FOREIGN DIRECT INVESTMENT (FDI) IN LIMITED LIABILITY PARTNERSHIP (LLP)

ISSUING AUTHORITY : RESERVE BANK OF INDIA

DATE OF ISSUE : 16/04/2014

EFFECTIVE DATE : IMMEDIATE EFFECT

CIRCULAR NO. 123

LLP's can accept direct investment from foreign investors, subject to certain riders. Following persons shall not eligible to invest in LLPs:

1. a citizen/entity of Pakistan and Bangladesh or
2. a SEBI registered Foreign Institutional Investor (FII) or
3. a SEBI registered Foreign Venture Capital Investor (FVCI) or
4. a SEBI registered Qualified Foreign Investor (QFI) or
5. a Foreign Portfolio Investor registered in accordance with Securities and Exchange Board of India(Foreign Portfolio Investors) Regulations, 2014 (RFPI).

ELIGIBILITY OF LLP FOR ACCEPTING FOREIGN INVESTMENT

LLPs in all sectors where 100% FDI is permitted would be eligible to get FDI. However such investments would need prior government approval. 

PRICING

Any transfer of capital contribution / profit share from a resident to a non-resident would be for a consideration equal to or more than the fair price of the capital contribution or the profit share of the partnership.

Further, any transfer of capital contribution/profit share from a non-resident to a resident would be for a consideration which is less than or equal to the fair price of the capital contribution / profit share of the partnership.

REPORTING REQUIREMENTS

The LLP which have received foreign investment in terms of FIPB approval shall comply with the reporting requirement in respect of FDI within 30 or 60 days, as applicable from the date of receipt of the amount of consideration.

DOWNSTREAM INVESTMENTS

Further, an Indian Company with foreign investment can make a downstream investment in a LLP only if both the company and the partnership operate in the sectors where 100% FDI is allowed under the automatic route.

For detailed Circular, please find the link below:
A.P. (DIR Series) Circular No. 123

FII/QFI INVESTMENTS IN COMMERCIAL PAPERS

ISSUING AUTHORITY : SECURITIES AND EXCHANGE BOARD OF INDIA

DATE OF ISSUE : 14/02/2014

EFFECTIVE DATE : IMMEDIATE EFFECT

CIRCULAR NO. CIR/IMD/FIIC/4/2014

The limit for investment by SEBI registered FIIs, QFIs and long term Investors in Corporate Debt stood at USD 51 billion. Out of the above limit of USD 51 billion, a sub-limit of USD 3.5 billion was available for investment by eligible investors in Commercial Paper (CP). 

Thus, to encourage long term investors, it has been decided, to reduce, with immediate effect, the existing Commercial Paper sub-limit of USD 3.5 billion by USD 1.5 billion to USD 2 billion. The balance USD 1.5 billion shall, however, continue to be part of the total Corporate debt limit of USD 51 billion and will be available to eligible foreign investors for investment in Corporate debt.

For detailed Circular, please find the link below:

CIR/IMD/FIIC/4/2014

INTEREST RATES ON FCNR (B) DEPOSITS

ISSUING AUTHORITY : RESERVE BANK OF INDIA

DATE OF ISSUE : 31/01/2014

EFFECTIVE DATE : 01/03/2014

CIRCULAR NO. RBI/2013-14/477

In exercise of the powers conferred by Section 35A of the Banking Regulation Act, 1949, following changes in the interest rates on FCNR (B) deposits will be exercised with effect from March 1, 2014.

MATURITY PERIOD	EXISTING	WITH EFFECT FROM MARCH 1, 2014
1 year to less than 3 years	LIBOR/SWAP plus 200 basis points	No change
3 - 5 years	LIBOR/SWAP plus 400 basis points	LIBOR/SWAP plus 300 basis points

The interest rates mentioned vide Circular dated August 14, 2013 shall be applicable till February 28, 2014.

