TaxTMI 
TaxTMI 
Master Circular on Foreign Investment in India
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....p; ============= Document 1 Part - I Foreign Investments in India-Schematic Representation: Foreign Direct Investments Foreign Portfolio Investments Automatic Route Govt. Route Persons Resident outside India Foreign Investments Foreign Venture Capital Investments Other investments (G-Sec, NCDs, etc) Investments on non-repatriable basis Fils NRIs, PIO Fils NRIS, PIO SEBI regd. FVCIS NRIS, PIO VCF, IVCUS 2 of 92 à¤à¤¾à¤°à¤¤à¥€à¤¯ SERVE PART-I रिज़रà¥à¤µ बैंक ANK OF INDEX FOREIGN INVESTMENTS IN INDIA-SCHEMATIC REPRESENTATION: SECTION - I: FOREIGN DIRECT INVESTMENT 0 .0 1. 2. FOREIGN DIRECT INVESTMENT IN INDIA. ENTRY ROUTES FOR INVESTMENTS IN INDIA 3. PROHIBITION ON INVESTMENT IN INDIA.. .2 4. ELIGIBILITY FOR INVESTMENT IN INDIA.. 5. TYPE OF INSTRUMENTS 5 6. INVESTMENTS IN MICRO AND SMALL ENTERPRISE (MSE).. 6 7. 8. 9. 10. 11. 12. INVESTMENTS IN ASSET RECONSTRUCTION COMPANIES (ARCS). INVESTMENT IN INFRAST....
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....°à¤¤à¥€à¤¯ रिजरà¥à¤µ बैंक SERVE ANK OF OF IND 5. FOREIGN INVESTMENT IN TIER-I AND TIER-II INSTRUMENTS ISSUED BY BANKS IN INDIA....40 ANNEX - 1 ANNEX - 2 ANNEX - 3 ANNEX-4 ANNEX - 5 INVESTMENT BY NON-RESIDENTS OTHER THAN NRIS / PIO.. RESTRICTIONS. PART II 3. 1234 4. 1. INVESTMENT IN PARTNERSHIP FIRM / PROPRIETARY CONCERN. INVESTMENT IN PARTNERSHIP FIRM / PROPRIETARY CONCERN INVESTMENTS WITH REPATRIATION BENEFITS.. .42 .42 .42 42 .43 .43 .44 .55 56 .61 63 ANNEX - 6 64 ANNEX - 7 66 ANNEX - 8 67 ANNEX - 9 ANNEX-10 ANNEX - 11 APPENDIX 78 83 85 86 Website:www.fema.rbi.org.in 2 Email: [email protected] 4 of 92 Section - I: Foreign Direct Investment 1. Foreign Direct Investment in India Foreign Direct Investment (FDI) in India is governed by the FDI Policy announced by the Government of India and the provisions of the Foreign Exchange Management Act (FEMA), 1999. Reserve Bank has issued Notification No. FEMA 20/2000-RB dated May 3, 2000 which contains the Regulat....
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....nology transfer / trade mark agreement of the person to whom the shares are to be issued are also in the Information Technology sector or in the mining sector for same area / mineral. Entry route for non-resident investors in India as well as sector-specific investment limits in India are given in Annex -1. (ii) FDI Policy is formulated by the Government of India. The Ministry of Commerce and Industry, Department of Industrial Policy and Promotion has issued a “Consolidate FDI Policy Circular†dated March 31,2010 elaborating the policy and the process in respect of FDI in India, which is available in public domain and can be downloaded from the website of Ministry of Commerce and Industry, Department of Industrial Policy and Promotion http://siadipp.nic.in/policy/fdi circular/fdi circular 1 2010.pdf. FEMA Regulations prescribe the mode of investments i.e. manner of receipt of funds, issue of shares / convertible debentures and preference shares and reporting of the investments to the Reserve Bank. 3. Prohibition on investment in India (i) Foreign investment in any form is prohibited in a company or a partnership f....
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....ny form including licensing for franchise, trademark, brand name, management contract is also completely prohibited for Lottery Business and Gambling and Betting activities. 4. (i) 2. Foreign investment in Trusts other than investment by SEBI registered FVCIs in domestic VCF is not permitted. Eligibility for Investment in India A person resident outside India (other than a citizen of Pakistan) or an entity incorporated outside India, (other than an entity incorporated in Pakistan) can invest in India, subject to the FDI Policy of the Government of India. A person who is a citizen of Bangladesh or an entity incorporated A "person" is defined under FEMA (Section 2 u) as: (a) an individual, (b) a Hindu undivided family, (c) a company, (d) a firm, (e) an association of persons or a body of individuals, whether incorporated or not, (f) every artificial juridical person, not falling within any of the preceding sub-clauses, and (g) any agency, office or branch owned or controlled by such person; "person resident in India" means-[As per FEMA Sec 2(v)] (i) a person residing in India for more than one hundred and eigh....
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.... Type of instruments Indian companies can issue equity shares, fully and mandatorily convertible debentures and fully and mandatorily convertible preference shares subject to pricing guidelines / valuation norms prescribed under FEMA Regulations. Issue of other types of preference shares such as, non-convertible, optionally convertible or partially convertible, have to be in accordance with the guidelines applicable for External Commercial Borrowings (ECBs). Since these instruments are denominated in rupees, the rupee interest rate will be based on the swap equivalent of London Interbank Offered Rate (LIBOR) plus the spread permissible for ECBs of the corresponding maturity. As far as debentures are concerned, only those which are fully and mandatorily convertible into equity, within a specified time would be reckoned as part of equity under the FDI Policy. Website:www.fema.rbi.org.in 5 Email: [email protected] 9 of 92 à¤à¤¾à¤°à¤¤à¥€à¤¯ SERVE BANK OF OF IND 6. Investments in Micro and Small Enterprise (MSE) A company which is reckoned as Micro and Small Enterprise (MSE) (earlier Small ....
