TaxTMI 
TaxTMI 
TaxTMI 
Derecognition of Overseas Corporate Bodies (OCBs)
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....s enclosed. 3. In order to address various operational issues associated with the exit arrangements for OCBs, FAQs to illustratively deal with these issues has been placed on RBI web-site for the information of all concerned (copy enclosed). 4. Authorised Dealers may bring the contents of this circular to the notice of their constituents and customers concerned. 5. The directions contained in this circular have been issued under Sections 10 (4) and 11 (1) of the Foreign Exchange Management Act, 1999. Yours faithfully Grace Koshie Chief General Manager Derecognition of OCBs Exchange Control Department Foreign Investment Division Overseas Corporate Bodies (OCBs) have been derecognised as a class of investor entity in India with effect from September 16, 2003. In this connection, Reserve Bank has issued directions to the Authorised Dealers in terms of A.P (DIR Series) Circular No. 14 dated 16th September 2003 and has made Foreign Exchange Management [Withdrawal of General Permission to Overseas Corporate Bodies (OCBs)] Regulations, 2003, which have been notified vide Notification No. FEMA 101/2003-RB dated October 3, 2003. In order to address various operational issues ass....
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.... firm on non-repatriation basis, or f) invested in Non Convertible Debentures (NCDs) on repatriation and non-repatriation basis of a company incorporated in India, or g) lent in foreign currency to a person resident in India. Q.3. A non-resident incorporated entity having major holdings by NRIs, as on September 16, 2003 did not avail of any of the facilities as indicated at (a) to (g) in answer (2) above. Can such an entity invest in Indian companies in terms of Regulation 5(1) of RBI Notification No.20/2000-RB dated May 3, 2000 under FDI Scheme through Government Route/Automatic Route of RBI? A.3. Yes. Such non-resident incorporated entity is treated like any other foreign incorporated company. An eligible non-resident incorporated entity having major holdings by NRIs, which as on September 16, 2003 did not avail of any of the facilities as indicated at (a) to (g) in answer (2) above, may invest in Indian companies in terms of Regulation 5(1) of RBI Notification No.20/2000-RB dated May 3, 2000 under FDI Scheme through Government Route / Automatic Route of RBI.. Q. 4. Can unincorporated entities/ventures such as trusts, Mutual funds etc invest under FDI Scheme after September ....
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....any receive the remittance towards allotment of shares from the OCB after 16.9.2003? A. 8. Yes, provided the Indian company obtains the FIPB/SIA specific approval for receiving the remittance from the OCB towards allotment of shares. (B) Transfer of shares Q. 9. Can the shares be transferred to OCBs against the (i) permission granted by FIPB/SIA prior to 16.9.2003; (ii) in-principle approval granted by RBI prior to 16.9.2003. A. 9. Yes, with the specific approval of FIPB/SIA followed by RBI approval. Q. 10. Can the shares held by an OCB, other than under Portfolio Investment Scheme be transferred by way of sale? A. 10. OCB may transfer the shares held by it by way of sale to NRIs in terms of Regulation 5(2) (b)(i) of RBI Notification No. FEMA 101/2003-RB dated October 3, 2003. OCB may seek prior permission of FIPB/SIA and RBI for transfer of shares held by it by way of sale to a person resident outside India, other than a NRI. OCB may transfer the shares held by it by way of sale to a Resident in terms of Regulation 10 of RBI Notification No. FEMA 20/2000-RB dated May 3, 2000, as amended from time to time. Q. 11. Can one OCB transfer shares by way of sale to another OCB a....
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.... while in case of investments held on non-repatriation basis, the amount may be credited to NRO current account. (F) Mergers/de-mergers Q. 18. Is issue of shares to OCBS consequent to mergers/de-mergers after September 16, 2003 prohibited? A. 18. A merger or de-merger or restructuring proposal which impacts on the capital structure of a company could be on account of (a) merger of two companies, (b) de-merger of an existing company and (c) restructuring of the capital of company under rehabilitation scheme approved by BIFR/Court/under CDR mechanism. These cases may lead to acquisition of fresh shares by the existing OCBs. In case of (a) and (b) there may not be fresh inward remittance and therefore such acquisition may be treated as existing holding which OCBs may continue to hold. In case of (c) there may be fresh inflows and therefore OCBs may seek approval of Govt./RBI (for investment as the non-resident company). Q. 19. Under rehabilitation scheme approved by BIFR/Court/under CDR mechanism (i) if the advance remittance, with the approval of RBI, has been received in full by an Indian company from the OCBs prior to 16.9.2003 can the Indian company allot shares/convertible ....