For detailed Circular, follow the Link below:
RBI/2013-14/477

DEREGULATION OF INTEREST RATES ON NON-RESIDENT (EXTERNAL) RUPEE (NRE) DEPOSITS

ISSUING AUTHORITY : RESERVE BANK OF INDIA

DATE OF ISSUE : 31/01/2014

EFFECTIVE DATE : 01/01/2014

CIRCULAR NO. RBI/2013-14/476

The freedom to offer interest rates on incremental NRE deposits with maturity of 3 years and above without any ceiling in order to pass on the benefit of exemption provided on such deposits from CRR / SLR requirements will remain unchanged up to February 28, 2014.

With effect from March 1, 2014 the interest rate ceiling will revert to the position prior to August 14, 2013, i.e. interest rates offered by banks on NRE deposits cannot be higher than those offered by them on comparable domestic rupee desposits.

For detailed Circular, follow the Link below:
RBI/ 2013-14/476

FOREIGN INVESTMENT IN INDIA BY SEBI REGISTERED LONG TERM INVESTORS IN GOVERNMENT DATED SECURITIES

ISSUING AUTHORITY : RESERVE BANK OF INDIA

DATE OF ISSUE : 29/01/2014

EFFECTIVE DATE : IMMEDIATE EFFECT

CIRCULAR NO. 99

Reserve Bank of India, in consultation with the Government, has decided to enhance the existing sub-limit of $5 billion available to long term investors – Sovereign Wealth Funds (SWFs), Multilateral Agencies, Pension/ Insurance/ Endowment Funds and Foreign Central Banks - registered with SEBI for investment in Government dated securities to $10 billion.

This doubling of the investment sub-limit is within the total limit of $30 billion available for foreign investments in Government securities. The operational guidelines in this regard will be issued by SEBI.

For detailed Circular, please follow the link below:
A.P. (DIR Series) Circular No.99

FII POSITION LIMITS IN EXCHANGE TRADED INTEREST RATE FUTURES (IRF)

ISSUING AUTHORITY : SECURITIES AND EXCHANGE BOARD OF INDIA

DATE OF ISSUE : 20/01/2014

EFFECTIVE DATE : IMMEDIATE EFFECT

CIRCULAR NO. : CIR/MRD/DRMNP/2/2014

SEBI in consultation with RBI prescribed the framework for Stock Exchanges to launch cash settled Interest Rate Futures on 10-year G-sec.

The following position limits were prescribed for FIIs:

The gross open positions of the FII across all contracts shall not exceed 10% of the total open interest or INR 600 crores, whichever is higher.

Additional restriction:

• Total gross short (sold) position - Not to exceed its long position in the government securities and in Interest Rate Futures, at any point in time.

• Total gross long (bought) position - Not to exceed the aggregate permissible limit for investment in government securities for FIIs.

For detailed Circular, please follow the link below:
CIR/MRD/DRMNP/2/2014

CLARIFICATION - ESTABLISHMENT OF LIAISON OFFICE/ BRANCH OFFICE/ PROJECT OFFICE IN INDIA BY FOREIGN ENTITIES - GENERAL PERMISSION

ISSUING AUTHORITY : RESERVE BANK OF INDIA

DATE OF ISSUE : 15/01/2014

EFFECTIVE DATE : IMMEDIATE EFFECT

CIRCULAR NO. 93

RBI has included Hong Kong and Macau in the sensitive list of countries along with Pakistan and China that will require its prior approval to set up business or related activities in India.

Pakistan, Bangladesh, Sri Lanka, Afghanistan, Iran and China are already in the sensitive list which means entities and residents of these countries will need prior RBI permission to establish a branch office or a liaison office or a project office in India.

For detailed Circular, please follow the link below:

A.P. (DIR Series) Circular No.93

CONVERSION OF EXTERNAL COMMERCIAL BORROWING (ECB) AND LUMPSUM FEE/ROYALTY INTO EQUITY

ISSUING AUTHORITY : RESERVE BANK OF INDIA

DATE OF ISSUE : 16/01/2014

EFFECTIVE DATE : IMMEDIATE EFFECT

CIRCULAR NO. 94

Companies can convert their Overseas Borrowings through the ECB route into Equity Shares at the foreign  exchange rate applicable on the date of swap agreement.