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.... subject to the condition that investment by a single FII in each tranche of SRs shall not exceed 10 per cent of the issue. 8. Investment in infrastructure companies in the Securities Market Foreign investment is permitted in infrastructure companies in Securities Markets, namely, stock exchanges, depositories and clearing corporations, in compliance with SEBI Regulations and subject to the following conditions : (i) There is a composite ceiling of 49 per cent for Foreign Investment, with a FDI limit of 26 per cent and an FII limit of 23 per cent of the paid-up capital; (ii) FDI will be allowed with specific prior approval of FIPB; and (iii) FII can invest only through purchases in the secondary market. 9. Investment in Credit Information Companies Foreign investment is permitted in Credit Information Companies in compliance with the Credit Information Companies (Regulations) Act, 2005 and subject to the following: (i) (ii) (iii) (iv) The aggregate foreign investment in Credit Information Companies is permitted only up to 49 per cent of the paid up capital. Foreign investment up to 49 per cent is allowed only w....
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.... Email: [email protected] 12 of 92 à¤à¤¾à¤°à¤¤à¥€à¤¯ SERVE BANK OF laws / statutes like the Companies Act, 1956, SEBI Issue of Capital and Disclosure Requirements, Regulations 2009, etc. The price of shares offered on rights basis by the Indian company to non-resident shareholders shall be; (i) In the case of shares of a company listed on a recognised stock exchange in India, at a price as determined by the company; (ii) In the case of shares of a company not listed on a recognised stock exchange in India, at a price which is not less than the price at which the offer on right basis is made to the resident shareholders 14. Prior permission of Reserve Bank for Rights issue to erstwhile OCBS OCBS have been de-recognised as a class of investors with effect from September 16, 2003. Therefore, companies desiring to issue rights share to such erstwhile OCBS will have to take specific prior permission from the Reserve Bank 5. As such, entitlement of rights share is not automatically available to OCBs. However, bonus shares can be issued to erstwhile OCBS without the Reserve Bank approval. 15. Additio....
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....ace value of the shares to be allotted under the scheme to the non-resident employees does not exceed 5 per cent of the paid-up capital of the issuing company. (ii) Unlisted companies have to follow the provisions of the Companies Act, 1956. The Indian company can issue ESOPs to employees who are resident outside India, other than to the citizens of Pakistan. ESOPs can be issued to the citizens of Bangladesh with the prior approval of the FIPB. The issuing company is required to report the details of such issues to the Regional Office concerned of the Reserve Bank, within 30 days from the date of issue of shares. (iii) Website :www.fema.rbi.org.in 10 Email: [email protected] 14 of 92 à¤à¤¾à¤°à¤¤à¥€à¤¯ SERVE रिजरà¥à¤µ बैंक BANK OF INDIA 18. Reporting of FDI (i) Reporting of inflow (a) An Indian company receiving investment from outside India for issuing shares / convertible debentures / preference shares under the FDI Scheme, should report the details of the amount of consideration to the Regional Office concerned of the Reserve Bank th....
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.... 30 days from the date of issue of shares. The Form can also be downloaded from the Reserve http://www.rbi.org.in/Scripts/BS_ViewFemaForms.aspx. Bank's website Non-compliance with the above provision would be reckoned as a contravention under FEMA and could attract penal provisions. (b) Part A of Form FC-GPR has to be duly filled up and signed by Managing Director/Director/Secretary of the Company and submitted to the Authorised Dealer of the company, who will forward it to the concerned Regional Office of the Reserve Bank. The following documents have to be submitted along with Part A: (i) A certificate from the Company Secretary of the company certifying that: a) all the requirements of the Companies Act, 1956 have been complied with; b) terms and conditions of the Government's approval, if any, have been complied with; Website:www.fema.rbi.org.in 12 Email: [email protected] 16 of 92 à¤à¤¾à¤°à¤¤à¥€à¤¯ RESERV INDIA (á) (ii) c) the company is eligible to issue shares under these Regulations; and d) the company has all original certificates issu....
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....DCF) In case of issue of shares on preferential allotment the price shall not be less that the price as applicable to transfer of shares from resident to non-resident. 20. Foreign Currency Account Indian companies which are eligible to issue shares to persons resident outside India under the FDI Scheme will be allowed to retain the share subscription amount in a Foreign Currency Account, with the prior approval of the Reserve Bank. 21. Transfer of Shares and convertible debentures (i) Foreign investors can also invest in Indian companies by purchasing / acquiring existing shares from Indian shareholders or from other non- resident shareholders. General permission has been granted to non- residents / NRIs for acquisition of shares by way of transfer as follows: a. b. Sale / Gift of shares by Non Resident to Non-Resident including NRI: A person resident outside India (other than NRI and OCB) may transfer by way of sale or gift, the shares or convertible debentures to any person resident outside India (including NRIs). Sale / Gift of share by NRI to NRI: NRIs may transfer by way of sale or gift the shares or convertible de....
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....¾à¤°à¤¤à¥€à¤¯ RESERV INDIA (ii) f. g. arrangement to a person resident outside India, subject to the guidelines given in Annex - 3. - Private Sale of shares by Non-Resident to Resident arrangement: General permission is also available for transfer of shares / convertible debentures, by way of sale under private arrangement by a person resident outside India to a person resident in India, subject to the guidelines given in Annex - 3. The above General Permission also covers transfer by a resident to a non-resident of shares / convertible debentures of an Indian company, engaged in an activity earlier covered under the Government Route but now falling under Automatic Route of Reserve Bank, as well as transfer of shares by a non-resident to an Indian company under buyback and / or capital reduction scheme of the company. However, this General Permission is not available in case of transfer of shares / debentures, from a Resident to a Non- Resident/Non-Resident Indian, of an entity engaged in any activity in the financial services sector (i.e. Banks, NBFCs, ARCS, CICS, Insurance, infrastructure com....
