Procedural Aspects in Inbound Investments

1. Procedural Aspects in Inbound Investments 07 November 2015 Impact Seminar on ‘Inbound Investment – Policies, Opportunities & Challenges’ By NIRC of ICSI Vijay Gupta ACMA, FCA, FCS

2. Agenda Inbound Investment Schemes (only snap shot) FDI/ECB Policy references FIPB Reporting of FDI Inflow Reporting of Issue of Shares Transfer of shares Downstream Investments Annual Return of Liabilities & Assets Schedule 4 of FEMA 20 FPIs & NRIs under Portfolio Investments Scheme Limited Liability Partnership Remittances External Commercial Borrowings Compounding

3. FEM (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000: ‘FEMA 20’

4. Foreign Investment in India- Schematic Representation Foreign Inbound Investments Foreign Direct Investments Foreign Portfolio Investments Foreign Venture Capital Investments Other Investments (G-Sec, NCDs, etc.) Investments on Non-Repatriablebasis Company Sch. 1, 10 LLP Sch. 9 Govt. Route Automatic Route NRIs/ PIOs Sch. 3 FIIs/ QFIs/ RFPIs Sch. 2, 2A, 8 SEBI Regd. FVCIs/AIFs Sch. 6 FIIs/RFPIs, NRIs, PIO, QFIs Long Term Investors Sch. 5 NRIs, PIOs Sch. 4 Persons Resident Outside India VCF, IVCUs

5. FDI/ECB Policy • Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 FEMA 20 • Foreign Exchange Management (Borrowing or Lending in Foreign Exchange) Regulations, 2000 FEMA 03 • Department of Industrial Policy and Promotion, Ministry of Commerce & Industry, Government of India (DIPP) Circular on Consolidated FDI Policy(last updated on May 12, 2015) • RBI Master Circular on Foreign Investments in India dated 01 July 2015 (updated on 16 July 2015) • External Commercial Borrowings and Trade Credits dated 01 July 2015 (updated on 06 October 2015) • RBI FAQs - Foreign Investments in India 10.02.2015 • No FAQs on ECB • FIPB Review books 2014, 2011-2013; 2010; 2009; 2008; FAQs by FIPB for eFiling • Annual Return on Foreign Liabilities and Assets (FLA return) 18 June 2014 – for LLP also • FDI inflows - FIPB/SIA; Acquisition of Existing Shares; & Automatic Route of RBI:Website of DIPP.nic.in • ECB/FCCB data under Automatic/Approval Routes:Monthly Press Release by RBI • In case of any conflict between FDI Circular and FEMA Regulations, the relevant FEMA Notification will prevail. The procedural instructions are issued by the Reserve Bank of India vide A.P.Dir. (Series) circulars • Read Circulars, latest Master Circulars, FAQs as Regulations may not be amended simultaneously by Notification.

6. Foreign Direct Investment into an Indian company • Kinds of Investment • Automatic Route – no prior approval from the RBI/ Government • Approval Route – prior approval of the FIPB required (no separate RBI approval) • Mode of Investment • Greenfield: Setting up a new JV/ WOS (fresh issue of shares) • Brownfield: Relating to existing investments/ business activities: Brownfield Investment Share Purchase Gift of shares Share swap Rights/ Bonus issue/ ESOP/ Sweat Equity Merger/Demerger/ Amalgamation/ Reconstruction Conversion of ECB/ pre-incorp payables/ import payables, royalty, other legitimate dues etc.

7. Types of instruments: ‘Capital’

8. Issue of Non convertible/ redeemable bonus preference shares or debentures To non-resident shareholders, including the depositories that act as trustees for the ADR/GDR holders, by way of distribution as bonus from its general reservesunder a Scheme of Arrangement approved by a Court in India under the provisions of the Companies Act, as applicable, subject to no-objection from the Income Tax Authorities.

