Fema Compliance in case of Bonus Issue
Pooja Khurana
CS Shainshad Aduvanni
10B.3 Issue of Rights/Bonus Shares to Non-Residents
In terms of Notification No.F.E.R.A.208/99-RB dated 31st July 1999, Reserve Bank has granted general permission to (a) Indian Companies to issue rights/bonus shares to Non-Residents and to send such shares out of India and (b) non-residents to acquire such shares, subject to the following conditions :
1. the issue of rights/bonus shares does not bring any change in the percentage of foreign equity already approved.
2. the existing shares on which the rights/bonus shares are proposed to be issued are held by the Non-Resident holders with the Reserve Bank's permission under Section 29 of the F.E.R.A, 1973, and where the shares were issued under the general permission of the Reserve Bank, the Indian Company had made the requisite report to Reserve Bank in Form FC, form ISD/ISD (R) as the case may be.
3. the rights shares are not issued to the Non-Residents at a price lower than that at which the rights shares are offered to resident shareholders.
4. the rights/bonus shares are subject to the same restrictions with regard to repatriability and other conditions as are applicable to the original shares against which rights/bonus shares are issued.
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5. |
(a) |
in case of foreign nationals and companies incorporated outside India, the consideration is received by way of inward remittance, |
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(b) |
in case the original investment was made by NRIs/Persons of Indian Origin/OCBs on repatriation basis, the funds are received through normal banking channels by way of inward remittance or by debit to the FCNR/NRE account of the NRI/PIO/OCB concerned, |
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(c) |
in case the original investment was made by NRIs/Persons of Indian Origin/OCBs on non-repatriation basis, the funds are received through normal banking channels by way of inward remittance or by debit to the FCNR/NRE/NRO/NRSR account of the NRI/PIO/OCB concerned. |
6. the original project cost as approved by FIPB does not exceed Rs.600 crores. It may be noted, that issue of rights/bonus shares resulting in increase in the percentage of foreign equity as also issue of shares by companies whose original project cost was more than Rs.600 crores shall continue to require prior approval by Government of India, as per the existing procedure
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Company Secretary
Coimbatore
Pooja Khurana
CS Shainshad Aduvanni
CS.Omkar
An Indian company may issue bonus shares to its non-resident shareholders, subject to the following conditions:
- the shares against which bonus shares are issued by the company ( hereinafter referred to as ‘the original shares’) were acquired or held by the non-resident shareholder in accordance with the Rules/ Regulations applicable to such acquisition;
- the bonus shares acquired by the non-resident shareholder shall be subject to the same conditions including restrictions in regard to repatriability as are applicable to the original shares.
6B. Report to RBI:
A company issuing right shares or bonus shares in terms of Regulation 6 or Regulation 6A as the case may be, shall, within thirty days from the date of issue, report the transaction in Form FC-GPR to the Regional Office of the Reserve Bank of India under whose jurisdiction the Registered Office of the company is situated.
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Regards...Omkar