Reserve Bank of India
Exchange Control Department
Central Office
Mumbai
A.P.(DIR Series) Circular No. 54
December 20, 2003
To
All Authorised Dealers in Foreign Exchange
Madam / Sirs,
Investment by an unincorporated
entity
under Foreign Direct Investment (FDI) Scheme
Attention of Authorised Dealers
is invited to Regulation 5(1) of Notification No. FEMA 20/2000-RB dated
May 3, 2000, in terms of which, besides a person resident outside India
(other than a citizen of Bangladesh or Pakistan or Sri Lanka), an entity
outside India, whether incorporated or not, (other than an entity
in Bangladesh or Pakistan), may purchase shares or convertible debentures
of an Indian company under FDI Scheme, subject to the terms and conditions
specified in Schedule 1 thereto.
2. In this connection, in terms
of A.P.(DIR Series) Circular No.14 dated September 16, 2003, a decision
has been conveyed, among others, that an unincorporated entity shall not
be allowed to make fresh investments under FDI Scheme including the Automatic
Route.
3. Accordingly, necessary amendments
to the Foreign Exchange Management (Transfer or Issue of Security by a Person
Resident outside India) Regulations, 2000 have been notified vide Notification
No. FEMA 100/2003-RB dated October 3, 2003. It is clarified that only an
entity incorporated/registered under the relevant statutes, laws of the
host country (other than an entity in Bangladesh or Pakistan) is allowed
to invest as per the amended Regulation.
4. Authorised Dealers may
bring the contents of this circular to the notice of their constituents
concerned.
5. The directions contained
in this circular have been issued under Sections 10(4) and 11(1) of the
Foreign Exchange Management Act, 1999 (42 of 1999).
Yours faithfully,
Grace Koshie
Chief General Manager