Sebi allows investments by FPIs in Non-Convertible / Redeemable preference shares or debentures of Indian companies

In terms of the RBI circular an Indian company is permitted to issue non-convertible/redeemable preference shares or debentures to non-resident shareholders, including the depositories that act as trustees for the ADR/GDR holders by way of distribution as bonus from its general reserves under a Scheme of Arrangement approved by a Court in India under the provisions of the Companies Act, as applicable, subject to no-objection from the Income Tax Authorities.

All Foreign Portfolio Investors (FPIs) are permitted to invest on repatriation basis, in non-convertible/redeemable preference shares or debentures issued by an Indian company in terms of the above RBI circular and listed on recognized stock exchanges in India.

The investments by FPIs in the abovementioned securities shall be reckoned against the Corporate Debt Investment Limits (US$ 51 billion).

This circular shall come into effect immediately.

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