Press Information Bureau

Government of India

Ministry of Commerce & Industry

31-October-2011 16:04 IST

Corrigendum to Circular 2 Of 2011 - Consolidated FDI Policy

Circular 2 of 2011 was issued on 30th September, 2011. Para NO.3.3.2.1 of the above Circular hereby stands deleted.  Erstwhile paragraph 3.3.2.1 of ‘Circular 2 of 2011’  went like this:

“ 3.3.2.1:  Only equity shares, fully, compulsorily and mandatorily convertible debentures and fully, compulsorily and mandatorily convertible preference shares, with no in-built options of any type, would qualify as eligible instruments for FDI.   Equity instruments issued/transferred to non-residents having in-built options or supported by options sold by third parties would lose their equity character and such instruments would have to comply with the extant ECB guidelines.”

This paragraph now stands deleted from ‘Circular 2 of 2011’.

The Circular duly corrected is available at www.dipp.nic.in.

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DS

FDI instrument eligibility: deletion of restrictive paragraph removes prohibition on instruments with in built options, altering foreign investment compliance. Paragraph 3.3.2.1 of Circular 2 of 2011, which had limited eligible FDI instruments to equity shares and fully, compulsorily and mandatorily convertible instruments with no in built options and treated instruments with in built options or third party sold options as losing equity character and falling under ECB guidelines, is deleted; the corrected Circular is available from the Department of Industrial Policy and Promotion.