India – New Exchange Control Rules for Share-Based Awards Offered to Indian Residents

On August 22, 2022, the Indian Government issued new exchange control rules affecting share-based awards offered to Indian residents by non-Indian issuers. In particular, the Indian Government issued the Foreign Exchange Management (Overseas Investment) Rules, 2022 (“OI Rules”), Foreign Exchange Management (Overseas Investment) Regulations, 2022 (“ODI Regulations”) and Foreign Exchange Management (Overseas Investment) Directions, 2022 (“ODI Directions”). 
 
The new OI Rules replace all previously available exemptions to grant share-based awards to Indian residents with a single exemption (the new “general permission”), which requires, inter alia, that semi-annual reports be filed with the Reserve Bank of India (“RBI“). The reports will need to be submitted by an Authorized Dealer Bank in India (i.e., the bank in India involved with the remittance of funds under the plan) and include information on the number of shares issued to Indian residents, funds remitted from India to purchase shares (if any) and amounts remitted to India related to the shares (e.g., sale proceeds).

The first report under the new OI Rules is due by November 29, 2022. For more information on the new exchange control rules, determining whether the new general permission applies to your awards, and how to prepare the new reports, read our recent alert here.