RBI allows non-residents to buy shares, debentures at face value

The Reserve Bank of India (RBI) today said non-residents, including NRIs, can acquire shares or debentures of an Indian company at face value, subject to compliance with FDI norms.

''It has been decided that in cases, where non-residents (including NRIs) make investment in an Indian company in compliance with the provisions of the Companies Act, 1956, by way of subscription to memorandum of association, such investments may be made at face value subject to their eligibility to invest under the FDI scheme,'' RBI said in a circular.

As per the existing norms, non-residents, including entities incorporated outside the country, are allowed to purchase shares or convertible debentures of an Indian company up to the extent and subject to terms and conditions set out under the FDI scheme.

Also, a person purchasing shares proposes to be collaborator or proposes to acquire the entire share holding of a new Indian company is required to obtain prior permission of the government if he has already has a similar venture or tie-up in India.

Also the price of shares issued to persons resident outside India under this scheme have to be worked out in accordance with the SEBI guidelines, if the issuing company is listed on an India stock exchange.

The valuation of shares have to be done by a chartered accountant as per the guidelines issued by the Controller of Capital Issues in all other cases.