Section 24 in The Foreign Exchange Management (Transfer or Issue of any Foreign Security) Regulations, 2004
24. General permission for acquisition of foreign securities as qualification/rights shares. - (1) A person resident in India being an individual may--
(a)[ acquire foreign security as qualification shares issued by an entity incorporated outside India for holding the post of a director in the entity provided that:(i)the extent of acquiring the qualification shares is as per the law of the host country where the entity is located and(ii)the limit of remittance for acquiring such qualification shares shall be within the overall ceiling prescribed for the resident individuals under the Liberalised Remittance Scheme (LRS) in force at the time of acquisition.](b)acquire foreign securities by way of rights shares in a company incorporated outside India:Provided that the right shares are being issued by virtue of holding shares in accordance with the provisions of the law for the time being in force;(c)where such person is an employee or a director of the Indian promoter company, acquire by way of purchase shares of a Joint Venture or Wholly Owned Subsidiary outside India of the Indian promoter company, in the field of software:Provided that--(i)the consideration for purchase does not exceed the ceiling as stipulated by RBI from time to time;(ii)the shares so acquired do not exceed 5% of the paid-up capital of the Joint Venture or Wholly Owned Subsidiary outside India; and(iii)after allotment of such shares, the percentage of shares held by the Indian promoter company, together with shares allotted to its employees is not less than the percentage of shares held by the Indian promoter company prior to such allotment.(2)A person resident in India, being an individual holding qualification/ rights shares in terms of sub-regulation (a) or (b) above may sell the shares so acquired, without prior approval, provided the sale proceeds are repatriated to India through banking channels and documentary evidence is submitted to the authorised dealer.(3)[ An Indian company in the knowledge based sector may allow its resident employees (including working directors) to purchase foreign securities under the ADR/GDR linked stock option schemes:Provided that the issue of employees stock option by a listed company shall be governed by the SEBI (Employees Stock Option and Stock Purchase Scheme) Guidelines, 1999 and the issue of employees stock option by an unlisted company shall be governed by the guidelines issued by the Government of India for issue of ADR/GDR linked stock options.Provided further that the consideration for the purchase does not exceed the ceiling as stipulated by the Reserve Bank from time to time.Explanation .-For the purpose of this clause "knowledge based sector" means such sectors as have been notified by the Government of India from time to time in terms of its guidelines for the issue of ADR/GDR linked Employees Stock Options by the Indian companies dated 15th September, 2000.] [ Substituted by G.S.R. 220(E), dated 31.3.2005 (w.r.e.f. 1.10.2004).]