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....engaged in financial services sector (i.e. Banks, NBFCs, Asset Reconstruction Companies, CICS, Insurance, Infrastructure companies in the securities market such as, Stock Exchanges, Clearing Corporations, and Depositories, Commodity Exchanges, etc.). Transactions which attract the provisions of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997. c) The activity of the Indian company whose securities are being transferred falls outside the automatic route and the approval of the FIPB has been obtained for the said transfer. Website:www.fema.rbi.org.in 17 Email: [email protected] 21 of 92 RESERV INDIA (ii) d) e) The transfer is to take place at a price which falls outside the pricing guidelines specified by the Reserve Bank from time to time. Transfer of equity instruments where the non-resident acquirer proposes deferment of payment of the amount of consideration, prior approval of the Reserve Bank is required. Further, in case approval is granted for a transaction, the same should be reported in Form FC-TRS, duly certified by the AD Category - I bank, within 60 days from the dat....
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....Zs in to Equity (i) Indian companies have been granted general permission for conversion of External Commercial Borrowings (ECB) into shares / preference shares, subject to the following conditions and reporting requirements: a) The activity of the company is covered under the Automatic Route for FDI or the company has obtained Government's approval for foreign equity in the company; b) The foreign equity after conversion of ECB into equity is within the sectoral cap, if any; c) Pricing of shares is as per SEBI regulations or DCF method in the case of listed or unlisted companies respectively; Website :www.fema.rbi.org.in 19 Email: [email protected] 23 of 92 à¤à¤¾à¤°à¤¤à¥€à¤¯ RESERV BANK OF OF INT d) Compliance with the requirements prescribed under any other statute and regulation in force; e) The conversion facility is available for ECBS availed under the Automatic or Approval Route and is applicable to ECBs, due for payment or not, as well as secured / unsecured loans availed from non-resident collaborators. (ii) General permission is also available for issue of shares....
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....earance certificate from the Income Tax Department has been produced. 25. Remittance on winding up/liquidation of Companies AD Category - I banks have been allowed to remit winding up proceeds of companies in India, which are under liquidation, subject to payment of applicable taxes. Liquidation may be subject to any order issued by the court winding up the company or the official liquidator in case of voluntary winding up under the provisions of the Companies Act, 1956. AD Category - I banks shall allow the remittance provided the applicant submits: Ä°. No objection or Tax clearance certificate from Income Tax Department for the remittance. ii. Auditor's certificate confirming that all liabilities in India have been either fully paid or adequately provided for. iii. Auditor's certificate to the effect that the winding up is in accordance with the provisions of the Companies Act, 1956. Website:www.fema.rbi.org.in 21 Email: [email protected] 25 of 92 à¤à¤¾à¤°à¤¤à¥€à¤¯ RESER रिज़रà¥à¤µ बैंक BANK OF iv. In case of winding up otherwis....
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....the Indian company in consultation with the Lead Manager to the issue. The proceeds so raised have to be kept abroad till actually required in India. Pending repatriation or utilisation of the proceeds, the Indian company can invest the funds in:- v) a. b. C. Deposits with or Certificate of Deposit or other instruments offered by banks who have been rated by Standard and Poor, Fitch, IBCA or Moody's, etc. and such rating not being less than the rating stipulated by Reserve Bank from time to time for the purpose; Deposits with branch/es of Indian Authorised Dealers outside India; and Treasury bills and other monetary instruments with a maturity or unexpired maturity of one year or less. There are no end-use restrictions except for a ban on deployment / investment of such funds in real estate or the stock market. There is no monetary limit up to which an Indian company can raise ADRs/GDRs. vi) The ADR / GDR proceeds can be utilised for first stage acquisition of shares in the disinvestment process of Public Sector Undertakings / Enterprises and also in the mandatory second stage offer to the public in view of their strate....
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....bruary 5,2007 bank raising fund through ADR / GDR mechanism, should give an undertaking to the Reserve Bank that they would not take cognizance to voting by the depository, should the depository vote in contravention of its agreement with the bank. Website:www.fema.rbi.org.in 24 Email: [email protected] 28 of 92 i) à¤à¤¾à¤°à¤¤à¥€à¤¯ SERVE BANK OF Foreign Currency (Domestic) accounts in India by the resident shareholders who have tendered such shares for conversion into ADRs/GDRs. 29. Reporting of ADR / GDR Issues The Indian company issuing ADRs/GDRs has to furnish to the Reserve Bank, full details of such issue in the Form enclosed in Annex -10, within 30 days from the date of closing of the issue. The company should also furnish a quarterly return in the Form enclosed in Annex - 11, to the Reserve Bank within 15 days of the close of the calendar quarter. The quarterly return has to be submitted till the entire amount raised through ADR/GDR mechanism is either repatriated to India or utilized abroad as per the extant Reserve Bank guidelines. 30. Pledge of Shares A person being a promoter of a....
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....esignated branch of any AD Category - I bank authorised by the Reserve Bank to administer the Portfolio Investment Scheme for permission to open a NRE/NRO account under the Scheme for routing investments. 2. Investment by Flls under PIS Reserve Bank has given general permission to SEBI registered Flls/sub-accounts to invest under the PIS. Shareholding (i) (a) (b) Total shareholding of each FII/sub-account under this Scheme shall not exceed 10 per cent of the total paid-up capital or 10 per cent of the paid-up value of each series of convertible debentures issued by the Indian company. Total holdings of all Fils/sub-accounts put together shall not exceed 24 per cent of the paid-up capital or paid-up value of each series of convertible debentures. This limit of 24 per cent can be increased to the sectoral cap / statutory limit, as applicable to the Indian company concerned, by passing a resolution of its Board of Directors followed by a special resolution to that effect by its General Body. Website:www.fema.rbi.org.in 27 Email: [email protected] 31 of 92 à¤à¤¾à¤°à¤¤à¥€à¤¯ RESERV ....
