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TMI BlogReview of FDI Policy for permitting foreign investment in Life Insurance Corporation of India (LIC) and other modifications for further clarity of the existing FDI Policy.X X X X Extracts X X X X X X X X Extracts X X X X ..... rily and mandatorily convertible debentures and warrants; Note: The equity shares issued by an Indian Company in accordance with the provisions of the Companies Act, 2013 or any other applicable law, shall include equity shares that have been partly paid. Preference shares and convertible debentures shall be required to be fully paid, and to be mandatorily and fully convertible. Further, 'warrant' includes Share Warrant issued by an Indian Company in accordance with the regulations made by the Securities and Exchange Board of India (SEBI), the Companies Act, 2013 or any other applicable law. 1.2 Para 2.1.9 of the FDI Policy is amended to be read as under: 'Convertible Note' means an instrument issued by a startup company acknowledging receipt of money initially as debt, which is repayable at the option of the holder, or which is convertible into such number of equity shares of such startup company, within a period not exceeding ten years from the date of issue of the convertible note, upon occurrence of specified events as per the other terms and conditions agreed to and indicated in the instrument. 1.3 Para 2.1.17 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a 3.4.3 and new Para 3.4.4. 1.8 The existing definitions of 'Real Estate Business' under Para 5.1(f) and Note (i) to Para 5.2.10.2 of the FDI Policy, are amended and aligned in the following manner: (i) Para 5.1(f) of the FDI Policy is amended to be read as under: Real Estate Business or Construction of Farm Houses `Real estate business' means dealing in land and immovable property with a view to earning profit there from and does not include development of townships, construction of residential/commercial premises, roads or bridges, educational institutions, recreational facilities, city and regional level infrastructure, townships and Real Estate Investment Trusts (REITs) registered and regulated under the SEBI (REITs) Regulations 2014. Further, earning of rent/income on lease of the property, not amounting to transfer, will not amount to real estate business. (ii) Note (i) to Para 5.2.10.2 of the FDI Policy is amended to be read as under: It is clarified that FDI is not per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cent of the total paid-up equity of the Indian Insurance Company shall be allowed on the automatic route subject to approval/verification by the Insurance Regulatory and Development Authority of India. (c) Foreign investment in this sector shall be subject to compliance with the provisions of the Insurance Act, 1938 and the condition that Companies receiving FDI shall obtain necessary license/approval from the Insurance Regulatory and Development Authority of India for undertaking insurance and related activities. (d) (I) In an Indian Insurance Company having foreign investment,- i. a majority of its directors; ii. a majority of its Key Management Persons; and iii. at least one among the Chairperson of its Board, its Managing Director and its Chief Executive Officer shall be Resident Indian Citizens. Explanation: For the above purposes, the expression - "Key Management Person" shall have the same meaning as assigned to it in guidelines made by the Insurance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... surance Regulatory and Development Authority of India to function as an insurance intermediary, the foreign equity investment caps applicable in that sector shall continue to apply, subject to the condition that the revenues of such entities from their primary (i.e., non-insurance related) business must remain above 50 percent of their total revenues in any financial year. (i) The insurance intermediary that has majority shareholding of foreign investors shall undertake the following: i. be incorporated as a limited company under the provisions of the Companies Act, 2013; ii. at least one from among the Chairman of the Board of Directors or the Chief Executive Officer or Principal Officer or Managing Director of the insurance intermediary shall be a resident Indian citizen; iii. shall take prior permission of the Authority for repatriating dividend; iv. shall bring in the latest technological, managerial and other skills; v. shall not make payments to the foreign group or promoter or subsidiary or interconnected or associate entities beyond what is necessary or permitted by the Authority; vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aking of one or more Indian company to another Indian company, or involving division of one or more Indian company, has been approved by the National Company Law Tribunal or other authority competent to do so by law, the transferee company or the new company, as the case may be, may issue capital instruments to the existing shareholders of the transferor company resident outside India, subject to the following conditions: (i) the percentage of shareholding of persons resident outside India in the transferee or new company does not exceed the sectoral cap; and (ii) the transferor company or the transferee or the new company is not engaged in activities which are prohibited under the FDI Policy. Note: Government approval shall not be required in case of mergers and acquisitions taking place in sectors under automatic route. 1.12 Para 5 of Annexure 3 of the FDI Policy is amended to be read as under: Issue of Employees Stock Option (ESOP) scheme / sweat equity shares/ Share Based Employee Benefits An Indian company may issue 'employees' stock option', and/or 'sweat equity shares' and/or Share Based Employee Benefits to its employee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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