With this change, the government has changed the definition of Indian company to include corporations. According to this amendment, companies created or incorporated by or under a central law or state also fall within the definition of Indian enterprise. On April 12, 2022, the Department of Economic Affairs (DEA) issued the Exchange Management (Non-Debt Instruments) (Amendment) Rules 2022 to further amend the Exchange Management Rules (Non-Debt Instruments), 2019. The amended NDI rules explicitly provide that an “Indian enterprise” does not include a company, trust or other entity that is excluded as an eligible investee under the FDI policy. According to Rule 2(e), convertible bond means an instrument issued by a start-up company which initially confirms receipt of funds as debt redeemable at the choice of the holder or which can be converted into such a number of shares of that company within a maximum period of 10 years from the date of issue of the convertible bond; in the event of the occurrence of certain events in accordance with other conditions agreed and specified in the instrument. “(k) The terms `equity participation`, `foreign direct investment` (FDI), `foreign investors`, `foreign portfolio investment`, `Indian insurance company`, `Indian company`, `non-resident entity`, `public financial institution`, `resident Indian citizen` and `total foreign investment` shall have the same meanings as those given in the Insurance Act 1938 or the provisions of the Insurance Regulatory and Development Authority of India. from time to time. with regard to foreign investment in Indian insurance companies and intermediaries or insurance intermediaries. » 3. In those rules, Rule 8 is replaced by the following: `ama bis) `share-based employee benefits` means the issuance of equity instruments to employees or directors or to employees or directors of the holding company or joint venture or to wholly owned foreign subsidiaries resident outside India under issued share-based benefit schemes by an Indian company have been formulated”; Previously, these conditions were not expressly provided for. The specific mention of these terms will lead to greater clarity. Now, the Indian company can also issue share-based benefits to employees under Rule 8 of the Foreign Exchange Management (Non-Debt Instruments) Rules 2019. The amended rules revised the definition of Indian company.
The empty Govt. N/A notification number 1802 (E) of 1.04.2022 amended FEMA (other than debt instruments), 2019 (“NDI Rules”) to align them with the amended FDI policy published by the Government. Press release No 1 of 14.3.2022. The amended standards allow a start-up to issue convertible bonds for a maximum period of 10 years, whereas previously the start-up could issue convertible bonds for a period of 5 years. A clearer and more defined definition of shares has been given, the term “legal person” has been added to the definition of Indian company and specific provisions for LIC have been added.