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....ed by the 10th of the following month to which it relates. Prohibition on investments (a) (b) Fils are not permitted to invest in equity shares issued by an Asset Reconstruction Company. Fils are also not allowed to invest in any company which is engaged or proposes to engage in the following activities: Business of chit fund, or Nidhi company, or Agricultural or plantation activities, or i) ii) iii) iv) Real estate business, or construction of farm houses, or v) Trading in Transferable Development Rights (TDRs). "Real estate business" does not include construction of housing / commercial premises, educational institutions, recreational facilities, city and regional level infrastructure, townships. 3. Short Selling by Fils Foreign Institutional Investors (FIls) registered with SEBI and sub-accounts of Fils are permitted to short sell, lend and borrow equity shares of Indian companies. Short selling, lending and borrowing of equity shares of Indian companies shall be subject to such conditions as may be prescribed by the Reserve Bank and the 11 Addressed to the Chief General Manager-in-Charge, Res....
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.... FIls registered with SEBI may purchase / sell Interest Rate Futures subject to the condition that total gross long position does not exceed their individual permissible limit for investment in government securities and the total gross short position, for the purpose of hedging only, does not exceed their long position in the government securities and in the Interest Rate Futures at any point of time. Website:www.fema.rbi.org.in 30 Email: [email protected] 34 of 92 à¤à¤¾à¤°à¤¤à¥€à¤¯ SERVE OF IND (ii) Flls are allowed to offer foreign sovereign securities with AAA rating as collateral to the recognised Stock Exchanges in India in addition to the cash for their transactions in derivatives segment of the market. SEBI approved clearing corporations of stock exchanges and their clearing members are allowed to undertake the following transactions subject to the guidelines issued from time to time by SEBI in this regard: a. b. to open and maintain demat accounts with foreign depositories and to acquire, hold, pledge and transfer the foreign sovereign securities, offered as collateral by FIls; to remit ....
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....nt process. 6. Private placement with Flls SEBI registered Flls have been permitted to purchase shares / convertible debentures of an Indian company through offer/private placement, subject to total FII investment viz. PIS/ private placement / offer being within the ceilings prescribed, i.e. individual FII/sub account -10 per cent and all Flls/sub-accounts put together - 24 per cent of the paid-up capital of the Indian company or to the sectoral limits, as applicable. Indian company is permitted to issue such shares provided that: a) b) in the case of public offer, the price of shares to be issued is not less than the price at which shares are issued to residents; and in the case of issue by private placement, the price is not less than the price arrived at in terms of SEBI guidelines or guidelines issued by the erstwhile Controller of Capital Issues, as applicable. Website:www.fema.rbi.org.in 32 Email: [email protected] 36 of 92 à¤à¤¾à¤°à¤¤à¥€à¤¯ SERVE 7. Reporting of FII investments (i) An FII may invest in a particular share issue of an Indian company either under the FDI Scheme o....
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.... by way of inward remittance of foreign exchange through normal banking channels or out of funds held in NRE/FCNR(B) account maintained in India. If the shares are purchased on non-repatriation basis, the NRIs can also utilise their funds in NRO account in addition to the above. (iv) The link office of the designated branch of an AD Category - I bank shall furnish to the Reserve Bank 15, a report on a daily basis on PIS transactions undertaken by it, such report can be furnished on-line or on a floppy to the Reserve Bank. (v) Shares purchased by NRIs on the stock exchange under PIS cannot be transferred by way of sale under private arrangement or by way of gift (except by NRIs to their relatives as defined in Section 6 of Companies Act, 1956 or to a charitable trust duly registered under the laws in India) to a person resident in India or outside India without prior approval of the Reserve Bank. (vi) NRIs are allowed to invest in Exchange Traded Derivative Contracts approved by SEBI from time to time out of Rupee funds held in India on non- repatriation basis, subject to the limits prescribed by SEBI. 9. Monitoring of investment....
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....enture Capital Fund (IVCF) or in a Scheme floated by such IVCFs subject to the condition that the VCF should also be registered with SEBI. These investments by SEBI registered FVCI, would be subject to the SEBI regulation and sector specific caps of FDI. An IVCU is defined as a company incorporated in India whose shares are not listed on a recognized stock exchange in India and which is not engaged in an activity under the negative list specified by SEBI. A VCF is defined as a fund established in the form of a trust, a company including a body corporate and registered under the Securities and Exchange Board of India (Venture Capital Fund) Regulations, 1996 which has a dedicated pool of capital raised in a manner specified under the said Regulations and which invests in Venture Capital Undertakings in accordance with the said Regulations. (ii) FVCIs can purchase equity / equity linked instruments / debt / debt instruments, debentures of an IVCU or of a VCF through initial public offer or private placement in units of schemes / funds set up by a VCF. At the time of granting approval, the Reserve Bank permits the FVCI to open a Foreign ....
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.... India subject to and under the terms and conditions of Companies (Issue of Depository Receipts) Rules, 2004 and subsequent amendment made thereto and Website :www.fema.rbi.org.in 37 Email: [email protected] 41 of 92 à¤à¤¾à¤°à¤¤à¥€à¤¯ b) SERVE BANK OF the SEBI (DIP) Guidelines,2000, as amended from time to time. These IDRs can be issued in India through Domestic Depository to residents in India as well as SEBI registered Flls and NRIs. In case of raising of funds through issuances of IDRs by financial / banking companies having prescence in India, either through a branch or subsidiary, the approval of the sectoral regulator(s) should be obtained before the issuance of IDRs. a) The FEMA Regulations shall not be applicable to persons resident in India as defined under Section 2(v) of FEMA, 1999, for investing in IDRs and subsequent transfer arising out of transaction on a recognized stock exchange in India. Foreign Institutional Investors (Flls) including SEBI approved sub-accounts of the FIls, registered with SEBI and Non-Resident Indians (NRIs) may invest, purchase, hold and transfer IDRs of ....
