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of <h1>New Guidelines Allow Optionality Clauses in FDI Instruments for Non-Residents, Effective November 2013.</h1> The circular addresses guidelines for Foreign Direct Investment (FDI) instruments with optionality clauses. It allows optionality clauses in equity shares and convertible preference shares/debentures issued to non-residents under the FDI Scheme. The clauses enable investors to exit without assured returns, subject to a minimum lock-in period. Post lock-in, investors in listed companies can exit at market prices, while those in unlisted companies can exit based on Return on Equity. Investments in convertible instruments can be transferred at prices determined by international methodologies. These changes, effective from November 2013, must be adhered to for FDI compliance.
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