RBI revises FDI norms for equity, preference shares and CDs

The Reserve Bank of India has announced revised guidelines in respect of pricing issue of shares, including preferential allotment to non-resident Indians (NRIs).

Under the revised guidelines, an Indian company may issue equity shares/compulsorily convertible preference shares and compulsorily convertible debentures (equity instruments) to a person resident outside India under the FDI policy, subject to inter alia, compliance with the pricing guidelines, RBI said in its release.

Further, the guidelines allow transfer of equity instruments, by way of sale, from residents to non-residents (including transfer of subscriber's shares) of an Indian company in sectors other than financial service sector (ie banks, NBFCs, insurance, asset reconstruction aompanies, infrastructure companies in securities market namely, stock exchanges, depositories and clearing corporations, credit information cmpanies and commodity exchanges) from residents to non-residents and vice versa.

Transfer by resident to non-resident

Transfer of shares by way of sale, by resident to non-resident (ie, to incorporated non-resident entity other than erstwhile OCB, foreign national, NRI, FII) should be at a price not less than the ruling market price, in case the shares are listed on stock exchange.

The fair valuation of shares should be done by a chartered accountant as per the guidelines issued by the erstwhile Controller of Capital Issues, in case of unlisted shares.