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....nated in Indian Rupees. 3. Purchase of other securities by FIIS Foreign Institutional Investors (Flls) can buy on repatriation basis dated Government securities / treasury bills, listed non-convertible debentures / bonds issued by Indian companies and units of domestic mutual funds either directly from the issuer of such securities or through a registered stock broker on a recognized stock exchange in India. Purchase of debt instruments by Flls are subject to limits notified by SEBI and the Reserve Bank from time to time. Website:www.fema.rbi.org.in 39 Email: [email protected] 43 of 92 à¤à¤¾à¤°à¤¤à¥€à¤¯ रिजरà¥à¤µ बैंक SERVE OF IND E BANK OF 4. Investment by Multilateral Development Banks (MDBs) A Multilateral Development Bank (MDB) which is specifically permitted by the Government of India to float rupee bonds in India can purchase Government dated securities. 5. India Foreign investment in Tier-I and Tier-ll instruments issued by banks in (i) FIls registered with SEBI and NRIs have been permitted to subscribe to the Perpetual Debt ins....
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....ely, to the Reserve Bank through the soft copy of the Forms LEC (FII) and LEC (NRI). 16 Addressed to the Chief General Manager-in-Charge, Foreign Exchange Department, Reserve Bank of India, Foreign Investment Division, Central Office, Central Office Building, Mumbai 400 001. Website:www.fema.rbi.org.in 41 Email: [email protected] 45 of 92 à¤à¤¾à¤°à¤¤à¥€à¤¯ RESERV Part II Investment in Partnership Firm / Proprietary Concern 1. Investment in Partnership Firm / Proprietary Concern 18 A Non-Resident Indian 17 (NRI) or a Person of Indian Origin´ (PIO) resident outside India can invest by way of contribution to the capital of a firm or a proprietary concern in India on non-repatriation basis provided: Ä°. Amount is invested by inward remittance or out of NRE / FCNR(B) / NRO account maintained with Authorised Dealers / Authorised banks. 2. ii. iii. The firm or proprietary concern is not engaged in any agricultural / plantation or real estate business (i.e. dealing in land and immovable property with a view to earning profit or earning income there from) or print media sector. ....
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....indicated. In Sectors/Activities not listed below, FDI is permitted up to 100 per cent on the automatic route subject to sectoral rules/regulations applicable. Sr. No. Sector/Activity FDI Cap I Entry Route Equity | AGRICULTURE 1. Floriculture, 100% Automatic Horticulture, Development of Seeds, Animal Husbandry, Pisciculture, Aquaculture, Cultivation of Vegetables & Mushrooms under controlled conditions and services related to agro and allied sectors. NB: Besides the above, FDI is not allowed in any other agricultural sector /activity 2. Tea Sector, including tea plantation 3. NB: Besides the above, FDI is not allowed in any other plantation sector /activity INDUSTRY MINING Mining covering exploration and mining of diamonds & precious stones; gold, silver and minerals. 100% FIPB 100% Automatic Website :www.fema.rbi.org.in 44 Other conditions Subject to divestment of 26% equity in favour of Indian partner/Indian public within 5 years and prior approval of State Government concerned in case of....
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....egulation) Act, 1951 and other sectoral Regulations. Subject to industrial license under the Industries (Development & Regulation) Act, 1951 and Regulations under Explosives Act, 1898 11. Drugs and 100% Automatic Pharmaceuticals including those involving use of recombinant DNA technology POWER 12. Power including 100% Automatic generation Subject to provisions of the Electricity Act, 2003 (except Atomic (www.powermin.nic.in) energy); transmission, distribution and Power trading. FDI is not permitted for generation, transmission and distribution of electricity produced inatomic power/plant/atomic energy since private investment in this sector / activity is prohibited and is reserved for public sector. SERVICES CIVIL AVIATION SECTOR 13. Airports- a. Greenfield projects 100% Automatic 14. b. Existing projects 100% FIPB beyond 74% Subject to sectoral Regulations notified by Ministry of Civil Aviation (www.civilaviation.nic. in) Subject to sectoral Regulations notified by Ministry of Civil Aviation (www.civilaviation.nic. in) ....
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.... RBI. Website :www.fema.rbi.org.in 47 Email: [email protected] 51 of 92 à¤à¤¾à¤°à¤¤à¥€à¤¯ SERVE 18. BANK OF Broadcasting a. FM Radio FDI +FII investme FIPB nt up to 20% b. Cable network 49% (FDI+FII) FIPB & Subject to guidelines notified by Ministry of Information Broadcasting. (www.mib.nic.in) Subject to Cable Television Network Rules (1994), notified by Ministry of Information & Broadcasting. (www.mib.nic.in) C. Direct-To-Home 49% (FDI+FII) FIPB Subject to guidelines issued by Ministry of Information & Broadcasting. (www.mib.nic.in) Within this limit, FDI compon ent not to exceed 20% d. Setting up 49% FIPB hardware facilities (FDI+FII) such as up-linking, HUB, etc. e. Up-linking a News & Current Affairs 26% (FDI+FII) FIPB TV Channel f. Up-linking a Non- 100% FIPB news & Current Affairs TV Channel 19. Commodity Exchanges 49% (FDI+FII) FDI - FIPB 26% FII – 23% - 20 20. Development townships of 100% A....
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....ave not been made available. It will be necessary that the investor provides this infrastructure and obtains the completion certificate from the from the local body / service agency before he would be allowed to dispose of services housing plots. as [Note The above conditions are not applicable for 1: For investment by NRIs, 2: For investment in SEZs, Hotels & Hospitals, Subject to existing laws and exclusion of activity relating to distribution of letters, which is Website :www.fema.rbi.org.in 49 Email: [email protected] 53 of 92 à¤à¤¾à¤°à¤¤à¥€à¤¯ SERVE BANK OF and other items which do not come within the ambit of the Indian Post Office Act, 1898. 22 22. Infrastructure companies in 49% (FDI+FII) FIPB securities markets FDI namely, Stock 26% Exchanges, FII Depositories and 23% Clearing Corporations 23. Credit Information 49% FIPB Companies(CIC) (FDI+FII ) Within exclusively reserved for the State. (www.indiapost.gov.in) FII purchases shall be restricted to secondary market. Subject t....
