The Ministry of Finance issued a notification on Monday, to amend the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 and the amendment came to be known as the Foreign Exchange Management (Non-debt Instruments) (Second Amendment) Rules, 2020.
The notification omitted the explanation given under Rule 7. In the principal rules, after rule 7, the “7A Acquisition after renunciation of rights: A person resident outside India who has acquired a right from a person resident in India who has renounced it may acquire equity instruments (other than share warrants) against the said rights as per pricing guidelines specified under rule 21 of these rules” shall be inserted.
In the Principal Rules, in Schedule1, in the Table, “against serial number 15.3.1, in the entries under column (2), under sub-heading “Note”, in the serial number (3), after the words “first store”, the words “or start of online retail, whichever is earlier” shall be inserted.
The serial number F.8.1, for the entries in column (2), under the heading “Sector/Activity”, the “Insurance Company” entry shall be substituted.
In the principal rules, in Schedule II, for the entries in clause (iii) of subparagraph (a) of paragraph 1, the “The FPIs investing in breach of the prescribed limit shall have the option of divesting their holdings within five trading days from the date of settlement of the trades causing the breach. In case the FPI chooses not to divest, then the entire investment in the company by such FPI and its investor group shall be considered as an investment under Foreign Direct Investment (FDI) and the FPI and its investor group shall not make further portfolio investment in the company concerned. The FPI, through its designated custodian, shall bring the same to the notice of the depositories as well as the concerned company for effecting necessary changes in their records, within -seven trading days from the date of settlement of the trades causing the breach. The divestment of holdings by the FPI and the reclassification of FPI investment as FDI shall be subject to further conditions, if any, specified by the Securities and Exchange Board of India and the Reserve Bank in this regard. The breach of the said aggregate or sectoral limit on account of such acquisition for the period between the acquisition and sale or conversion to FDI within the prescribed time, shall not be reckoned as a contravention under these rules.” entries shall be substituted.
Subscribe Taxscan Premium to view the Judgment
