Issuance of Rupee Bonds to Overseas Investors by Indian Companies- MCA Clarification

Issuance of Rupee Bonds to Overseas Investors by Indian Companies- MCA Clarification reg. applicability of provisions of Chapter III of the Companies Act, 2013

The MCA has clarified the issue of applicability of provisions of Chapter III of Companies Act, 2013 and Rule 18 of Companies (Share Capital and Debenture) Rules, 2014 to the issue of rupee denominated bonds by Indian companies to overseas investors, as under:

MCA General Circular No. 09/2016 dt. 3 Aug. 2016

1. The Ministry has received references from stakeholders seeking clarity an applicability of provisions of Chapter III of the Companies Act, 2013 (Act) and rule 18 of Companies (Share Capital and Debenture) Rules, 2014 to the issue of rupee bonds by Indian companies exclusively to persons resident outside India in accordance with applicable sectoral regulatory provisions.

2. The matter has been examined in the Ministry in consultation with Reserve Bank of India. The matter relating to issue of rupee denominated bonds to overseas investors is being regulated by RBI as part of ECB Policy framework. It is, accordingly, clarified that unless otherwise provided in the circular/ directions/ regulations issued by Reserve Bank of India, provisions of Chapter III of the Act and rule 18 of Companies (Share Capital and Debenture) Rules, 2014 would not apply to issue of rupee denominated bonds made exclusively to persons resident outside India in accordance with applicable sectoral regulatory provisions as stated above. Necessary changes in Companies (Share Capital and Debenture) Rules. 2014 in this regard are being made.

Companies (Share Capital and Debentures) Fourth Amendment Rules, 2016

The MCA has notified that Rule 18 of the Companies (Share Capital and Debentures) Rules, 2014 shall not apply to issue of rupee denominated bonds by Indian companies to overseas investors, as under:

MCA Notification dt. 12 Aug. 2016

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