9. FEMA & Valuation FDI Issue of shares Transfer of shares from Resident to Non-Resident Transfer of shares from Non-Resident to Resident Price of shares shall not be more than the fair value worked out as per any internationally accepted pricing methodology for valuation of shares on arm’s length basis Price of shares shall not be less than the fair value worked out as per any internationally accepted pricing methodology for valuation of shares on arm’s length basis Listed Company Unlisted Company Market Price as per SEBI Preferential Allotment Internationally accepted pricing Methodology for valuation of shares on arm’s length basis Convertible instruments: Based on conversion formula which has to be determined / fixed upfront. Price at the time of conversion should not be less than the fair value worked out, at the time of issuance of these instruments. NRIs on non-repatriation basis under Schedule 4 of FEMA 20: No express provision for valuation Pricing not applicable for transfers between two Non-Residents SEZs against import of capital goods into equity shares: Committee of Development Commissioner Only Certification by SEBI registered Merchant Banker/ Chartered Accountant Valuation & Certification by SEBI registered Merchant Banker/ Chartered Accountant • Non-residents (including NRIs): Subscription to its Memorandum of Association: Made at face value subject to their eligibility to invest under the FDI scheme Preferential Allotment Pricing Guideline under SEBI (ICDR) Regulations 2009: “Price not less than the higher of Avg. weekly high and low closing price over a trailing six month period, or a trailing two week period, from the "relevant date of transaction.” “Relevant Date” means date thirty days prior to the date of GM of shareholders

11. Issue of shares under ESOP/Sweat equity Indian company may issue “employees’ stock option” and/or “sweat equity shares” to itsemployees/directors or employees/directors of its holding company or joint venture or wholly owned overseas subsidiary/subsidiaries who are resident outside India, provided that : a) The scheme has been drawn either in terms of regulations issued under the Securities Exchange Board of India Act, 1992 or the Companies (Share Capital and Debentures) Rules, 2014 notified by the Central Government under the Companies Act 2013, as the case may be. b) The “employee’s stock option”/ “sweat equity shares” issued to non-resident employees/directors under the applicable rules/regulations are in compliance with the sectoral cap applicable to the said company. c) Issue of “employee’s stock option”/ “sweat equity shares” in a company where foreign investment is under the approval route shall require prior approval of the Foreign Investment Promotion Board (FIPB) of Government of India. d) Issue of “employee’s stock option”/ “sweat equity shares” under the applicable rules/regulations to an employee/director who is a citizen of Bangladesh/Pakistan shall require prior approval of the Foreign Investment Promotion Board (FIPB) of Government of India.

12. Mode of payment Inward remittance through normal banking channels Debit to NRE / FCNR account of a person concerned maintained with an AD category I bank Conversion of royalty / lump sum / technical knowhow fee/ Legitimate due for payment or conversion of ECB, shall be treated as consideration for issue of shares Conversion of import payables / pre incorporation expenses / share swap can be treated as consideration for issue of shares with the approval of FIPB Debit to non-interest bearing Escrow account in Indian Rupees in India which is opened with the approval from AD Category – I bank and is maintained with the AD Category I bank on behalf of residents and non-residents towards payment of share purchase consideration

13. Escrow Account

14. Prior permission of the Reserve Bank (i) Transfer from residents to non-residents by way of sale: Non-resident acquirer proposes deferment of payment of the amount of consideration. In case approval is granted for the transaction, the same should be reported in Form FC-TRS to the AD Category – I bank, within 60 days from the date of receipt of the full and final amount of consideration. (ii) A person resident in India, who intends to transfer any security, by way of gift to a person resident outside India. Gift does not exceed 5 per cent of the paid-up capital of the Indian company / each series of debentures / each mutual fund scheme; Sectoral cap limit is not breached; The transferor (donor) and the proposed transferee (donee) are close relatives as defined in Section 6 of the Companies Act, 1956; Value of security to be transferred together with any security already transferred by the transferor, as gift, to any person residing outside India does not exceed the rupee equivalent of USD 50,000 per financial year. • Transfer of shares from NRI to NR requires the prior approval of the Reserve Bank of India. • Transfer is at a price which falls outside the pricing guidelines specified by the Reserve Bank