It is clarified that the ECB conversion by an Indian company can be below its fair value. However, the fair value of the equity shares to be issued shall be worked out with reference to the date of conversion only.

This rule shall also apply to a liability denominated in foreign currency where lump sum fees/royalties, etc. are permitted to be converted to equity shares or other securities to be issued to a foreign investor subject to other conditions.

For detailed Circular, please follow the link below:

A.P. (DIR Series) Circular No. 94

FOREIGN DIRECT INVESTMENT - PRICING GUIDELINES FOR FDI INSTRUMENTS WITH OPTIONALLY CLAUSES

ISSUING AUTHORITY : RESERVE BANK OF INDIA

DATE OF ISSUE : 09/01/2014

EFFECTIVE DATE : IMMEDIATE EFFECT

CIRCULAR NO. 86

It has now been decided that optionality clauses may henceforth be allowed in Equity Shares and compulsorily and mandatorily convertible Preference Shares/Debentures to be issued to a person resident outside India under the Foreign Direct Investment (FDI) Scheme.

The provision of optionality clause shall be subject to the following conditions:

• There is a minimum lock-in period of one year or a minimum lock-in period as prescribed under FDI Regulations, whichever is higher.
• After the lock-in period, as applicable above, the non-resident investor exercising option/right shall be eligible to exit without any assured return, as under:

(i) In case of a listed company, the non-resident investor shall be eligible to exit at the market price prevailing at the recognised stock exchanges

(ii) In case of unlisted company, the non-resident investor shall be eligible to exit from the Investment in equity shares of the investee company at a price not exceeding that arrived at on the basis of Return on Equity (RoE) as per the latest audited balance sheet. 

(iii) Investments in Compulsorily Convertible Debentures (CCDs) and Compulsorily Convertible Preference Shares (CCPS) of an investee company may be transferred at a price worked out as per any internationally accepted pricing methodology at the time of exit duly certified by a Chartered Accountant or a SEBI registered Merchant Banker.

For detailed Circular, please follow the link below:

A.P. (DIR Series) Circular No. 86

NCLAT (SALARY, ALLOWANCES AND OTHER TERMS AND CONDITIONS OF SERVICE OF CHAIRPERSON AND OTHER MEMBERS) RULES

PAY

Chairperson

• Salary – Fixed monthly pay of Rs. 90,000.
• Allowances – As are admissible to an officer in the Cabinet Secretary’s Scale of Rs. 90,000 (fixed).

Judicial Member

• Salary – Fixed pay in the scale of Rs. 80,000.
• Allowances – As are admissible to an officer in the Apex Scale of Rs. 80,000 (fixed).

Technical Member

• Salary – Fixed pay in the scale of Rs. 80,000.
• Allowances – As are admissible to an officer in the Apex Scale (fixed).

PENSION, GRATUITY OR PROVIDENT FUND

In case a serving Judge of the Supreme Court or High Court, a serving Judicial Member of the Tribunal or a person in Government service is appointed to the post as any of the above member, the pension to be drawn shall be governed in terms of the service rules and also be governed by the provisions of the General Provident Fund (Central Services) Rules, 1960.

LEAVE

The Chairperson and every other member shall be entitled to 30 days of Earned Leave for every year of service and encashment of 50% of the same standing to their credit at any time. The payment of Leave salary shall be governed by Central Civil Services (Leave) Rules, 1972.

TRAVELLING ALLOWANCES

The Chairperson and Members, while on a tour in India or on transfer shall be entitled to the travelling and daily allowance, transportation of personnel effects and other similar matters 

OFFICIAL VISITS ABROAD

Official visits abroad by the Chairperson and Members shall be undertaken only in accordance with orders issued by the Central Government and they shall be entitled to draw such allowances in respect of such visits 

LEAVE TRAVEL CONCESSION

The Chairperson and Members of the Appellate Tribunal shall be entitled to Leave Travel Concession at the same rates  

As are admissible to an officer of the Central Government in the equivalent pay grade or scale, subject to the first proviso of sub-rule (3) of rule 3.

