RBI UPDATE
A) Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2016
RBI has notified Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2016 in supersession of the erstwhile Foreign Exchange Management (Manner of Receipt and Payment) Regulation, 2000 which deals with Receipt from and Payment to a person Resident outside India and dealing with Transactions in Indian Rupees with Residents of Nepal and Bhutan.
They shall come into effect from the date of their publication in the Official Gazette.
B) Acceptance of deposits by Indian companies from a person resident outside India for nomination as Director
Under section 160 of the Companies Act, 2013, it is provided that a person who intends to nominate himself or any other person as a director in an Indian company is required to place a deposit with the said company.
In this context, it has come to the notice of the Reserve Bank that there is ambiguity whether such deposits will require any specific approval from the Reserve Bank under Notification No. FEMA 5(R), in cases where the deposit is received from a person resident outside India.
It is clarified vide Notification No. FEMA 5(R)/2016-RB dated April 1, 2016 that keeping deposits with an Indian company by persons resident outside India, in accordance with section 160 of the Companies Act, 2013, is a current account (payment) transaction and, as such, does not require any approval from Reserve Bank. All refunds of such deposits, arising in the event of selection of the person as director or getting more than twenty five percent votes, shall be treated similarly.
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