Foreign investment compliance governs issuance of capital instruments after mergers, subject to entry routes, sectoral caps and prohibited sectors. Regulation 9 permits issuance or transfer of capital instruments to non-resident shareholders in approved mergers, demergers or amalgamations only if such ... Summary
Foreign investment compliance governs issuance of capital instruments after mergers, subject to entry routes, sectoral caps and prohibited sectors.
Regulation 9 permits issuance or transfer of capital instruments to non-resident shareholders in approved mergers, demergers or amalgamations only if such issuance complies with applicable entry routes, sectoral caps, investment limits and attendant conditionalities; anticipated breaches require governmental approvals and companies must not operate in prohibited sectors. For schemes of arrangement, Indian companies may distribute non-convertible redeemable preference shares or debentures as bonus to non-resident shareholders out of general reserves provided the original foreign investment complied with regulations and schedule conditions, the issue meets company law and scheme terms, and prohibited-sector restrictions are observed.
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