RBI relaxes equity shares issuance norms under FDI guidelines

Issuance of shares subject to certain conditions like entry route, sectoral cap, pricing guidelines and compliance with the applicable tax laws

The Reserve Bank of India has eased foreign direct investment (FDI) guidelines allowing companies to issue equity shares against any 'fund payable' by the investee company, remittance of which does not require prior permission of the government or RBI.

As per the extant guidelines, an Indian company under the automatic route may issue shares / convertible debentures to a person resident outside India against lump-sum technical know-how fee, royalty External Commercial Borrowings (ECBs) and import payables of capital goods by units in Special Economic Zones. The issuance of shares / debentures is subject to certain conditions like entry route, sectoral caps, pricing guidelines and compliance with the applicable tax laws.

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