Annex-II
[Annex to A.P. (DIR Series) Circular No. 49
dated May 04. 2010]

Reserve Bank of India
Foreign Exchange Department
Central Office Mumbai- 400 001

Notification No. FEMA 205/2010- RB

Dated April  7 , 2010

Foreign Exchange Management (Transfer or Issue of Security by a Person
Resident Outside India) (Amendment) Regulations, 2010

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:-

1. Short Title & Commencement:-

(i) These Regulations may be called the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) (Amendment) Regulations, 2010.

(ii) They shall come into force from the date of their publication in the Official Gazette.

2. Amendment of Regulation

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), (hereafter referred to as "the principal regulations")

(i) In Regulation 6, in sub-Regulation (2), for clause (iv), the following shall be substituted, namely:-

 “(iv) The offer on right basis to the persons resident outside India shall be:

(a)   in the case of shares of a company listed on a recognized stock exchange in India, at a price as determined by the company;

(b)  in the case of shares of a company not listed on a recognized stock exchange in India,  at a price which is not less than the price at which the offer on right basis  is made to resident shareholders.”

(ii) In Schedule 1, for paragraph 5, the following paragraph shall be substituted, namely:-

"5. Issue price

Price of shares issued to persons resident outside India under this Schedule, shall not be less than -

1. the price worked out in accordance with the SEBI guidelines, as applicable, where the shares of the company is listed on any recognised stock exchange in India;

2. the fair valuation of shares done by a SEBI registered Category - I Merchant Banker or  a Chartered Accountant as per the discounted free cash flow method, where the shares of the company is not listed on any recognised stock exchange in India ; and

3. the price as applicable to transfer of shares from resident to non-resident as per the pricing guidelines laid down by the Reserve Bank from time to time, where the issue of shares is on preferential allotment."

(Salim Gangadharan)
Chief General Manager-in-Charge

Foot Note: The Principal Regulations were published in the Official Gazette vide G.S.R.No. 406(E) dated May 8, 2000 in Part II, Section 3, sub-section (i) and subsequently amended as under:

G.S.R.No. 158(E) dated 02.03.2001
G.S.R.No. 175(E) dated 13.03.2001
G.S.R.No. 182(E) dated 14.03.2001
G.S.R.No.     4(E) dated 02.01.2002
G.S.R.No. 574(E) dated 19.08.2002
G.S.R.No. 223(E) dated 18.03.2003
G.S.R.No. 225(E) dated 18.03.2003
G.S.R.No. 558(E) dated 22.07.2003
G.S.R.No. 835(E) dated 23.10.2003
G.S.R.No. 899(E) dated 22.11.2003
G.S.R.No.   12(E) dated 07.01.2004
G.S.R.No. 278(E) dated 23.04.2004
G.S.R.No. 454(E) dated 16.07.2004
G.S.R.No. 625(E) dated 21.09.2004
G.S.R.No. 799(E) dated 08.12.2004
G.S.R.No. 201(E) dated 01.04.2005
G.S.R.No. 202(E) dated 01.04.2005
G.S.R.No. 504(E) dated 25.07.2005
G.S.R.No. 505(E) dated 25.07.2005
G.S.R.No. 513(E) dated 29.07.2005
G.S.R.No. 738(E) dated 22.12.2005
G.S.R.No.   29(E) dated 19.01.2006
G.S.R.No. 413(E) dated 11.07.2006
G.S.R.No. 712(E) dated 14.11.2007
G.S.R.No. 713(E) dated 14.11.2007
G.S.R.No. 737(E) dated 29.11.2007
G.S.R.No. 575(E) dated 05.08.2008
G.S.R.No. 896(E) dated 30.12.2008
G.S.R.No. 851(E) dated 01.12.2009