16. e-FIPB___Revised filing procedure Once the e-filing of the application is completed, the application needs to file/courier only SINGLE copy of the printed versionof the online application, along with the duly authenticated copy of the documents attached with the application. Global Reach -Apply from anywhere in the world! Access your status from anywhere in the world! Transact while on a move! E-communication - communication between the applicant, FIPS and other ministries/ departments is online. Quicker communication- All the correspondence including updates/ decisions are communicated through SMS/emails Quicker processing- FIPS forwards the application online to the concerned ministries for processing, queries are raised online eliminating physical delivery and loss of time due to postal delays. Less Paperwork - Single signed copy only needed (for record) instead of present multiple sets of the application. SMS/email alert- Regular alerts are sent to the applicants related to the queries raised by the administrative ministries, inclusion of the proposal in the scheduled FIPS meeting and decisions. Time saving- E-correspondence between applicant and ministries and also between ministries themselves avoids delays adding to speed and efficiency. Transparency and security: all transactions and correspondences are recorded online and are secure. Query module- Any doubts? A user can raise a query online which shall be replied by the relevant ministry.

18. Important issues in reporting / compliance requirements • KYC and documentation if funds received from entity/person other than foreign investor – KYC from both the entities, and letter of confirmations from both the entities • KYC in case of nominee if funds received / not received from nominee • Obtaining FIRC from AD banks and description therein • Time taken by AD-Bank to peruse the documents • Date of fair valuation certificate (sometime on format, contents, etc.) • Reconciling of shareholding pattern as per RBI records: past issues / transfer of shares/ NR to NR transfer • Appropriateness of main object clause in the Memorandum of Association • Determining correct NIC Codes 2008 • Registered office address • Changes in AD Bank post receipt of funds but before issue of shares • Interpretation Sectoral aspects with AD-Banks • Conversion of ECB – whether interest due covered (Legitimate due)?

19. Reporting of FDI Inflow

20. FDI – NIC CodesReporting under FDI Scheme Indian companies are required to report the NIC Codes in the FCGPR and FCTRSforms as per the NIC 2008 version, henceforth. A uniform State and District code listfor reporting of details of foreign direct investment by Indian companies in Form FCGPR. The list can be accessed on the RBI website (www.rbi.org.in - FEMA – State and District Code List). Mapping of Activities/ Sectors by DIPP - http://dipp.nic.in/English/acts_rules/Press_Notes/Mapping_NIC2008_05January2015.pdf. Circular No. 6 dated July 18, 2014

21. Reporting of FDI Inflow • Time frame for issue of shares • Equity/Capital instruments should be issued within 180 days (subject to Companies Act 2013) from the date of receipt of the inward remittance or by debit to the NRE/FCNR (B) account/ Escrow account • Else refunded to non-resident investor • Non-compliance will attract contravention of FEMA • In execptional cases, RBI may permit refund/allotment beyond 180 days on merit of each case

22. FIRC issues Abstract from A.P. (DIR Series) Circular No.96 Dated 20th January, 2014 Note should, however, be taken that KYC in respect of the remitter, wherever required, is a joint responsibility of the bank that has received the remittance as well as the bank that ultimately receives the proceeds of the remittance. While the first bank will be privy to the details of the remitter and the purpose of the remittance, the second bank, will have access to complete information from the recipient’s perspective. Besides, the remittance receiving bank is required to issue FIRC to the bank receiving the proceeds to establish the fact the funds had been remitted in foreign currency. Abstract from RBI/2010-11/315-DPSS (CO) EPPD No. 1309 / 04.03.01 / 2010-11 dated December 13, 2010 Credit to NRE account through RTGS / NEFT /NECS / ECS – Issuance of Foreign Inward Remittance Certificate (FIRC): FIRC should not be issued against remittance for credit to NRE account. If the proceeds of inward remittance received are remitted in foreign currency itself to the beneficiary’s banker, then FIRC is to be issued by the bank which has received the proceeds in foreign exchange, i.e., the bank which converts the foreign currency into rupees is required to issue FIRC.