FACILITY FOR MEDICAL TREATMENT

The Chairperson and Members shall be entitled to medical treatment and hospital facilities as provided in the Central Government Health Scheme.

ACCOMMODATION

The Chairperson and Members shall have the option of claiming house rent allowance in accordance with the rates prescribed by the Central Government for Group ‘A’ officers of equivalent pay grade or scale.

CONVEYANCE FACILITY

The Chairperson and Members shall be entitled to the facility of staff car for journeys for official and private purposes.

TELEPHONE FACILITY, OFFICIAL MEETINGS AND ENTERTAINMENT EXPENSES

The Chairperson and Members shall be entitled to the above facilities as admissible to Group ‘A’ of the Central Government drawing an equivalent pay.

CONDITIONS OF SERVICE OF SITTING JUDGE OF THE SUPREME COURT OR A CHIEF JUSTICE OF A HIGH COURT OR A JUDGE OF A HIGH COURT APPOINTED AS CHAIRPERSON OR JUDICIAL MEMBER

The service conditions unless specifically provided for in these rules, shall be as contained in the Supreme Court Judges (Conditions of Service) Act, 1958, or the High Court Judges (Conditions of Service) Act, 1954, as the case may be, and the rules made there under shall apply to him.

OATH OF OFFICE AND SECRECY

Every person appointed as the Chairman or a Member, shall, before entering upon his office, make and subscribe an oath of office and secrecy, in Form I and II of these rules.

DECLARATION OF FINANCIAL OR OTHER INTEREST

Every person, on his appointment as the Chairperson or Member, shall give a declaration to the satisfaction of the Central Government, that he does not have any such financial or other interest as is likely to affect prejudicially his functions as Chairperson or Member, as the case may be.

OVERSEAS DIRECT INVESTMENTS - ROLLOVER OF GUARANTEES

ISSUING AUTHORITY : RESERVE BANK OF INDIA

DATE OF ISSUE : 03/01/2014

EFFECTIVE DATE : IMMEDIATE EFFECT

CIRCULAR NO. 83

It has been decided not to treat/reckon the renewal/rollover of an existing/original guarantee, which is part of the total financial commitment of the Indian party, as a fresh financial commitment subject to certain riders.

These riders, including the following:

• existing/original guarantee, was issued in terms of the then extant/prevailing FEMA. 

• there is no change in the end use of the guarantee.

• there is no change in any of the terms & conditions, including the amount of the guarantee except the validity period.

• the reporting of the rolled over guarantee would be done as a fresh financial commitment in Part II of form Overseas Direct Investments. 

• And if the Indian party is under investigation by any investigation / enforcement agency or regulatory body, the concerned agency / body shall be kept informed about the same.

In case these conditions are not met, the Indian party shall obtain prior approval of RBI for rollover / renewal of the existing guarantee through the designated bank.

For detailed Circular, please follow the link below:
A.P. (DIR Series) Circular No.83

EXTERNAL COMMERCIAL BORROWINGS (ECB) POLICY - LIBERALIZATION OF DEFINITION OF INFRASTRUCTURE SECTOR

ISSUING AUTHORITY : RESERVE BANK OF INDIA

DATE OF ISSUE : 06/01/2014

EFFECTIVE DATE : IMMEDIATE EFFECT

CIRCULAR NO. 85

The existing definition of infrastructure sector for the purpose of availing ECB has been extended to include the Harmonised Master List of Infrastructure sub-sectors and Institutional Mechanism. The List consists of (i) power (ii) telecommunication (iii) railways (iv) road including bridges (v) sea port and airport (vi) industrial parks (vii) urban infrastructure (viii) mining, exploration and refining (ix) cold storage or cold room facility

'Maintenance, Repairs and Overhaul' shall be treated as part of the sub-sector of Airport in the Transport Sector of Infrastructure for the purpose of ECB.

