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Corporate Legal Framework

Notes the paid up value of each series of convertible debentures issued by the company
concerned.
(iv) The aggregate paid up value of shares of any company purchased by all NRIs does
not exceed 10 per cent of the paid up capital of the company and in the case of
purchase of convertible debentures, the aggregate paid up value of each series of
debentures purchased by all NRIs does not exceed 10 per cent of the paid up value of
each series of convertible debentures. The aggregate ceiling of 10 per cent referred to
in this clause may be raised to 24 per cent if a special resolution to that effect is passed
by the General Body of the Indian company concerned.
(v) The NRI investor takes delivery of the shares purchased and gives delivery of shares
sold (i,e., speculative purchases are not permitted).
(vi) Payment for purchase of shares and/or debentures is made by inward remittance
in foreign exchange through normal banking channels or out of funds held in
NRE/FCNR account maintained in India if the shares are purchased on repatriation
basis and by inward remittance or out of funds held in NRE/FCNR/NRO account of
the NRI concerned maintained in India where the shares/debentures are purchased
on non-repatriation basis.

(vii) The link office of the designated branch of the authorised dealer shall furnish to
the Chief General Manager, Reserve Bank of India (ECD), Central Office, Mumbai a

report on daily basis.
(viii) The net sale/maturity proceeds (after payment of taxes) of shares and/or debentures
of an Indian company purchased by NRI under this Scheme, can be credited only in
designated branch of an authorised dealer:
(a) In NRO account, where the shares and/or debentures were purchased on non-
repatriation basis, or
(b) It can be remitted abroad or credited to his/its NRE/FCNR/NRO account,
where purchased on repatriation basis.

Current Account Transactions

Sec.5 explains dealings in current account transactions. This section provides that any person
may sell or draw foreign exchange to or from an authorised person if such sale or drawal is
a current account transaction. Also it empowers the central government to impose reasonable
restrictions for current account transaction in the public interest in consultation with the Reserve
Bank of India by making appropriate rules.

Regulation of Capital Account Transactions

Sec.6 provides that any person may sell or draw foreign exchange to or from an authorised person
for a capital account transaction.

Export of Goods and Services

Sec.7 deals with export of goods and services. Every exporter is required to furnish to Reserve
Bank or any other authority as prescribed, a declaration containing true and correct particulars
regarding the amount representing the full export value or if the full export value of the goods is
not ascertainable at the time of export, the value which the exporter having regard to prevailing
market conditions expects to receive on sale of the goods in a market outside India. Every exporter
is also required to furnish to the Reserve Bank such other information as may be required by the
Reserve Bank for the purpose of ensuring the realisation of the export proceeds.

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