RBI comes out with FEMA regulations for direct listing on international exchange
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Listing of an Indian company on international stock exchanges got a push with the Reserve Bank of India (RBI) coming out with regulations under Foreign Exchange Management (FEMA). Experts believe new regulations will help companies utilise foreign exchange more effectively.
Regulations have been made public through two notifications. First set of regulations deals with mode of payment and reporting of non-debt instruments. “The proceeds of 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,” the notification said.
Further, the 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. Reporting about transaction in foreign exchange will be done by the investee Indian company through an authorised dealer. In case an FPI makes investment through stock exchange, the authorised dealer will report to the RBI.
The second set of regulation is related with foreign currency accounts by a person resident in India. Here, it has been said that in case the fund has been raised through External Commercial Borrowings (ECB), American Depository Receipts (ADRs), Global Depository Receipts (GDRs) or through direct listing of equity shares of companies incorporated in India on International Exchanges but yet to be utilised or repatriated, then it will be held in foreign currency accounts with a bank outside India.
Regulations have been made public through two notifications. First set of regulations deals with mode of payment and reporting of non-debt instruments. “The proceeds of 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,” the notification said.
Further, the 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. Reporting about transaction in foreign exchange will be done by the investee Indian company through an authorised dealer. In case an FPI makes investment through stock exchange, the authorised dealer will report to the RBI.
The second set of regulation is related with foreign currency accounts by a person resident in India. Here, it has been said that in case the fund has been raised through External Commercial Borrowings (ECB), American Depository Receipts (ADRs), Global Depository Receipts (GDRs) or through direct listing of equity shares of companies incorporated in India on International Exchanges but yet to be utilised or repatriated, then it will be held in foreign currency accounts with a bank outside India.
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