23. Customer's Request Letter cum declaration & undertaking Form –Receipt of the inward remittance in foreign currency

24. We further confirm, declare and undertake that:

26. Customer letter to include below stated declarations and documents for FDI through the following mode: Foreign investment towards issue of ADRs / GDRs “We declare that the inward remittance is towards issue of ADRs/ GDRs and we are eligible to issue ADRs / GDRs in accordance with the Scheme for issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism Scheme ,1993 and subsequent guidelines issued by Ministry of Finance , Government of India. The existing regulations issued by SEBI, FEMA and RBI Guidelines on the investment have been complied with.” Foreign investment towards issue of shares under ESOPs (Employee Stock Option Scheme) We declare that the inward remittance is towards issue of shares under ESOPs (Employee Stock Option Scheme) .The existing regulations issued by SEBI FEMA and RBI Guidelines on the investment have been complied with. ESOP is to be submitted to Mr./Ms.______________ who is an employee (not resident in Pakistan) of our firm ____________/of our JV/WOS firm ______________/ of our subsidiary firm______________ and the face value of the shares to be alloted under the scheme to the non-resident employee does not exceed 5 percent of the paid up capital of the issuing company. For ____________ Authorized Signatory

27. Reporting of Issue of Shares Reporting of Issue of Fresh Shares /Partly paid shares/Bonus /Rights Shares /ESOP/ Convertible Debentures / Convertible Preference Shares /Conversion of ECB / Royalty / Lumpsum Technical Know-how Fee / Import of Capital Goods by SEZs /Pre-operative/Pre-incorporation Expenses/Legitimate dues/ Amalgamation/ Merger

28. Conversion of shares other than cash…1/3

29. Conversion of shares other than cash …2/3

30. FDI - Issue of equity shares under the FDI Scheme against Legitimate Dues …. 3/3 Issue of equity sharesagainst any other funds (Legitimate Dues) payable by the investee company, remittance of which does not require prior permission of the Government of India or Reserve Bank of India under FEMA, 1999 or any rules/ regulations framed or directions issued thereunder, provided that: i. The equity shares shall be issued in accordance with the extant FDI guidelines on sectoral caps, pricing guidelines etc. as amended by Reserve bank of India, from time to time; Explanation: Issue of shares/convertible debentures that require Government approval in terms of paragraph 3 of Schedule 1 of FEMA 20 or import dues deemed as ECB or trade credit or payable against import of second hand machinery shall continue to be dealt in accordance with extant guidelines; ii. The issue of equity shares under this provision shall be subject to tax laws as applicable to the funds payable and the conversion to equity should be net of applicable taxes. Circular No.31 dated September 17, 2014

31. Conversion of ECB into Equity In case the ECB liability, denominated in foreign currency and / or import of capital goods, etc. is sought to be converted by the company, it will be in order to apply the exchange rate prevailing on the date of the agreement between the parties concerned for such conversion. Reserve Bank will have no objection if the borrower company wishes to issue equity shares for a rupee amount less than that arrived at as mentioned above by a mutual agreement with the ECB lender. It may be noted that the fair value of the equity shares to be issued shall be worked out with reference to the date of conversion only. FEMA • It is under Automatic Route – no prior or post approvals required from RBI/FIPB. • ECB, due for payment or not, eligible to be converted into equity if ECB was taken in compliance with ECB regulations. • Equity shares can be issued to the ECB Lender entity. • To obtain consent from ECB lender for such conversion; supported by Indian Company’s Board Resolution. • A Chartered Accountant's Certificate complying with RBI Pricing/Valuation guidelines. The actual issue price of shares shall not be less than the price determined on the basis of valuation report. • A Chartered Accountant's Certificate certifying the amount outstanding on the date of conversion. • Reporting under Form FC-GPR. No intimation for Inward Remittance Report required to be furnished to RBI; as not applicable being conversion of ECB. • For full conversion: Reporting of the conversion of ECB into equity, in ECB-2 Return. The words “ECB wholly converted to equity” should be clearly indicated on top of the ECB-2 form. Once reported, filing of ECB-2 in the subsequent months is not necessary. • In case of partial conversion of ECB, the company shall report the converted portion in Form FC-GPR to the Regional Office concerned as well as in Form ECB-2 clearly differentiating the converted portion from the non-converted portion. The words "ECB partially converted to equity" shall be indicated on top of the Form ECB-2. In the subsequent months, the outstanding balance of ECB shall be reported in Form ECB-2 to DSIM.

