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TMI BlogIssue of Partly Paid Shares and Warrants by Indian Company to Foreign InvestorsX X X X Extracts X X X X X X X X Extracts X X X X ..... ures are recognised as Foreign Direct Investment (FDI) compliant instruments. Further, 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 have also been recognised as FDI compliant instruments. 2. A review of the policy as regards partly paid shares and warrants has been undertaken and it has been decided as under: (i) Eligible instruments and investors Partly paid equity shares and warrants issued by an Indian company in accordance with the provision of the Companies Act, 2013 and the SEBI guidelines, as applicable, shall be eligible instruments for the purpose of FDI and foreign portfolio investment (FPI) by Fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s fully paid up equity shares shall be received within a period of 18 months; The price at the time of conversion should not in any case be lower than the fair value worked out, at the time of issuance of such warrants, in accordance with the extant FEMA Regulations and pricing guidelines stipulated by RBI from time to time. Thus, Investee company shall be free to receive consideration more than the pre-agreed price. (iii) Reporting (a) Partly paid equity shares The reporting of receipt of foreign inward remittance towards each upfront /call payment for FDI transaction shall be made in Advance Reporting Form (format enclosed) along with copy/ies of Foreign Inward Remittance Certificate/s (FIRC), Know Your Customer (KYC) report on non-re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er FDI guidelines shall be on the Investee company in case of issue of partly paid shares /warrants as well as upon resident transferor or transferee in accordance with extant guidelines in case of transfer of partly-paid shares/warrants . The onus of giving notice required under the provisions of the Companies Act, 2013 for transfer of partly-paid shares shall also be on the Investee company. The onus of compliance with individual limit below 10% (ten per cent) of the total paid-up equity capital shall be on each FII/RFPI. Further, the aggregate investments of all FIIs/RFPIs put together shall not exceed the applicable aggregate limit for each issue of partly paid shares. Other conditions 3. The following other conditions shall also be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and warrants issued by Indian companies in accordance with the provisions of the Companies Act/ SEBI guidelines / Income tax provisions, as applicable. Investments by NRIs in partly-paid shares and warrants on non-repatriation basis shall also be subject to terms and conditions stipulated in Schedule 4 to Notification No. FEMA. 20/2000-RB dated 3rd May 2000, as amended from time to time. 5. Reserve Bank has since amended the Principal Regulations through the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Ninth Amendment) Regulations, 2014 notified vide Notification No. FEMA. 308 /2014-RB dated June 30, 2014 c.f. G.S.R. No. 436(E) dated July 8, 2014. 6. Authorised Dealer banks may bring the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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