RBI allows foreign investors to invest in partly paid shares

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Easing rules, the Reserve Bank today allowed foreign investors to invest in partly paid shares and warrants of Indian companies.

Such investors, till now, were only allowed to invest in equity shares and compulsorily and mandatorily convertible preference shares or debentures recognised as Foreign Direct Investment (FDI) compliant instruments.

Foreign investors can invest in partly paid equity shares and warrants issued by an Indian company which are now eligible instruments for the purpose of FDI and foreign portfolio investment (FPI) by Foreign Institutional Investors (FIIs), the RBI said in a notification.

"The pricing of the partly paid equity shares would be determined upfront and 25 per cent of the total consideration amount (including share premium, if any), would also be received upfront," it said.

The balance consideration towards fully paid equity shares would be received within a period of 12 months, it added.

Similar pricing formula has been prescribed for issuance of warrants to foreign investors.

Non-Resident Indians (NRIs) would also be eligible to invest on non-repatriation basis in partly-paid shares and warrants issued by Indian companies, it added.

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