Optionality in foreign investment instruments allows non-resident exits subject to market, RoE, or certified pricing rules.
Issuance of shares or convertible debentures with an optionality clause but without any assured exit price is permitted to non-residents subject to Schedule I terms and a minimum lock-in of one year or higher as per Schedule I Annex-B; exits must be without assured return and priced as follows: listed company exits at recognised stock exchange market price, unlisted equity exits at a price not exceeding that based on Return on Equity from the latest audited balance sheet, and preference shares or debentures priced under an internationally accepted methodology certified by a Chartered Accountant or SEBI-registered Merchant Banker.

Amendment to permitted foreign jurisdictions list expands allowable locations for establishment of branch or office in India.
The amendment substitutes the words "Iran or China" in Regulation 4 of the Principal Regulations with "Iran, China, Hong Kong or Macau," thereby altering the list of jurisdictions referenced under the Foreign Exchange Management (Establishment in India of Branch or Office or Other Place of Business) Regulations, 2000.

Correction to statutory reference: power provision in foreign exchange notification amended to clause (e), preserving regulatory effect.
The notification substitutes the reference to clause (d) of sub section (3) of section 6 with clause (e) of sub section (3) of section 6 in Notification No. FEMA.287/2013 RB, and states that, as so rectified, the Principal Regulations shall remain in full force and effect.

Group company definition updated: control via voting rights or board appointments now governs overseas security transfers, with retrospective effect.
The Regulations insert a definition of Group company into Regulation 2, defining it as two or more enterprises which, directly or indirectly, can either (i) exercise twenty-six per cent or more of voting rights in the other enterprise, or (ii) appoint more than fifty per cent of members of the board of directors of the other enterprise; and state the Regulations are deemed to have come into force from June 3, 2013 with a clarification that no person will be adversely affected by the retrospective effect.

Bonus distribution of non-convertible securities to non-resident shareholders allowed subject to acquisition, company and tax conditions.
Permits Indian companies under a Court approved Scheme of Arrangement to issue non-convertible redeemable preference shares or debentures as bonus distributions to non-resident shareholders from general reserves, subject to: original acquisition compliance with FEMA and the relevant Schedule; adherence to the Companies Act and scheme terms; possession of a No Objection Certificate from the Income Tax authority; and exclusion of activities/sectors listed in Annex A to Schedule 1.

Foreign exchange regulation amendment removes a specific clause from transfer or issue of security rules, changing compliance obligations.
The Reserve Bank of India amends the principal Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations by deleting clause (a) of Regulation 10A(b)(v); the Fourteenth Amendment, 2013 takes effect on publication in the Official Gazette under powers conferred by the Foreign Exchange Management Act.

Credit enhanced bonds inclusion under FEMA expands permitted instruments for non-resident transfers and issues abroad.
Addition of credit enhanced bonds to Schedule 5 of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 at three specified sub paragraph locations, thereby recognising them as instruments permissible for transfer or issue by persons resident outside India.

Borrowing and lending in foreign exchange: scope expanded to permit entities beyond India subject to regulatory permission.
Amendment inserts "or any other entity as permitted by Reserve Bank" into Regulation 4(2)(i) of the Foreign Exchange Management (Borrowing or Lending in Foreign Exchange) Regulations, 2000, extending eligibility for borrowing and lending in foreign exchange to entities beyond India where permitted by the Reserve Bank; made under Sections 6(3)(d) and 47(2) of the Foreign Exchange Management Act, 1999, effective on publication in the Official Gazette.

Borrowing and lending rules: RBI may permit use of borrowed rupee funds for on lending to infrastructure or fixed deposits.
Amendment to Regulation 6 authorises the Reserve Bank to permit resident entities to use borrowed rupee funds either for on lending/re lending to the infrastructure sector or for placing the funds in fixed deposits with banks in India pending utilisation for permissible end uses.

Qualified Foreign Investor eligibility requires FATF/IOSCO membership and KYC compliance, with residency and SEBI registration exclusions.
Defines Qualified Foreign Investor (QFI) eligibility: initially residence in an FATF-compliant jurisdiction and IOSCO MMoU signatory plus SEBI KYC compliance, excluding SEBI-registered FIIs/FVCIs. Subsequently, residence in a FATF member or group member and IOSCO MMoU signatory or party to a bilateral MoU with SEBI providing information sharing, while excluding residents of jurisdictions with FATF-identified AML/CFT deficiencies, residents of India, and SEBI-registered FIIs, FII sub-accounts, or FVCIs.

Corrigendum amends FEMA notification terminology, substituting 'Regulation' with 'paragraph' and 'regulation' with 'Notification' for clarity in text.
Corrigendum effects two textual substitutions in a FEMA notification: it replaces the phrase referring to insertion after "Regulation (3)" with a reference to insertion after "paragraph (3)", and it amends the Explanation by substituting "this regulation" with "this Notification", making the drafting cross-references and scope terminology consistent without changing substantive provisions.