32. Conversion of ECB into Equity Companies Act 2013: • Valuation Report by a an independent Chartered Accountant in practice having a minimum experience of ten years who shall submit a valuation report to the company giving justification for the valuation. The actual issue price of shares shall not be less than the price determined on the basis of valuation report. • To hold Board meeting to convene EGM for conversion of ECB. • To pass a Special Resolution in a general meeting. To hold Extra-Ordinary general meeting of shareholders. To File with RoC Form MGT.14 u/s 117(3(a). • After EGM, to hold Board meeting for allotment of shares by means of resolutions passed at meetings of the Board; and not by resolution by circulation – section 179(3)(c). • To file with RoC Form MGT.14 u/s 179(3(c) read with section 117(3)(g). • To maintain a complete record of such offers and acceptances in Form No. PAS-5. • File with RoC a Return of Allotment in Form PAS-3 with list of allottees stating their names, address, occupation, if any, and number of securities allotted to each of the allottees and the list shall be certified by the signatory of the Form PAS-3 as being complete and correct as per the records of the company; along with the valuation report by independent chartered accountant in practice having a minimum experience of ten years.

33. Pledge of shares of company incorporated in India • Any person being a promoter of a company registered in India (borrowing company), which has raised external commercial borrowing, may pledge the shares of the borrowing company or that of its associate resident companies for the purpose of securing the external commercial borrowing (ECB) raised by the borrowing company • Shares of an Indian company held by the non-resident investor can be pledged in favour of an Indian bank in Indiato secure the credit facilities being extended to the resident investee company for bona fide business purposes • Shares of the Indian company held by the non-resident investor can be pledged in favour of an overseas bankto secure the credit facilities being extended to the non-resident investor / non-resident promoter of the Indian company or its overseas group company. • Any person being a non-resident investor of a company registered in India and listed on a recognised stock exchange/s in India (resident investee company), may pledge the shares of that company, in favour of a Non-Banking Financial Company in India, to secure the credit facilities being extended to that resident investee company for bonafide business purposes, subject to the AD bank satisfying itself of the compliance of the conditions stipulated by the Reserve Bank, from time to time, in this regard

34. FC-GPR Reporting of issue of shares Form FC-GPR has to be duly filled up and signed by Managing Director/Director /Secretary of the Company and submitted to the Authorised Dealer of the company, who will forward it to the concerned Regional Office of the Reserve Bank. The following documents have to be submitted along with Form FC-GPR: (i) A certificate from our Company Secretarycertifying that (a) all the requirements of the Companies Act, 1956 have been complied with; (b) terms and conditions of the Government approval, if any, have been complied with; (c) the company is eligible to issue shares under these Regulations; and (d) the company has all original certificates issued by authorised dealers in India evidencing receipt of amount of consideration in accordance with paragraph 8 of Schedule 1 to Notification No. FEMA 20/2000-RB dated May 3, 2000. (ii) A certificate from SEBI registered Merchant Banker / Chartered Accountantindicating the manner of arriving at the price of the shares issued to the persons resident outside India. (iii) Board resolution duly certified by Company Secretary: “Since the date of incorporation, the Company ______ Limited has not carried out any activity which is not FDI compliant. Further the Company is doing and in future also will do only such activity which is allowed under FDI Policy issued by DIPP, Ministry of Commerce and Industry, Govt. of India.”

