[The following guest post is contributed by Surbhi Jaiswal of Vinod Kothari & Co. The author can be contacted at [email protected]. This is a continuation from the first part, which is available here] Slew of Regulations 1. Foreign Exchange Management (International Financial Service Centre ) Regulations, 2015 To operationalize the IFSC, a notification under the Foreign Exchange...
GIFT City: A New Chapter in the Indian Financial Sector: Part 1
[The following guest post is contributed by Surbhi Jaiswal of Vinod Kothari & Co. The author can be contacted at [email protected].] The International Financial Service Centre (IFSC) is a hub of financial services within a country, which has laws and regulations that are different from the rest of the country. Usually these centres have low tax rates and flexible regulations for...
Pricing of Options To Foreign Investors
The last few weeks have witnessed some activity from the Reserve Bank of India (RBI), which is indicative of a more liberalized approach towards the pricing at which foreign investors are able to sell their shares upon exercise of options (such as put options) made available to them under contractual documentation. Most of the indications came from the RBI in relation to a specific case involving...
RBI Allows FDI against “Legitimate Dues”
Hitherto, an Indian company could issue shares to a non-resident against payment obligations only in certain circumstances. These related to “lump-sum technical know-how fee, royalty, External Commercial Borrowings (ECB) (other than import dues deemed as ECB or Trade Credit as per RBI guidelines) and import payables of capital goods by units in Special Economic Zones” subject to applicable...
RBI Reforms on Investment Instruments and Pricing
The Reserve Bank of India (RBI) has recently brought about two sets of related reforms that introduce much greater flexibility to foreign investors in investing in Indian companies that gets rid of some of the rigidity that hitherto existed. In terms of investment instruments, the RBI has permitted investment in partly paid shares and warrants. Additionally, it has also relaxed the pricing...
Guest Post: State Consent vis-à-vis FDI in Multi-Brand Retail
[The following post is contributed by Sujoy Chatterjee who is an Advocate in New Delhi and an alumnus of the National Law University Jodhpur (’13)] In the aftermath of the December 2013 State Assembly elections, the newly elected Governments of Delhi and Rajasthan expressed their intention to withdraw their consent from allowing foreign direct investment (FDI) in multi-brand retail trading (MBRT)...
Possible Liberalization in FDI Pricing Guidelines
Despite the progressive opening up of the Indian economy to foreign investment in 1991, there has been tight control over the entry and exit prices for foreign investors into and from investments in Indian companies through the foreign direct investment route (FDI). While the initial approach was to benchmark the transaction prices to the erstwhile formula prescribed by the Controller of Capital...
Guest Post: RBI Circular on ‘Options’
[The following post is contributed by Parag Bhide, who is a Principal Associate at Universal Legal, Mumbai] Finally, Foreign Investors investing into India are able to include ‘options’ in their investment agreements. The Reserve Bank of India (“RBI”), through its circular dated 9 January 2013 (“Circular”) has legitimized inclusion of options/right to exit in the Investment Agreements.[1]...
RBI’s Stance on Bitcoins and Other Virtual Currencies
Earlier this month, we had highlighted some legal issues pertaining to Bitcoin, as that form of virtual currency has been gaining ascendancy the world over. We had stated that the Reserve Bank of India (RBI), as the currency regulator, would certainly be seized of the issue. It now emerges that it is indeed the case. Yesterday, the RBI issued a press release warning users, holders and traders of...
Unlisted Companies: Raising Capital Abroad
In the late 1990s, it was possible for Indian unlisted companies to raise capital overseas and list on overseas stock exchanges without having a primary listing in India. Companies such as Rediff and Sify had taken advantage of this mechanism and listed on the US stock exchanges. However, a few years ago, this route was effectively blocked when the Government of India stipulated that a primary...
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