The Reserve Bank of India (RBI) today said sale of shares by resident Indians to non-residents, other than in the financial services sector, will not need prior approval of Foreign Investment Promotion Board (FIPB) if the activities of the investee company falls under the automatic route of foreign direct investment (FDI) policy. | |
| RBI further said transfer by way of sale to a non-resident entity should also not attract Sebi's takeover regulations and that the onus of complying with the sectoral cap as well as other guidelines/ regulations would rest with the buyer as well as the seller/ issuer. |
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| The general permission for transfer of shares by way of sale to non-resident entities is not applicable to shares of banks, non-banking finance companies and insurance companies. |
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| Union finance ministry on September 29 had granted general permission and done away with the requirement of prior approval of RBI for transfer of shares and convertible debentures to non-resident entities, as a measure of further simplification of procedures. |
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| The government has also put cases of increase in foreign equity participation by fresh issue of shares as well as conversion of preference shares into equity capital under general permission provided such increase falls within the sectoral cap in relevant sectors and are within the automatic route. |
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