Nris Allowed To Buy Up To 100% Stake In Sick Firms
The Reserve Bank of India (RBI) has allowed non-resident Indians (NRIs) and overseas
corporate bodies (OCBs) to buy up to 100 per cent stake in a sick company and repatriate the funds thus invested without any lock-in period.
This comes as a major relaxation in the norms for investments by NRIs and OCBs in a bid to attract funds to help rehabilitate sick industrial units.
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According to a RBI notification, only those sick units can avail of such investment which have been declared as sick under law or have been brought under a rehabilitation programme approved by a public financial institution or a commercial bank.
According to the notification, NRIs and OCBs can make a bulk investment in the shares of such companies through purchase of equity shares from existing shareholders or subscription to fresh equity issues. The bulk investment can be made on a private placement basis up to 100 per cent of the equity capital of the sick company.
The RBI has also specified that there will be no lock-in period for the repatriation of such capital. Thus, the overseas investor enjoys full benefits of repatriation of capital invested and income earned on their investment.