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.... upfront for FDI up to 51%; US$ 5 million to be brought upfront for FDI above 51% and up to 75%; and US$ 50 million out of which US$ 7.5 million to be brought upfront and the balance in 24 months, for FDI beyond 75% and up to 100%. b. Minimum capitalization norms for non-fund based NBFC activities- US$ 0.5 million, subject to the condition that such company would not be aloowed to set up any subsidiary for any othe activity nor it can participate in the equity of NBFC holding / operating company. Non- fund based activities would include Investment Advisory services Financial consultancy, Forex Broking, Money changing Business and Credit Rating Agencies. c. Foreign investors can set up 100% operating subsidiaries without the condition to disinvest a minimum of 25% of its equity to Indian entities subject to bringing in US$ 50 million without any restriction on number of operating subsidiaries without bringing additional capital. d. Joint venture operating NBFCs that have 75% or less than 75% foreign Website:www.fema.rbi.org.in 51 Email: [email protected] ....
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.... shares, and Communications Services proportio (GMPCS) and nate other value foreign added telecom equity in services Indian promoter S/ Investing Compan y) b. ISP with 74% gateways, radio- paging, end-to-end bandwidth. C. (a) ISP without 100% gateway; (b) infrastructure provider providing dark fibre, right of way, duct space, tower (Category I); (c) electronic mail Automatic up to 49%. FIPB beyond 49%. Automatic up to 49%. FIPB beyond 49%. Subject to licensing and security requirements notified by the Department Telecommunications. (www.dotindia.com) Subject to the condition that such companies shall divest 26% of their equity in favour of Indian public in 5 years, if these companies are listed in other parts of the world. Also subject to licensing and security requirements, where required. (www.dotindia.com) of and voice mail. d. Manufacture of 100% Automatic telecom Subject to sectoral requirements. (www.dotindia.com) equipments 31. Trading a. Wholesale/cash 1....
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....ble Development Rights (TDRs) Activities/sector not opened to private sector investment Agriculture (excluding Floriculture, Horticulture, Development of seeds, Animal Husbandry, Pisciculture and cultivation of vegetables, mushrooms etc. under controlled conditions and services related to agro and allied sectors) and Plantations (Other than Tea Plantations) Real estate business, or construction of farm houses. Manufacturing of Cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco or of tobacco substitutes. Note: 1. Besides foreign investment in any form, foreign technology collaboration in any form including licensing for franchise, trademark, brand name, management contract is also completely prohibited for Lottery Business and Gambling and Betting activities. 2. Foreign investment in Trusts other than investment by SEBI registered FVCIs in domestic VCF is not permitted. Website:www.fema.rbi.org.in 55 Email: [email protected] 59 of 92 21 à¤à¤¾à¤°à¤¤à¥€à¤¯ RESERV INDIA Annex - 3 (PART I, Section I, para 21) Terms and conditions for Transfer of Shares /Convertible D....
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....ant. Transfer by Non-resident (i.e. by incorporated non-resident entity, erstwhile OCB, foreign national, NRI, FII) to Resident Sale of shares by a non-resident to resident shall be in accordance with Regulation 10 B (2) of Notification No. FEMA 20/2000-RB dated May 3, 2000 which shall not be more than the minimum price at which the transfer of shares can be made from a resident to a non-resident as given at para 2.2 above. 3. Responsibilities / Obligations of the parties All the parties involved in the transaction would have the responsibility to ensure that the relevant regulations under FEMA are complied with and consequent on transfer of shares, the relevant individual limit/sectoral caps/foreign equity participation ceilings as fixed by Government are not breached. Settlement of transactions will be subject to payment of applicable taxes, if any. 4. Method of payment and remittance/credit of sale proceeds 4.1 The sale consideration in respect of the shares purchased by a person resident outside India shall be remitted to India through normal banking channels. In case the buyer is a Foreign Institutional Investor (FII), paym....
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....a person resident outside India showing equity participation of residents and non-residents category-wise (i.e. NRIs/OCBs/foreign nationals/incorporated non-resident entities/FIls) and its percentage of paid up capital obtained by the seller/buyer or their duly appointed agent from the company, where the sectoral cap/limits have been prescribed. Certificate indicating fair value of shares from a Chartered Accountant. Copy of Broker's note if sale is made on Stock Exchange Undertaking from the buyer to the effect that he is eligible to acquire shares/ convertible debentures under FDI policy and the existing sectoral limits and Pricing Guidelines have been complied with. Undertaking from the FII/sub account to the effect that the individual FII/ Sub account ceiling as prescribed by SEBI has not been breached. For sale of shares by a person resident outside India Consent Letter duly signed by the seller and buyer or their duly appointed agent indicating the details of transfer i.e. number of shares to be transferred, the name of the investee company whose shares are being transferred and the price at which shares are being transferred. ....
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.... receipt of the certificate from the AD, the company may record the transfer in its books. 6.3 The actual inflows and outflows on account of such transfer of shares shall be reported by the AD branch in the R-returns in the normal course. 6.4 In addition the AD branch should submit two copies of the Form FC-TRS received from their constituents/customers together with the statement of inflows/outflows on account of remittances received/made in connection with transfer of shares, by way of sale, to IBD/FED/or the nodal office designated for the purpose by the bank in the 22 To the Chief General Manager-in-Charge, Reserve Bank of India, Foreign Exchange Department, Foreign Investment Division, Central Office, Mumbai Website :www.fema.rbi.org.in 59 Email: [email protected] 63 of 92 à¤à¤¾à¤°à¤¤à¥€à¤¯ SERVE OF IND BANK enclosed proforma (which is to be prepared in MS-Excel format). The IBD/FED or the nodal office of the bank will in turn submit a consolidated monthly statement in respect of all the transactions reported by their branches together with copies of the FC-TRS Forms received from their bra....
