FOREIGN EXCHANGE MANAGEMENT (TRANSFER OR ISSUE OF SECURITY BY A PERSON RESIDENT OUTSIDE INDIA) (SEVENTH AMENDMENT) REGULATIONS, 2012 - AMENDMENT IN REGULATION 5 AND SCHEDULE 1

NOTIFICATION [NO.FEMA 244/2012-RB]/GSR 946(E), DATED 22-10-2012

In exercise of the powers conferred by clause (b) of sub-section (3) of section 6 and section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999), the Reserve Bank of India hereby makes the following amendments in the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000 (Notification No. FEMA 20/2000-RB, dated 3rd May, 2000) namely :-

Short Title & Commencement

1. (i) These Regulations may be called the Foreign Exchange Management (Transfer or Issue of Security by A Person Resident Outside India) (Sixth Amendment) Regulations, 2012.

(ii) They shall be deemed to have come into force from the 1st day of August 2012.^@

Amendment of Regulation 5

2. In the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000, (Notification No. FEMA 20/2000-RB, dated 3rd May, 2000), in regulation 5, in sub-regulation (1), after clause (ii), the following new clause (iii) shall be added, namely:-

"(iii) Further, notwithstanding anything contained in clause (i) of the sub-regulation (1) above, a person who is a citizen of Pakistan or an entity incorporated in Pakistan may, with the prior approval of the Foreign Investment Promotion Board of the Government of India, purchase shares and convertible debentures of an Indian company under Foreign Direct Investment Scheme, subject to the terms and conditions specified in Schedule 1.

Provided further that notwithstanding anything contained in Schedule 1, the Indian company, receiving such foreign direct investment, is not engaged or shall not engage in sectors/activities pertaining to defence, space and atomic energy and sectors/activities prohibited for foreign investment."

Amendment to Schedule 1

3. In the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000, (Notification No. FEMA 20/2000-RB, dated 3rd May, 2000), the existing sub-paragraph 1 of paragraph shall be substituted by the following, namely :-

"1. (1) A person resident outside India referred to in clauses (i), (ii) and (iii) of sub-regulation (1) of Regulation 5, may purchase shares or convertible debentures issued by an Indian company up to the extent and subject to the terms and conditions set out in this Schedule."

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@ It is certified that no person will be adversely affected as a result of the retrospective effect being given to these regulations. These provisions have been notified by Department of Industrial Policy & Promotion, Ministry of Commerce & Industry, Government of India, vide Press Note No. 3 (2012 Series), dated August 1,2012.