Section 16 in The Foreign Exchange Management (Transfer or Issue of any Foreign Security) Regulations, 2004
16. Transfer by way of sale of shares of a JV/WOS outside India. - [(1) An Indian Party may transfer, byway of sale to another Indian Party which complies with the provisions of Regulation 6 above, or to a person resident outside India, any share or security held by it in a JV or WOS outside India subject to the following conditions:
(i)the sale does not result in any write off of the investment made;(ii)the sale is to be effected through a stock exchange where the shares of the overseas JV/WOS are listed;(iii)if the shares are not listed on the stock exchange and the shares are dis-invested by a private arrangement, the share price is not less than the value certified by a Chartered Accountant/Certified Public Accountant as the fair value of the shares based on the latest audited financial statements of the JV/WOS;(iv)the Indian Party does not have any outstanding dues by way of dividend, technical know-how fees, royalty, consultancy, commission or other entitlements and/or export proceeds from the JV or WOS;(v)the overseas concern has been in operation for at least one full year and the Annual Performance Report together with the audited accounts for that year has been submitted to the Reserve Bank;(vi)the Indian party is·not under investigation by CBI/DoE/SEBI/IRDA or any other regulatory authority in India.(1A)(i)In the following cases, an Indian Party may disinvest, if the amount to be repatriated on disinvestment is less than the amount of the original investment:(a)where the JV/WOS is listed in the overseas stock exchange;(b)where the Indian Party is listed on a stock exchange in India and has a net worth of not less than RS.1 00 crore;(c)where the Indian Party is an unlisted company and the. investment in the overseas· venture does not exceed USD 10 million and(d)where the Indian Party is a listed company having a net worth of less than Rs. 100 crore but investment in an overseas JV/WOS does not exceed USD 10 million.(ii)Such dis-investments shall be subject to the conditions listed in clause (ii) to (vi) of sub-regulation (1) of Regulation 16.](2)Sale proceeds of shares/securities shall be repatriated to India immediately on receipt thereof and in any case not later than 90 days from the date of sale of the shares/securities and documentary evidence to this effect shall be submitted to the Regional Office of the Reserve Bank through the designated authorised dealer.(3)An Indian party, which does not satisfy the criteria specified at sub-regulation (1) above, shall apply to the Reserve Bank for permission to transfer by way of sale of shares of a JV/WOS outside India which may be granted subject to such conditions as the Reserve Bank may consider appropriate.[16A. Restructuring of the balance sheet of JV/WOS involving write-off of capital and receivables(1)A listed Indian Party, who has set up WOS abroad or have at least 51 per cent stake in an overseas JV, may write off capital (equity/preference shares) and other receivables, such as loans, royalty, technical know how fees and management fees in respect of the JV/WOS up to 25 per cent of the equity investment in the JV/WOS subject to condition that the Indian Party should submit the following documents for scrutiny along with the applications to the designated AD Category-I bank:(i)A certified copy of the balance sheet showing the loss in the overseas JV/WOS set up by the Indian Party; and(ii)Projections for next five years indicating benefit accruing to the Indian Party consequent to such write off/restructuring.(2)The write-off/restructuring allowed under sub-regulation (1) has to be reported to the Reserve Bank through the designated AD category I bank within 30 days of write-off/restructuring.(3)An unlisted Indian Party, who has set up WOS abroad or have at least 51 per cent stake in an overseas JV, is permitted to write off capital and other receivables up to 25 per cent of the equity investment in the JV/WOS under the Approval Route.]