Foreign investment in micro and small enterprises allowed subject to sectoral exclusions, prescribed annex limits and applicable FDI policy.
A corrigendum substitutes regulation 2 to allow a Micro and Small Enterprise (including Export Oriented Units, units in Free Trade Zones, Export Processing Zones, Software Technology Parks and Electronic Hardware Technology Parks) not engaged in activities in Annex A to issue shares or convertible debentures to a person resident outside India subject to the limits in Annex B, the specified Entry Routes and the provisions of the Foreign Direct Investment Policy. An Explanation defines micro and small enterprise classifications by investment in plant and machinery for manufacturing and by investment in equipment for services.

Foreign exchange borrowing limit revised; Reserve Bank empowered to set or vary the applicable ceiling under amended regulation.
The amendment substitutes the words "fifty percent" in Regulation 4(2)(i) of the Foreign Exchange Management (Borrowing or Lending in Foreign Exchange) Regulations, 2000 with "hundred percent or such other limit as decided by the Reserve Bank, from time to time", thereby granting the Reserve Bank discretion to set or vary the applicable borrowing limit. The Fourth Amendment Regulations, 2013 commence from their publication in the Official Gazette and are issued under the specified provisions of the Foreign Exchange Management Act, 1999.

Definition of control expanded to include director appointment, management and voting agreements, broadening FDI regulatory reach.
The Regulations amend Regulation 14 to broaden the definition of control to include rights to appoint a majority of directors, control management or policy decisions, and influence via shareholding, management rights, shareholders' agreements or voting agreements; they delete the prior narrower clauses. The notification substitutes Annex B with a revised sectoral policy listing FDI ceilings, entry routes and sector-specific conditions, and provides that the amendments are deemed effective from the stated commencement date with a non-adverse retrospective clarification.

Downstream investments through internal accruals permitted by Indian companies, subject to clause (i) and retrospective commencement.
The amendment substitutes language in Regulation 14(6)(ii)(d) to provide that downstream investments through internal accruals are permissible by an Indian company, subject to the provisions of clause (i) and the elaborations that follow.

Overseas investment limits require compliance with net worth-based ceilings and prior regulatory approval for exposure breaches.
The amendments cap an Indian party's overseas investment by reference to a net worth-based ceiling, specifying which items form part of the total financial commitment, including remittances by market purchases, capitalization of export proceeds, full value of guarantees, investment in agricultural operations, ECBs compliant with guidelines, and fifty percent of performance guarantees; invocation of performance guarantees exceeding the ceiling requires prior regulatory approval before remittance. The drawal of foreign exchange from authorized dealers is aligned to the same net worth-linked limit, and bank guarantees backed by counter-guarantee or collateral are fully reckoned. Certain jurisdictional investments are placed on the approval route.

Foreign exchange drawal limits for resident individuals cap yearly capital account remittances and prohibit transfers to FATF noncooperative jurisdictions.
A resident individual may draw foreign exchange from an authorised person up to a prescribed annual cap for capital account transactions in Schedule I; remittances to acquire immovable property abroad are not permitted. Drawals for gifts or donations under the current account rules are subsumed within this cap. If drawal for a Schedule I transaction exceeds the annual cap, the transaction-specific regulatory limit applies. No part of the annual permitted drawal may be used, directly or indirectly, for remittances to jurisdictions designated as non-cooperative by the Financial Action Task Force.

Retrospective commencement declared for specified FEMA regulation by corrigendum, clarifying no person will be adversely affected.
The corrigendum substitutes Regulation 1's commencement wording so that the provision shall be deemed to have come into force from October 10, 2000; it confirms the Principal Regulations remain in full force and effect and clarifies that the retrospective effect will not adversely affect any person.

Infrastructure sector definition expanded to list qualifying industries for foreign exchange borrowing and lending under amended regulations.
Amendment replaces the 'Explanation' in Schedule I and Schedule II of the principal Regulations to define qualifying infrastructure sectors for foreign exchange borrowing and lending. The substituted Explanation enumerates Energy, Communication, Transport, Water and Sanitation, Mining (including exploration and refining), and Social and Commercial Infrastructure (including hospitals, specified hotel and convention projects, common industrial park/SEZ/tourism infrastructure, fertilizer capital projects, post-harvest storage and cold chain facilities, and soil testing laboratories), and preserves a residual provision permitting other sectors as prescribed by the regulator in consultation with the Government of India.

Non-resident Rupee account access allowed without prior RBI approval for share purchases on recognised exchanges.
A non-resident, including an NRI, may open a single non-interest bearing Rupee Account with Authorised Dealers in India without prior Reserve Bank approval, exclusively for purchase of shares on recognised stock exchanges in accordance with the regulations governing transfer or issue of securities to persons resident outside India.