35. CERTIFICATE TO BE FILED BY THE COMPANY SECRETARY OF THE INDIAN COMPANY ACCEPTING THE INVESTMENT: (As per Para 9 (1) (B) (i) of Schedule 1 to Notification No. FEMA 20/2000-RB dated May 3, 2000) In respect of the abovementioned details, we certify the following : 1. All the requirements of the Companies Act, 1956 have been complied with. 2. Terms and conditions of the Government approval, if any, have been complied with. 3. The company is eligible to issue shares / convertible debentures/others under these Regulations. 4. The company has all original certificates issued by AD Category – I banks in India, evidencing receipt of amount of consideration in accordance with paragraph 8 of Schedule 1 to Notification No. FEMA 20/2000-RB dated May 3, 2000. Note: If the company doesn’t have full time Company Secretary, a certificate from practicing Company Secretary may be submitted.  (Name & Signature of the Company Secretary) (Seal) DECLARATION TO BE FILED BY THE AUTHORISED REPRESENTATIVE OF THE LIMITED LIABILITY PARTNERSHIP: A certificate from the Chartered Accountant/Cost Accountant/ approved valuerfrom the panel maintained by the Central Government, indicating the manner of arriving at the fair price of the capital contribution/profit shares issued to the persons resident outside India.

36. Branch document checklist- Filing form FC-GPR

37. FC-GPR-Scrutiny Company Secretary’s Certificate • Submit in original • All the clauses in the certificate must be as per format/ any conditionality mentioned • Registration number of Practicing CS • Indian company’s name indicated? (if issued not as a continuation page of FCGPR) • If name of investor/s, the number of shares issued / date of issue mentioned in the certificate, whether they tally with FCGPR Chartered Accountant’s certificate • Submit in original • Subscribe to MoA/ Rights/ Bonus – No CA valuation certificate • Valuation based on latest balance sheet and as per erstwhile CCI guidelines (allotment < 7.4.2010) • Valuation based on Discounted Free Cash Flow (DCF) Method (allotment=> 7.4.2010) • W.E.F 15.7.2014, for unlisted – Internationally accepted methodology • Fair Value has to be indicated clearly • Indian company’s name is appearing in the certificate • Valuation of equity share as on the date/ near to the date of issue is required – CCPS/ CCDs/ warrants • Date of issue of CA certificate be nearest to the date of issue of shares. • ESOPs – plain paper reporting for stock options- at the time of issue shares FCGPR within 30 days- not more than 5% of capital and scheme as per SEBI guidelines • Merger/ Amalgamation – Court order - FCGPR (not to exceed sectoral cap – activity permitted as per FDI policy) • ECB conversion in to Equity – CA certificate for outstanding ECB, copy of ECB-2 returns

38. FCGPR-For checking and reporting to RBI (For Issue of Shares) Documents required for initial reporting to RBI: • Certified copy of FIRC. • KYC of the overseas remitter. • Letter from customer addressed to RBI for inward remittance received. • Initial reporting format duly filled. • In case where customer failed to report receipt of inward remittance to RBI through A.D., within 30 days from the date of receipt of remittance, a separate request letter clarifying the reason for delay and also requesting RBI to condone the delay on account of late submission should be forwarded along with subsequent intimation of inward remittance. Documents required along with FC GPR Form Part A: • KYC of the overseas remitter (Certified Copy from Remitting Bank.) as per the prescribed format mentioned in the circular. • Certified copy of FIRC. • CA VALUATION • CS certificate for application of funds. • Certified copy of Board Resolution for issuance of shares. • Acknowledgment from R.B.I. for report of inward remittance OR UIN LETTER ISSUED BY RBI • If the remittance is under approval route, copy of the FIPB/DIPP approval. • Companies failing to Issue shares/ Convertible debentures within 180 days from the date of receipt of consideration needs to return the consideration to the foreign investors or seeks RBI’s approval for extension of period for issue of shares/debentures. • MOA of the company required