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....rom the resident transferor that the value of security to be transferred together with any security already AP (DIR Series) Circular No. 08 dated August 25, 2005 Website:www.fema.rbi.org.in 61 Email: [email protected] 65 of 92 à¤à¤¾à¤°à¤¤à¥€à¤¯ RESERV INDIA- transferred by the transferor, as gift, to any person residing outside India does not exceed the rupee equivalent of USD 25,000 during a calendar year. Website:www.fema.rbi.org.in 62 Email: [email protected] 66 of 92 à¤à¤¾à¤°à¤¤à¥€à¤¯ RESERV INDIA- Annex - 5 (PART I, Section I, para 22) Definition of "relative" as given in Section 6 of Companies Act, 1956. A person shall be deemed to be a relative of another, if, and only if: (a) they are members of a Hindu undivided family; or (b) they are husband and wife ; or (c) the one is related to the other in the manner indicated in Schedule IA (as under) 1. Father. 2. Mother (including step-mother). 3. Son (including stepson). 4. Son's wife. 5. Daughter (including step-daughter). 6. Father's father. 7. Father's mother. 8. Mother's mother. ....
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[email protected] 69 of 92 à¤à¤¾à¤°à¤¤à¥€à¤¯ RESERV INDIA Annex - 7 (PART I, Section I, para 18 (i) (b)) Know Your Customer (KYC) Form in respect of the non-resident investor Registered Name of the Remitter / Investor (Name, if the investor is an Individual) Registration Number (Unique Identification Number* in case remitter is an Individual) Registered Address (Permanent Address if remitter Individual) Name of the Remitter's Bank Remitter's Bank Account No. Period of banking relationship with the remitter * Passport No., Social Security No, or any Unique No. certifying the bonafides of the remitter as prevalent in the remitter's country We confirm that all the information furnished above is true and accurate as provided by the overseas remitting bank of the non-resident investor. (Signature of the Authorised Official of the AD bank receiving the remittance) Date: Stamp : Place: Website:www.fema.rbi.org.in 66 Email: [email protected] 70 of 92 à¤à¤¾à¤°à¤¤à¥€à¤¯ RESERV INDIA FC-GPR Annex - 8 (PART I, Section I, para 18 (iii)) PART....
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....erves of the monetary authorities. Website :www.fema.rbi.org.in 68 Email: [email protected] 72 of 92 à¤à¤¾à¤°à¤¤à¥€à¤¯ SERVE BANK OF Nature of issue 01 IPO/FPO 02 Preferential allotment / private placement 03 Rights 04 Bonus 05 Conversion of ECB 06 Conversion of royalty 07 (including lump sum payments) Conversion against import of capital goods by units in SEZ 08 ESOPS 09 Share Swap 10 Total (b) Others (please specify) Type of security issued No. Nature of security 01 Equity 02 Compulsorily Convertible Debentures 03 Compulsorily Convertible Preference shares 04 Others (please specify) Total Date of issue Number of shares/ convertible debentures Number Maturity Face value Premium Issue Price per share Amount of inflow* i) In case the issue price is greater than the face value please give break up of the premium received. ii) * In case the issue is against conversion of ECB or royalty or against import of capital goods by units in SEZ, a Chartered Ac....
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.... the Automatic Route namely (strike off whichever is not applicable). a) Foreign entity/entities—(other than individuals), to whom we have issued shares have existing joint venture or technology transfer or trade mark agreement in India in the same field and Conditions stipulated at Para 4.2 of Consoildated FDI policy Circular of Government of India have been complied with. OR Foreign entity/entities—(other than individuals), to whom we have issued shares do not have any existing joint venture or technology transfer or trade mark agreement in India in the same field. For the purpose of the 'same' field, 4 digit NIC 1987 code would be relevant. b) We are not an Industrial Undertaking manufacturing items reserved for small sector. OR We are an Industrial Undertaking manuafacturing items reerved for small sector and the investment limit of 24 % of paid-up capital has been observed/ requisite approvals have been obtained. c) Shares issued on rights basis to non-residents are in conformity with Regulation 6 of the RBI Notification No FEMA 20/2000-RB dated 3rd May 2000, as amended from time to time. OR Shares iss....
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....ntioned details, we certify the following: 1. All the requirements of the Companies Act, 1956 have been complied with. 2. Terms and conditions of the Government approval, if any, have been complied with. 3. The company is eligible to issue shares / convertible debentures under these Regulations. 4. The company has all original certificates issued by AD Category - I banks in India, evidencing receipt of amount of consideration in accordance with paragraph 8 of Schedule 1 to Notification No. FEMA 20/2000-RB dated May 3, 2000. (Name & Signature of the Company Secretary) (Seal) FOR USE OF THE RESERVE BANK ONLY: Registration Number for the FC-GPR: Unique Identification Number allotted to the Company at the time of reporting receipt of remittance R 25 If the company doesn't have a full time Company Secretary, a certificate from a practicing Company Secretary may be submitted. Website :www.fema.rbi.org.in 73 Email: [email protected] 77 of 92 à¤à¤¾à¤°à¤¤à¥€à¤¯ RESERV रिजरà¥à¤µ बैंक BANK OF OF IND INDIA PART-B [Part- B of Annex I to A.....
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.... Capital Ω 6.2 Disinvestments during the year 6.3 Retained earnings during the year + Previous Year at end- March of Current Year at end- March of Previous Year at end- March of Current Year * Please furnish the outstanding investments of non-resident investors (Direct Investors) who were holding 10 per cent or more ordinary shares of your Company on the reporting date. & Please furnish your total investments outside the country in each of which your Company held 10 per cent or more ordinary shares of that non-resident enterprise on the reporting date. Ω Other Capital includes transactions between the non-resident direct investor and investee / reporting company, relating to i) Short Term Borrowing from overseas investors, ii) Long Term Borrowing from overseas investors, iii) Trade Credit, iv) Suppliers Credit, v) Financial Leasing, vi) Control Premium, vii) Non- Competition Fee in case of transactions not involving issue of shares, viii) Non-cash acquisition of shares against technical transfer, plant and machinery, goodwill, business development and similar considerations and ix) inves....
