Section 6 in The Foreign Exchange Management (Transfer Or Issue Of Security By A Person Resident Outside India) Regulations, 2000
6. Acquisition of right shares.
(1)A person resident outside India may purchase equity or preference shares or convertible debentures offered on right basis by an Indian company which satisfies the conditions specified in sub-regulations (2).(2)An Indian company which satisfies the following conditions, may offer to a person resident outside India, equity or preference shares or convertible debentures on right basis, namely:(i)the offer on right basis does not result in increase in the percentage of foreign equity already approved, or permissible under the Foreign Direct Investment Scheme in terms of these regulations;(ii)[ the existing non-resident shareholders may apply for issue of additional shares, and the investee company may allot the same subject to the condition that the overall issue of shares to non-residents in the total paid-up capital does not exceed the sectoral cap;] [Added by G.S.R. 223(E), dated 12.11.2002 (w.e.f. 18.3.2003).](iii)[] [Renumbered by G.S.R. 223(E), dated 12.11.2002 (w.e.f. 18.3.2003).] the existing shares or debentures against which shares or debentures are issued by the company on right basis were acquired and are held by the person resident outside India in accordance with these regulations;(iv)[ The offer on right basis to the persons resident outside India shall be: [Substituted by Notification No. G.S.R. 341 (E) dated 7.4.2010 (w.e.f. 8.5.2000).](a)in the case of shares of a company listed on a recognized stock exchange in India, at a price as determined by the company;(b)in the case of shares of a company not listed on a recognized stock exchange in India, at a price which is not less than the price at which the offer on right basis is made to resident shareholders.](3)The right shares or debentures purchased by the person resident outside India shall be subject to same conditions including restrictions in regard to repatriability as are applicable to the original shares against which right shares or debentures are issued:Provided that the amount of consideration for purchase of right shares or debentures is paid by way of inward remittance in foreign exchange through normal banking channels or by debit to NRE/FCNR account, when the shares or debenture are issued on repatriation basis:Provided further that in respect of shares or debentures issued on non-repatriation basis, the amount of consideration may also be paid by debit to NRO/NRSE/NRNR account.[6-A. Acquisition of bonus shares. [Inserted by G.S.R. 558(E), dated 18.6.2003 (w.e.f. 22.7.2003).]- An Indian company may issue bonus shares to its non-resident shareholders, subject to the following conditions:-(a)the shares against which bonus shares are issued by the company(hereinafter referred to as "the original shares") were acquired or held by the non-resident shareholder in accordance with the rules/ regulations applicable to such acquisition;(b)the bonus shares acquired by the non-resident shareholder shall be subject to the same conditions including restrictions in regard to repatriability as are applicable to the original shares.
