Alignment of regulations issued under FEMA regarding Indian companies listed on International Exchanges in GIFT-IFSC by Reserve Bank of India (RBI)

The Foreign Exchange Management (Mode of Payment and Reporting of Non-Debt Instruments) Regulations, 2019 and the Foreign Exchange Management (Foreign currency accounts by a person resident in India) Regulations, 2015 have been amended by the RBI to include provisions for payment, foreign currency account outside India, and remittance for equity shares of Indian companies listed on international exchanges in Gujarat International Finance Tec-City - International Financial Services Centre (GIFT- IFSC) in India.

The key points are outlined below:

• Mode of Payment: Consideration towards the purchase/subscription of equity shares of an Indian company listed on an international exchange is required to be paid either through inward remittances from abroad in the Indian bank account or deposited in the foreign currency bank account outside India (maintained in accordance with foreign currency accounts regulations issued by RBI) of the Indian company.
  
• Remittance of sale proceeds: The net proceeds (after tax deductions) from the sale of equity shares can be remitted overseas or credited to a bank account of the permissible holder.
  
• Reporting of foreign portfolio investment (FPI): The investee Indian company (i.e., whose shares are listed on an international exchange) is required to report the FPI to the RBI through their concerned authorized dealer (AD) Bank in Form LEC (FII) in the case of the purchase/subscription of equity shares by a permissible holder (other than transfers between permissible holders on international exchanges).
  
• Foreign currency bank account outside India: Funds raised (pending their utilization or repatriation to India) through the direct listing of equity shares of companies incorporated in India on International Exchanges can also be held in foreign currency accounts maintained with a bank outside India.
  

The above changes have been made effective from the date of notification in the official gazette i.e., 19 April 2024.

_{^{Source: Notification No. FEMA. 395(2)/2024-RB and 10(R)(3)/2024-RB dated 23 April 2024}}