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....Wealth Fund (SWF) 20 26 09 10 11 Partnership / Proprietorship Firms Financial Institutions NRIS/PIO 12 Others (please specify) Sub Total Total No. of shares b) Resident Persons employed during the financial year ending March 31Ⓡ Directly Indirectly Total Signature of the authorised Official Name (in block letters) Designation Place: Date: Equity (Face Value) Rs. Amount 26 SWF means a Government investment vehicle which is funded by foreign exchange assets, and which manages those assets separately from the official reserves of the monetary authorities. Ⓡ Please indicate the number of persons recruited by your company during the financial year for which the return is being submitted. Under “Directly', indicate the number of persons on the roll of your company, whereas under "Indirectly", indicate the number of persons otherwise engaged by your company during the year. Website:www.fema.rbi.org.in 77 Email: [email protected] 81 of 92 % No. Compulsorily convertible Preference Shares/ Debentures of shares Amount Va....
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....om non resident to resident Constitution / Nature of the investing Entity Specify whether 1. Individual 2. Company 3. Fll 4. FVCI 5. Foreign Trust 6. Private Equity Fund 7. Pension/ Provident Fund 8. Sovereign Wealth Fund (SWF) 9. Partnership / Proprietorship firm 10. Financial Institution 11. NRIS/PIOS 12. others Date and Place of Incorporation Address of the buyer (including e-mail, telephone number. Fax no.) 5 Name of the seller Ï€ SWF means a Government investment vehicle which is funded by foreign exchange assets, and which manages those assets separately from the official reserves of the monetary authorities. Website :www.fema.rbi.org.in 79 Email: [email protected] 83 of 92 à¤à¤¾à¤°à¤¤à¥€à¤¯ SERVE BANK Constitution / Nature of the disinvesting entity Specify whether 1. Individual 2. Company 3. FII 4. FVCI 5. Foreign Trust 6. Private Equity Fund 7. Pension/ Provident Fund 8. Sovereign Wealth Fund (SWF) 9. Partnership/ Proprietorship firm 10. Financial Institution 11. NRIS/PIOS 12. others Date and....
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....datorily convertible debentures from resident to non resident the declaration has to be signed by the non resident buyer, and in respect of the Website :www.fema.rbi.org.in 81 Email: [email protected] 85 of 92 à¤à¤¾à¤°à¤¤à¥€à¤¯ SERVE रिजरà¥à¤µ बैंक OF IND OF BANK O transfer of shares / compulsorily and mandatorily convertible preference shares / compulsorily and mandatorily convertible debentures from non-resident to resident the declaration has to be signed by the non-resident seller. Certificate by the AD Branch It is certified that the application is complete in all respects. The receipt/payment for the transaction are in accordance with FEMA Regulations / Reserve Bank guidelines. Signature Name and Designation of the Officer Date: Name of the AD Branch AD Branch Code Website:www.fema.rbi.org.in 82 Email: [email protected] 86 of 92 à¤à¤¾à¤°à¤¤à¥€à¤¯ RESERV INDIA Annex-10 [Part I, Section I, para 29] Form DR [Refer to paragraph 4(2) of Schedule 1] Return to be filed by an Indian Company w....
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....GDRs/ADRs issue was launched 20. Amount raised (in US $) 21. Amount repatriated (in US $) Certified that all the conditions laid down by Government of India and Reserve Bank of India have been complied with. Sd/- Chartered Accountant Website:www.fema.rbi.org.in 84 Sd/- Authorised Signatory of the Company Email: [email protected] 88 of 92 à¤à¤¾à¤°à¤¤à¥€à¤¯ RESERV INDIA Form DR - Quarterly Annex - 11 [Part I, Section I, para 29] Quarterly Return [Refer to paragraph 4(3) of Schedule 1] (to be submitted to the Reserve Bank of India, Foreign Investment Division, Central Office, Mumbai) 1. Name of the Company 2. Address 3. GDR/ADR issue launched on 4. Total No. of GDRs/ADRs issued 5. Total amount raised 6. Total interest earned till end of quarter 7. 8. 9. Issue expenses and commission etc. Amount repatriated Balance kept abroad - Details (i) Banks Deposits (ii) Treasury Bills (iii) 10. Others (please specify) No. of GDRs/ADRs still outstanding 11. Company's share price at the end of the quarter 12. GDRs....
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....mail: [email protected] 90 of 92 à¤à¤¾à¤°à¤¤à¥€à¤¯ SERVE BANK OF OF IND Circulars Sl.No. Circulars 1. A.P.DIR(Series) Circular No.14 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. A.P.DIR(Series) Circular No.24 A.P.DIR(Series) Circular No.26 A.P.DIR(Series) Circular No.32 A.P.DIR(Series) Circular No. 13 A.P.DIR(Series) Circular No.21 A.P.DIR(Series) Circular No.29 A.P.DIR(Series) Circular No.45 A.P.DIR(Series) Circular No.52 A.P.DIR(Series) Circular No.68 A.P.DIR(Series) Circular No.69 A.P.DIR(Series) Circular No.75 A.P.DIR(Series) Circular No.88 A.P.DIR(Series) Circular No.101 A.P.DIR(Series) Circular No.10 A.P.DIR(Series) Circular No.13 A.P.DIR(Series) Circular No. 14 A.P.DIR(Series) Circular No.28 A.P.DIR(Series) Circular No.35 Date September 26, 2000 January 6, 2001 February 22, 2001 April 28, 2001 November 29, 2001 February 13, 2002 March 11, 2002 November 12, 2002 November 23, 2002 January 13, 2003 January 13, 2003 February 3, 2003 March 27, 2003 May 5, 2003....