39. Reporting under ESOPs for allotment of equity shares An Indian company issuing sweat equity shares / employees’ stock option / shares issued against exercise of stock option to its employees/directors or employees/directors of its holding company or joint venture or wholly owned overseas subsidiary/subsidiaries who are resident outside India shall furnish to the Regional Office concerned of the Reserve Bank of India under whose jurisdiction the registered office of the company operates, within 30 days from the date of issue of employees’ stock option or sweat equity shares, as per the Form-ESOP (Annex -13 to Master Circular).

40. Foreign Direct Investment-Reporting under FDI Scheme on the e-Biz platform A.P. (DIR Series) Circular No.77 Dated 12th February, 2015 • Advance Remittance Form (ARF) - used by the companies to report the foreign direct investment (FDI) inflow to RBI; and • FCGPR Form - which a company submits to RBI for reporting the issue of eligible instruments to the overseas investor against the above mentioned FDI inflow. The design of the reporting platform enables the customer to login into the e-Biz portal, download the reporting forms (ARF and FCGPR), complete and then upload the same onto the portal using their digitally signed certificates. The Authorised Dealer Banks (ADs) will be required to download the completed forms, verify the contents from the available documents, if necessary by calling for additional information from the customer and then upload the same for RBI to process and allot the Unique Identification Number (UIN). It has been decided that the ARF and FCGPR services of RBI will be operational on the e-Biz platform from February 19, 2015. The user manual for the two services is Annexed to this Circular. It may be noted that for the present, the online reporting on the e-Biz platform is an additional facility to the Indian companies to undertake their ARF and FCGPR reporting and the manual system of reporting as prescribed in terms of A.P. (DIR Series) Circular No.102 dated February 11, 2014 would continue till further notice. Steps for a Business User for Application Submission on eBiz • Steps for Processing of Application by AD Bank – Advanced Foreign Remittance • Steps for Resubmission of Application • Steps for applicant to apply for refund approval • Steps to process refund approval request • Steps for Processing of Application by AD Bank – FC-GPR

41. Transfer of shares - includesBuyback, delisting, exit, open offer/substantial acquisition/SEBI SAST, capital reduction scheme …1/2

42. Transfer of shares …2/2

43. Acquisition of shares under the FDI scheme by a non-resident on a recognized Stock Exchange A non resident including NRI may acquire shares of a listed Indian company on the stock exchange through a registered broker under FDI scheme provided that: i. The non-resident investor has already acquired and continues to hold the control in accordance with SEBI (Substantial Acquisition of Shares and Takeover) Regulations; ii. The amount of consideration for transfer of shares to non-resident consequent to purchase on the stock exchange may be paid as below: (a) by way of inward remittance through normal banking channels, or (b) by way of debit to the NRE/FCNR account of the person concerned maintained with an authorised dealer/bank; (c) by debit to non-interest bearing Escrow account (in Indian Rupees) maintained in India with the AD bank in accordance with Foreign Exchange Management (Deposit) Regulations, 2000; (d) the consideration amount may also be paid out of the dividend payable by Indian investee company, in which the said non-resident holds control as (i) above, provided the right to receive dividend is established and the dividend amount has been credited to specially designated non –interest bearing rupee account for acquisition of shares on the floor of stock exchange. iii. The pricing for subsequent transfer of shares shall be in accordance with the pricing guidelines under FEMA; iv. The original and resultant investments are in line with the extant FDI policy and FEMA regulations in respect of sectoral cap, entry route, reporting requirement, documentation, etc;

