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Corporate Laws Central Ministry of Finance Foreign Exchange Management Act, 1999

Foreign Exchange Management (Mode of Payment and Reporting of Non-Debt Instruments) (Amendment) Regulations, 2024

19-Apr-2024 | Notification No. FEMA. 395(2) /2024-RB

Reserve Bank of India has issued Foreign Exchange Management (Mode of Payment and Reporting of Non-Debt Instruments) (Amendment) Regulations, 2024, effective from 23rd April 2024. The key highlights of the amendment are: 1. Mode of Payment for Purchase or Subscription of Equity Shares of Indian Companies on International Exchanges: a. The amendment introduces a new schedule (Schedule XI) in Regulation 3.1, specifying the mode of payment for the purchase or subscription of equity shares of Indian companies listed on international exchanges by permissible holders. b. Permissible holders can make the payment for such transactions in two ways: (i) Through banking channels to 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. (ii) As inward remittance from abroad through banking channels. c. The sale proceeds (net of taxes) of the equity shares may be remitted outside India or credited to the bank account of the permissible holder maintained in accordance with the Foreign Exchange Management (Deposit) Regulations, 2016. 2. Reporting Requirements: a. Authorised Dealer Category I banks are mandated to report to the Reserve Bank in Form LEC (FII) the purchase or transfer of equity instruments by Foreign Portfolio Investors (FPIs) on the stock exchanges in India. b. Investee Indian companies, through an Authorised Dealer Category I bank, are required to report to the Reserve Bank in Form LEC (FII) the purchase or subscription of equity shares (classified as Foreign Portfolio Investment) by permissible holders on an International Exchange, excluding transfers between permissible holders. For detailed information, please refer to the attached document.

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