The Foreign Exchange Management (Non-debt Instruments) Amendment Rules, 2020

Apr 27, 2020 | by Avantis RegTech Legal Research Team

Finance & Taxation Compliance

The Ministry of Finance on April 22, 2020, issues the Foreign Exchange Management (Non-debt Instruments) Amendment Rules, 2020 to further amend the Foreign Exchange Management (Non-debt Instruments) Rules, 2019.

The amendments are made in Rule 6(a) related to “Investments by person resident outside India”, stating that a person resident outside India may make investment, may subscribe, purchase or sell equity instruments of an Indian company in the manner and subject to the terms and conditions specified in Schedule I.

Provided that an entity of a country, which shares land border with India or the beneficial owner of an investment into India who is situated in or is a citizen of any such country, shall invest only with the Government approval: Provided further that, a citizen of Pakistan or an entity incorporated in Pakistan shall invest only under the Government route, in sectors or activities other than defence, space, atomic energy and such other sectors or activities prohibited for foreign investment.

Provided also that in the event of the transfer of ownership of any existing or future FDI in an entity in India, directly or indirectly, resulting in the beneficial ownership falling within the restriction or purview of the above provisos, such subsequent change in beneficial ownership shall also require government approval.

This Notification shall come into force on the date of their publication in the Official Gazette that is April 22, 2020.

[Notification No. S.O. 1278 (E)]


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