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Expansion
Programme :
A
company which proposes to embark on expansion programme
to undertake activities or manufacture items included
in Annexure B, can issue shares or debentures out of
fresh capital proposed to be issued by it for the expansion
programme up to the extent indicated in Annexure B.
-
Trading
Activity :
A
Trading company incorporated in India can issue
shares/convertible debentures to the extent of 51%
of its capital to persons resident outside India
subject to the condition that remittance to shareholders
outside India is made only after the company has
secured registration as Export/Trading/Star Trading/Super
Star Trading House.
Small
Scale Industrial (SSI) Units:
A
company which is a small scale industrial unit may
issue shares/convertible debentures to a person
resident outside India to the extent of 24% of its
paid up capital.
Such
a company may issue shares in excess of 24% of its
paid up capital provided
- it
has given up its small scale status;
- it
is not engaged or does not propose to engage in
manufacture of items reserved for small scale sector,
and
- it
complies with ceilings in Annexure B to the Schedule.
The
sectoral cap of 24% is not applicable to an Export
Oriented Unit or a unit in the Free Trade Zone, or
in Export Processing Zone, or in a Software Technology
Park, or in an Electronic Hardware Technology Park
provided it complies with the ceilings specified in
Annexure B to the Schedule.
Conditions
Subject to which General Permission is Granted by Reserve
Bank under the Automatic Route
Issue
Price :
Price
of shares issued to persons resident outside India
under the Automatic Route shall not be less than -
-
the
price worked out in accordance with the SEBI guidelines,
in case of a listed company, and
-
fair
valuation of shares done by a Chartered Accountant
as per the guidelines issued by the erstwhile
Controller of Capital Issues, in all other cases.
Rate
of Dividend on Preference Shares :
The
rate of dividend on Preference Shares shall not exceed
300 basis points over the Prime-Lending Rate of State
Bank of India on the date of the Board Meeting of
the company in which issue of shares was recommended
.
Mode
of payment for shares/debentures issued to persons
resident outside India:
The
issuer company in India shall receive the amount of
consideration for such shares/debentures either by
inward remittance from abroad through normal banking
channels or by debit to NRE/FCNR account of the person
concerned maintained with an authorized dealer/authorized
bank.
Report
by the Indian company :
The
Indian company issuing shares or convertible debentures
in accordance with theses Regulations shall submit
to the Regional Office of Reserve Bank,
(A)
not later than 30 days from the date of receipt of
remittance, a report containing the following:
- Name
and address of the foreign investors;
- Date
of receipt of remittance and its rupee equivalent;
- Name
and address of the authorized dealer through whom
remittance is received
- Details
of the Government approval, if any.
(B)
not later than 30 days from the date of issue of shares,
a report in Form FC-GPR together with:
-
a
certificate from the Company Secretary of the
company accepting investment from persons resident
outside India certifying that
-
a certificate from Statutory auditors or Chartered
Accountant indicating the manner of arriving at
the price of the shares issued to persons resident
outside India
Permission
for retaining share subscription money received from
persons resident outside India in a foreign currency
account:
The
Reserve Bank of India may, on an application made
to it and on being satisfied, accord permission to
an Indian company issuing shares to persons resident
outside India under this Schedule, to retain the subscription
amount in a foreign currency account, subject to such
terms and conditions as it may stipulate.
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