Overseas Corporate Bodies Meaning: Overseas Corporate Body (OCB) means a company, partnership firm, overseas trust, society and other corporate body directly or indirectly owned by NRIs (Non-Resident Indians) with not less than 60% beneficial ownership. OCB existed till 16 September 2003 and was eligible to undertake transactions to the general permission granted under Foreign Exchange Management Regulations. To know the Overseas Corporate Body (OCB) meaning and laws related to it continue reading.
Also Read: What is the definition of NRI as per FEMA?
In September 2003, OCB was de-recognized as an eligible class of investors and thus was banned from investing under the Portfolio Investment Scheme that is only for the benefit of NRIs.
Which Overseas Corporate Bodies (OCBs )are governed by the regulations under the notification of Foreign Exchange Management Act dated October, 2003?
The regulations are applicable to OCBs who were receiving facilities as of September 2003 under several Foreign Exchange Management Regulations to invest in India under various schemes/ routes. For Overseas Corporte Body (OCB) who could have:
- Invested in shares/ convertible debentures of an Indian company under FDI scheme through Government Route/ RBI’s Automatic Route on a repatriation and non-repatriation basis. Or
- OCBs who invested in shares/ convertible debentures of an Indian company on repatriation and non-repatriation basis under PIS scheme. Or
- OCBs who invested in securities other than shares and convertible debentures of an Indian company on a repatriation or non-repatriation basis. Or
- Who held an NRE or NRO savings/ current/ recurring/ fixed deposit account with an authorized bank. Or
- Who held deposits with a company started in India (including NBFCs registered with RBI) on a non-repatriation basis. or
- Who invested in non-convertible debentures (NCDs) on repatriation and non-repatriation basis of a company started in India
- Who lent to a person in India (in foreign currency).
Can an overseas corporate body i.e. OCB invest in shares in the Indian market?
Overseas Corporate Bodies (OCBs) have been derecognized as a class of eligible investors in India since September 16, 2003. As per the Foreign Exchange Management Regulations, 2003, no fresh account can be opened by OCBs. Hence, OCBs can’t invest in shares in India.
Can the shares be transferred to OCBs against the permission/ in-principle approval granted by FIPB/ SIA and RBI respectively prior to 16 September 2003?
Yes, with the specific approval granted by FIPB/ SIA followed by RBI approval.
Can one OCB transfer shares through sale to another OCB after 16 September 2003?
No, OCBs can’t transfer shares by way of sale to another OCB.
Can fresh ADRs/ GDRs be issued to OCBs?
No fresh ADRs/ GDRs can be issued to OCBs since they have been derecognized as a class of investors.
What happens to the shares held by an OCB under Portfolio Investment Scheme?
OCBs can continue holding the shares purchased under portfolio investment scheme till the time they are sold on a recognised stock exchange.
What will happen to the existing NRO (savings) account of an OCB?
The existing NRO (savings) account of OCBs will be converted into NRO (current) account.
Can ADs open a fresh NRO (current) account in the name of an OCB to close out their existing investments?
No. But ADs may apply for a new NRO (current) account for OCBs with the specific prior permission of RBI for the specific purpose of closing out the existing investments.
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