Reserve Bank of India liberalizes & rationalizes the Overseas Investments by Resident Individuals
March 28, 2012:
Reserve Bank of India has decided to liberalise & rationalise permissions to resident individuals in respect of the following.
1. Acquiring qualification shares of an overseas company for holding the post of a Director
In terms of Regulation 24(1)(a) of the Notification ibid, a person resident in India being an individual may acquire foreign securities as qualification shares issued by a company incorporated outside India for holding the post of a Director in the company:
Henceforth, remittance shall be allowed from resident individuals for acquiring the qualification shares for holding the post of a Director in the overseas company to the extent prescribed as per the law of the host country where the company is located.
The limit of remittance for acquiring such qualification shares shall be within the overall ceiling prescribed for the resident individuals under the Liberalized Remittance Scheme (LRS) in force at the time of acquisition.
2. Acquiring shares of a foreign company towards professional services rendered or in lieu of Director’s remuneration
It has been decided to grant General Permission to the resident individuals to acquire shares of a foreign entity in part / full consideration of professional services rendered to the foreign company or in lieu of Director’s remuneration.
The limit of acquiring such shares in terms of value shall be within the overall ceiling prescribed for the resident individuals under the Liberalized Remittance Scheme (LRS) in force at the time of acquisition.
3. Acquiring shares in a foreign company through ESOP Scheme
It has now been decided that resident employees or Directors may be permitted to accept shares offered under an ESOP Scheme globally, on uniform basis, in a foreign company irrespective of the percentage of the direct or indirect equity stake in the Indian company subject to:
the shares under the ESOP Scheme are offered by the issuing company globally on a uniform basis, and
an Annual Return is submitted by the Indian company to the Reserve Bank through the AD Category – I bank giving details of remittances / beneficiaries, etc.
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