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July 2014

A. P. (DIR Series) Circular No. 140 dated 6th June, 2014

By Gaurang Gandhi Chartered Accountant
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Notification No. FEMA. 304/2014-RB dated 22nd May, 2014

Foreign investment in India – participation by registered FPIs, SEBI registered long term investors and NRIs in non-convertible/redeemable preference shares or debentures of Indian companies

Presently, FII/FPI, QFI and long term investors registered with SEBI can invest in corporate debt up to $ 51 billion. Also, an Indian company can issue non-convertible/redeemable preference shares or debentures to non-resident shareholders, including the depositories that act as trustees for the ADR/GDR holders by way of distribution as bonus from its general reserves under a Scheme of Arrangement approved by a Court in India.

This circular permits: –

– FII, QFI, FPI and long term investors registered with SEBI – Sovereign Wealth Funds (SWFs), Multilateral Agencies, Pension/Insurance/Endowment Funds, foreign Central Banks to invest on repatriation basis; and

– NR I to invest both on repatriation and non-repatriation basis in non-convertible/redeemable preference shares or debentures issued by an Indian company in terms of A.P. (DIR Series) Circular No. 84 dated 6th January, 2014 and listed on recognised stock exchanges in India, within the overall limit of $ 51 billion earmarked for corporate debt.

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