Wednesday, December 21, 2011

Reporting of issue / transfer of Participat​ing interest/r​ight in Oil Fields to a Non Resident as an FDI Transactio​n

RBI through its A.P. (DIR Series) Circular No. 45 dated 16 November, 2011 notified the FEMA (Transfer of Issue of Security by a PersonResident outside India) Regulations, 2000.

In terms of the said regulations the transfer of equity shares / fullyand mandatorily convertible debentures/ fully and mandatorilyconvertible 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 bereported to an AD Bank within 60 days of transactions.

Further, thereceipt 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 toRBI through an AD Bank within 30 days of the transaction.

Further it has decided, to treat the issue / transfer of‘participating interest/ rights’ in oil fields to a non- resident asForeign Direct Investment (FDI) transaction under the extant FDI policy and the FEMA regulations.

And these transactions have to be reported as FDI transactions in terms of the provisions of Regulations 9 and 10 of the Foreign Exchange Management (Transfer of Issue of Security by a Person
Resident outside India) Regulations, 2000 notified vide Notification No. FEMA 20/2000-RB dated May 3, 2000, as amended.

Accordingly, transfer of ‘participating interest/ rights’ will be reported as ‘other’ category under Para 7 of revised Form FC-TRS as given in the Annex 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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