44. FC-TRS • Transfer of shares/ convertible debentures/ partly paid shares/ warrants • From Resident to a Non-resident and vice versa • File form FC-TRS with RBI through authorised dealer within 60 days of receipt of consideration (in quardruplicate) • In respect of the transfer from resident to non resident, the declaration has to be signedby the non resident buyer, and in respect of the transfer from non-resident to resident the declaration has to be signed by the non-resident seller. • For any delay in submission, AD Bank to approach RO, RBI • Indian company can record transfer only post approval of Form-FC TRS by AD-Bank • Onus on transferor / transferee, resident in India • Onus on reporting for purchase on recognized stock exchange will be on the Investee company • Inward remittance subject to KYC norms (KYC check to be carried by remittance receiving bank) • AD Bank shall certify FC-TRS as being in order • FC-TRS should not be forwarded to RBI. Instead, AD Bank branch will submit two copies to IBD/FED/Nodal Office of the Bank in Specified Proforma. It in turn will consolidate all transactions reported by their branched on monthly basis into two statements inflow and outflow statement; which will be forwarded to CO, RBI in soft copy. • On receipt of certificate from AD Bank, Company may record transfer in its books. If transfer already effected by Indian company? • On receipt of Statements, RBI may seek information from transferor/ transferee/ their agents

45. FCTRS- For checking and reporting to RBI (For the Sale of Shares) Transfer of shares from Non -Resident to Resident. • Request Letter/ debit authority for making a remittance • Form A2 & FEMA Declaration as per Bank’s prescribed format • Consent letter duly signed by the Seller. • Board resolution from remiter if a Company/POA to Broker • Consent letter from Buyer • Share holding pattern of the Indian company (pre & post buy-back) • CA VALUATION OF SHARES OR COPY OF BROKER'S NOTE IF SALE IS MADE ON STOCK EXCHANGE. • Copy of reporting done to RBI for obtaining the approval. • RBI registration no. stating that the shares held was on repatriation basis. • Form 15 CA & CB • Form FC-TRS (4 sets signed by non-resident) • ID proof of person signing FCTRS form. • POA or Board resolution authorizing person to sign FCTRS form. DECLARATION FROM THE BUYER TO THE EFFECT THAT HE IS ELIGIBLE TO ACQUIRE SHARES / COMPULSORILY AND MANDATORILY CONVERTIBLE PREFERENCE SHARES / DEBENTURES UNDER FDI POLICY AND PRICING GUIDELINES HAVE BEEN COMPLIED WITH.

46. FCTRS- For checking and reporting to RBI (For the Sale of Shares) In case of shares transferred from Resident to Non –Resident • Request Letter cum debit authority for our vetting charges. • Consent letter duly signed by the Seller. • Consent letter from Buyer • Share holding pattern of the Indian company ( pre & post buy-back) • CA VALUATION OF SHARES OR COPY OF BROKER'S NOTE IF SALE IS MADE ON STOCK EXCHANGE. • Form FC-TRS (4 sets signed by non-resident) • ID proof of person signing FCTRS form. • POA or Board resolution authorizing person to sign FCTRS form. • DECLARATION FROM THE BUYER TO THE EFFECT THAT HE IS ELIGIBLE TO ACQUIRE SHARES / COMPULSORILY AND MANDATORILY CONVERTIBLE PREFERENCE SHARES / DEBENTURES UNDER FDI POLICY AND THE EXISTING SECTORAL LIMITS AND PRICING GUIDELINES HAVE BEEN COMPLIED WITH. • FIRC copy • KYC of the Remitter

50. Disclose in Balance Sheet • An Indian company taking on record in its books any transfer of its shares or convertible debenture by way of sale from a resident to a non-resident and a non-resident to a resident shall disclose in its balance sheet for the financial year, in which the transaction took place, the details of valuation of share or convertible debentures, the pricing methodology adopted for the same as well as the agency that has given/certified the valuation. If Contravened? • To bring the difference form the foreign investor to comply with pricing guidelines and also to apply for compounding for contravention of pricing guidelines?