For detailed Circular, please follow the link below:
A.P. (DIR Series) Circular No. 85

NORMS FOR USING OVERSEAS MONEY RAISED VIA TAX-FREE RUPEE BONDS EASED

ISSUING AUTHORITY : RESERVE BANK OF INDIA

DATE OF ISSUE : 24/12/2013

EFFECTIVE DATE : IMMEDIATE EFFECT

CIRCULAR NO. 81

The resident entities and companies, allowed by the government to issue tax-free, secured, redeemable, non-convertible bonds in rupees to person resident outside India, can use such borrowed funds for -

1. Lending or re-lending in Infrastructure Sector; and
2. Keeping in fixed deposits with banks in India pending utilization by them for permissible end-uses.

Earlier, restrictions were imposed on usage of funds by person resident in India who had borrowed in rupees from a person resident outside India. They could not use such borrowed funds for any investments in any company or partnership firm or proprietorship concern or any entity, or for re-lending.

For detailed Circular, please follow the link below:
A.P. (DIR Series) Circular No.81

SIMPLIFICATION OF DEMAT ACCOUNT OPENING PROCESS

ISSUING AUTHORITY : SECURITIES AND EXCHANGE BOARD OF INDIA

DATE OF ISSUE : 04/12/2013

EFFECTIVE DATE : IMMEDIATE EFFECT

CIRCULAR NO. CIR/MIRSD/12/2013

Making it simpler for investors to enter the Capital Market, SEBI has harmonized the account opening process for Trading and Demat accounts. It has also reduced the number of investor's signatures required on forms. 

Besides, the existing Beneficial Owner-Depository Participant agreements would be replaced with a simpler and a common document titled 'Rights and Obligations of the Beneficial Owner.

The Depository Participant is required to provide a copy of the new document to the Beneficial Owner and take an acknowledgement of the same.

The new Document would be mandatory and binding on all the existing and new clients and depository participants.

For detailed Circular, please follow the link below:

CIR/MIRSD/12/2013

EXCHANGE TRADED CASH SETTLED INTEREST RATE FUTURES (IRF) ON 10 YEAR GOVERNMENT OF INDIA SECURITY

ISSUING AUTHORITY : SECURITIES AND EXCHANGE BOARD OF INDIA

DATE OF ISSUE : 05/12/2013

EFFECTIVE DATE : IMMEDIATE EFFECT

CIRCULAR NO. CIR/MRD/DRMNP/35/2013

India will allow stock exchanges to introduce cash-settled Interest Rate Futures (IRF) on 10-year government securities, in a bid to develop local debt markets. The introduction will be on pilot basis.

SEBI has permitted two different designs for cash-settled futures on 10-year Government bonds—coupon-bearing government security as underlying and coupon-bearing notional 10-year Government of India security with settlement price based on basket of securities as the underlying.

An IRF is a contract between the buyer and seller agreeing to the future delivery of any interest-bearing asset. The product allows the buyer and seller to lock in the price of the interest-bearing asset for a future date.

For detailed Circular, please follow the link below:

CIR/MRD/DRMNP/35/2013

KNOW YOUR CLIENT REQUIREMENTS

ISSUING AUTHORITY : SECURITIES AND EXCHANGE BOARD OF INDIA

DATE OF ISSUE : 08/10/2013

EFFECTIVE DATE : IMMEDIATE EFFECT

CIRCULAR NO.: CIR/MIRSD/09/2013

Previously Aadhaar Letter issued by UIDAI was admissible as Residential Proof in addition to Identity Proof. It has now been decided to accept e-KYC launched by UIDAI containing relevant client details and photographs as a valid process for KYC verification. However the client shall have to authorise the intermediary to access his data through UIDAI system.

For detailed Circular, please follow the link below:
CIR/MIRSD/ 09/ 2013

EXTERNAL COMMERCIAL BORROWING (ECB) FROM THE FOREIGN EQUITY HOLDER

ISSUING AUTHORITY : RESERVE BANK OF INDIA

DATE OF ISSUE : 04/09/2013

EFFECTIVE DATE : IMMEDIATE EFFECT

CIRCULAR NO. 31

It has been decided to permit eligible borrowers to avail of ECB under the approval route from their foreign equity holder company with minimum average maturity of 7 years for general corporate purposes.

