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October 2013

A. P. (DIR Series) Circular No. 37 dated 5th September, 2013

By Gaurang Gandhi, Chartered Accountant
Reading Time 1 mins
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Notification No. FEMA.267/2013-RB dated 5th March, 2013 notified vide G.S.R. 573(E) dated 27th August, 2013
Issue of Bank Guarantee on behalf of person resident outside India for FDI transactions

Presently, non-resident acquirers, subject to certain conditions, can open Escrow account and Special account with a bank in India for acquisition/transfer of shares/convertible debentures of an Indian company through open offers/delisting/exit offers.

This circular permits a bank to issue bank guarantee, without prior approval of RBI, on behalf of a nonresident acquiring shares or convertible debentures of an Indian company through open offers/delisting/ exit offers, if:

a) The transaction is in compliance with the provisions of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeover) [SEBI (SAST)] Regulations.

b) The guarantee is covered by a counter guarantee of a bank of international repute.

c) The guarantee will be valid for a tenure coterminus with the offer period only, as required under the SEBI (SAST) Regulations.

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