Foreign Exchange Management (Non-debt Instruments) (Second Amendment) Rules_ 2021

Ministry of Finance, vide notification ref no. S.O. 1802(E) dated April 12, 2022 has issued Foreign Exchange Management (Non-debt Instruments) (Amendment) Rules, 2022 (“Rules”) to amend Foreign Exchange Management (Non-debt Instruments) Rules, 2019.

Applicability:

These Rules shall be effective from the date of their publication in the Official Gazette.

Nature of Amendment:

The Foreign Exchange Management (Non-debt Instruments) Rules, 2019 stands amended as below:

The key highlights are as follows:

• In Rule 2 which specifies ‘Definitions’
• clause (e), defining convertible note, the maximum time period for conversion of convertible note has been revised to ten years.
• clause (k) and clause (s), the explanation for equity instruments and foreign investment respectively has been substituted
• clause (y) definition of Indian company has been revised.
• clause (ama) defining Share Based Employee Benefits has been newly inserted
• clause (ana) defining Subsidiary has been newly inserted
• Rule 8 – Issue of Employees Stock Options , sweat equity shares and Share Based Employee Benefits to persons resident outside India has been substituted to include aspects pertaining to and Share Based Employee Benefits.
• Rule 19(1) and 19(2) pertaining to Merger or demerger or amalgamation of Indian companies, has been substituted to include aspects pertaining to scheme of compromise or arrangement.
• The explanation to para 2(f) of Schedule I – Real estate business or construction of farm houses has been substituted
• In the Table under Schedule I, F.8.1A has been inserted defining entry route and threshold into Life Insurance Council
• In the Table under Schedule I, F.8.3.1 has been substituted as Other conditions applicable to Indian insurance companies and intermediaries or insurance intermediaries
• In the Table under Schedule I, clause (k) prescribing the terms of reference has been substituted

In the Table under Schedule I, after Sl No. F.8.3.1, F.8.3.2 shall be inserted prescribing Other conditions applicable to the Life Insurance Corporation of India (LIC).

Source category: Others

Attachments

• /2022/14_FOREIG~1.PDF