Reserve Bank of India (RBI) has issued Foreign Exchange Management (Mode of Payment and Reporting of Non-Debt Instruments) (Amendment) Regulations, 2024 to amend Foreign Exchange Management (Mode of Payment and Reporting of Non-Debt Instruments) Regulations, 2019 to insert regulations related to mode of payment, remittance of sale proceeds and reporting requirement for purchase or subscription of equity shares of Indian Companies on International Exchanges Scheme.
Key points of the Notifications are:
- Amount of consideration for the purchase/subscription of equity shares of an Indian company listed on an International Exchange shall be paid:
(a) through banking channels to a foreign currency account of the Indian Company or,
(b) as inward remittance from abroad through banking channels.
Further, it is to be noted that the proceeds of the purchase/subscription of equity shares of an Indian company listed on an International Exchange shall either be remitted to a bank account in India or deposited in a foreign currency account of the Indian company held in accordance with the Foreign Exchange Management (Foreign currency accounts by a person resident in India) Regulations, 2015, as amended from time to time.
- Sale proceeds (net of taxes) of the equity shares may be remitted outside India or may be credited to the bank account of the permissible holder maintained in accordance with the Foreign Exchange Management (Deposit) Regulations, 2016.
- Investee Indian Company shall be under an obligation to report (through an Authorised Dealer Category I bank) to the Reserve Bank in Form LEC (FII) the purchase/subscription of equity shares (where such purchase/subscription is classified as Foreign Portfolio Investment under the rules) by permissible holder, other than transfers between permissible holders, on an International Exchange.
Source: Reserve Bank of India (RBI)