Till now borrowings in the form of ECB were not permitted to be utilized for general corporate purpose.

However, it includes certain conditions:

• Minimum paid up equity of 25% should be held directly by the Lender.

• Such ECBs would not be used for any purpose not permitted under extant the ECB Guidelines (including on-lending to their group companies/step down subsidiaries in India).

• Repayment of the Principal shall commence only after completion of minimum average maturity of 7 years. No prepayment will be allowed before maturity.

All other aspects of extant ECB guidelines shall remain unchanged.

For detailed circular, please follow the Link below:
A.P. (DIR Series) Circular No.31

DEREGULATION OF INTEREST RATES ON NON-RESIDENT (EXTERNAL) RUPEE (NRE) DEPOSITS

ISSUING AUTHORITY : RESERVE BANK OF INDIA

DATE OF ISSUE : 14/08/2013

EFFECTIVE DATE : IMMEDIATE EFFECT

CIRCULAR NO. RBI/2013-14/186

In exercise of the powers conferred by Section 35A of the Banking Regulation Act, 1949 and in modification of the directive DBOD. Dir. BC. 63/ 13.03.00/ 2011-12 dated December 16, 2011 on Deregulation of Interest Rates on Non-Resident (External) Rupee (NRE) Deposits and Ordinary Non-Resident (NRO) Accounts, it has been decided that banks are free to offer Interest Rates without any ceiling on NRE Deposits with maturity of 3 years and above.

The extant ceiling on NRO Accounts shall continue.

These Instructions will be valid up to November 30, 2013, subject to review.

For detailed Circular, follow the Link given below:
DBOD.Dir.BC.40 /13.03.00/2013-14

INTEREST RATES ON FCNR(B) DEPOSITS

ISSUING AUTHORITY : RESERVE BANK OF INDIA

DATE OF ISSUE : 14/08/2013

EFFECTIVE DATE : IMMEDIATE EFFECT

CIRCULAR NO. RBI/2013-14/185

In exercise of the powers conferred by Section 35A of the Banking Regulation Act, 1949 and in modification of the directive circular No.DBOD.Dir.BC.102/13.03.00/2011-12 dated May 4, 2012, it has been decided that with effect from the close of business in India as on August 14, 2013, the interest rates on FCNR(B) Deposits are as under:

MATURITY PERIOD	EXISTING	REVISED
1 year to less than 3 years	LIBOR/SWAP plus 200 basis points	No change
3 - 5 years	LIBOR/SWAP plus 300 basis points	LIBOR/SWAP plus 400 basis points

For Floating Rate Deposits, the Interest reset period shall be Six Months.

These Instructions will be valid upto November 30, 2013, subject to review.

For detailed Circular, follow the Link below:
DBOD.Dir.BC. 38 /13.03.00/2013-14

REDUCTION OF LIMIT FOR OVERSEAS DIRECT INVESTMENT

ISSUING AUTHORITY : RESERVE BANK OF INDIA

DATE OF ISSUE : 14/08/2013

EFFECTIVE DATE : IMMEDIATE EFFECT

CIRCULAR NO. 23

Previously, in terms of the provisions under FEMA, 1999 on Overseas Direct Investments (ODI), the total Direct Investment by an Indian Party in Overseas Joint Ventures (JV) or Wholly Owned Subsidiaries (WOS) was limited to the extent of 400% of the Indian Party's Net Worth. This limit has now been reduced to 100% of the Indian Party's Net Worth as on the date of last audited Balance Sheet under the Automatic Route.

The reduced Limit is also made applicable to Investments by Indian Companies in Overseas Unincorporated Entities in the Energy and Natural Resource Sector. Any ODI in excess of 100% of the Net Worth shall be considered under the Approval Route by RBI.

These provisions would apply to all fresh Overseas Direct Investment proposals on a prospective basis but would not apply to the existing JV/WOS set up under the extant guidelines.

For detailed Circular, follow the Link given below:
A. P. (DIR Series) Circular No.23