Reserve bank of India (RBI)

A. Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Fifteenth Amendment) Regulations, 2016

Vide its notification dated January 10, 2017, RBI has made the following amendments to the in the Foreign Exchange Management (Transfer or issue of Security by a Person Resident outside India) Regulations, 2000:

1. Regulation 2 – the definition of “convertible note” has been added
2. Insertion of new regulation 6C regarding terms of issue of convertible notes by startup companies

For further details, please refer to the link of the above-mentioned regulations

B. Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Amendment) Regulations, 2017

Vide its notification dated January 10, 2017, RBI has made further amendments to the Foreign Exchange Management (Transfer or issue of Security by a Person Resident outside India) Regulations, 2000 as follows:

a. Schedule I – Annexure B - Sectoral cap on Investments by Persons Resident Outside India

The existing Paragraph F.4 shall be substituted by the following namely:-

C. Prohibition on Indian Party from making direct investment in countries identified by the Financial Action Task Force (FATF) as “Non Co-operative countries and territories”

In order to align, the instructions with the objectives of FATF, on a review, it has been decided to prohibit an Indian Party from making direct investment in an overseas entity (set up or acquired abroad directly as JV/ WOS or indirectly as step down subsidiary) located in the countries identified by the FATF as “non co-operative countries and territories” as per list available on FATF website www.fatf-gafi.org or as notified by the Reserve Bank of India from time to time.