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August 2014

A. P. (DIR Series) Circular No. 3 dated 14th July, 2014

By Gaurang Gandhi Chartered Accountant
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Notification No. FEMA. 308 /2014-RB dated 30th June, 2014

Issue of Partly Paid Shares and Warrants by Indian Company to Foreign Investors

Presently, the following instruments are recognised as Foreign Direct Investment (FDI) compliant instruments – equity shares, compulsorily and mandatorily convertible preference shares/debentures as well as equity shares or compulsorily and mandatorily convertible preference shares/debentures containing an optionality clause but without any option/right to exit at an assured price.

This circular has expanded the list of FDI compliant instruments by including therein partly paid equity shares and warrants issued by an Indian company in accordance with the provision of the Companies Act, 2013 and/or SEBI guidelines, as applicable. These partly paid equity shares and warrants will be eligible instruments for the purpose of both FDI and Foreign Portfolio Investment (FPI) schemes.

Non-Resident Indians (NRI) can also invest in the partlypaid shares and warrants on non-repatriation basis in terms of the provisions contained in Schedule 4 to Notification No. FEMA. 20/2000-RB, dated 3rd May, 2000, as amended from time to time.

Detailed guidelines in respect of the same are contained in this circular.

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