and distribution of electric energy produced in atomic reactor power plants and hence such proposals shall not qualify for automatic approval by RBI under this Press Note.

4. The provisions referred in para 2 above would be listed under the heading Part-"D" of Annexure-III as appended to this Press Note as a substitution of the existing entry No.C-4 in Part-"C" of Annexure-III.

5. The list appended to this Press Note is based on the National Industrial Classification of all Economic Activities (NIC), 1987. The entrepreneurs/investors are advised to give the description of their activity under this classification system when submitting their applications to the RBI.

6. All other terms and conditions as notified under Press Note No.2(1997 series) dated the 17th January, 1997 and Press Note No.14(1997 series) dated the 8th October, 1997 remain unchanged.

Sd/-
(Ashok Kumar)
Joint Secretary to the Government of India

Sd/-
(ASHOK KUMAR)
Joint Secretary to the Government of India

Notification No.F.E.R.A 180/98-RB dated
13th January 1998 as amended upto 11th November 1998
[vide Notification No.FERA 188/98-RB dated 11th November 1998]

In pursuance of clause (a) and clause (d) of sub-section (1) of Section 19 read with clause (b) of sub-section (1) of Section 29 of the Foreign Exchange Regulation Act, 1973 (46 of 1973), the Reserve Bank is pleased to permit a company incorporated in India-

to issue shares subject to the conditions mentioned in para 3, to a person who is not a citizen of India (whether resident in India or not) or to a company (other than a banking company) which is not incorporated under any law in force in India, or to non-residents of Indian nationality or origin (NRIs) or to an Overseas Corporate Body, and to send such shares out of India, to their place of residence or incorporation as the case may be;

Provided that a company, existing on the date of this Notification, which is not engaged in the said Annexure III activities shall be eligible to issue shares, if it embarks upon expansion programme predominantly in the said Annexure III activities, subject to the condition that the foreign equity raised by issue of shares to foreign investor is utilised for such expansion.

Provided further that in the case of a newly set-up Trading Company primarily engaged in export, issue of shares shall be subject to the condition that registration as an Export/Trading/Star Trading House is obtained before remittance of dividend to the foreign investor.

Explanation: For the purpose of this Notification -

2. The general permission granted herein shall not apply to or in respect of-

3. The general permission granted herein to issue shares (hereinafter referred to as "foreign investment") is subject to the following conditions, namely:

Note: Remittance of dividend should be covered by earnings of the company from export of items covered by the foreign collaboration agreement. Remittance of dividend can also be covered from earnings through export of items not mentioned in the agreement provided these are in the list of industries mentioned in the said Annexure III. The amount of dividend payment may be covered by export earnings of such items recorded in years prior to the payment of dividend or in the year of payment of dividend.

In pursuance of clause (a) and clause (d) of sub-Section (1) of Section 19 read with clause (b) of sub-Section (1) of Section 29 of the Foreign Exchange Regulation Act, 1973 (46 of 1973), the Reserve Bank is pleased to permit a company incorporated in India, which holds a valid SIA/FIPB approval for foreign investment in India, to issue security subject to the conditions mentioned in para 2, to a person who is not a citizen of Indian (whether resident in India or not) or to a company (other than a banking company) which is not incorporated under any law in force in India; and to send such security out of India, to their place of residence or incorporation, as the case may be;

Provided that no security shall be issued to a person who is a citizen of, or to a company incorporated in, Pakistan or Bangladesh.

2. The general permission granted herein to issue security (hereinafter referred to as "foreign investment") is subject to the following conditions, namely:

Sd/-
(C. Harikumar)
Executive Director