Indian companies in FDI-prohibited sectors can issue bonus shares to existing foreign investors, topic to circumstances.
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Authorities on Monday permitted Indian companies working in FDI-prohibited sectors can issue bonus shares to existing foreign investors.
“An Indian firm engaged in sector/exercise prohibited for FDI is permitted to issue bonus shares to its pre-existing non-resident shareholders,” newest press notice, dated April 07, stated. Nonetheless, this leisure will probably be with a situation and that claims that shareholding sample of the pre-existing non-resident shareholders doesn’t change pursuant to the issuance of bonus shares.
As per the consolidated FDI Coverage Round of 2020, Indian companies are permitted to issue bonus shares to existing non-resident shareholders topic to adherence to sectoral cap. The most recent press notice is a clarification to the stated round.
Sandeep Sehgal, Associate-Tax, AKM World stated, “The clarification for permitting the issuance of bonus shares to existing non-resident shareholders even in sectors the place there are sectoral caps offers the much-needed flexibility.” Additional, this transfer will allow companies to reward their worldwide investors with out altering the possession construction or breaching FDI, he added.
Revealed on April 7, 2025
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