The Department of Industrial Policy & Promotion Board
(DIPP), Government of India, via Press note No. 9 (2015 Series),
dated September 15, 2015, reviewed the existing Foreign Direct
Investment (FDI) policy on partly paid shares and warrants.
The Government after reviewing the provisions of the extant FDI
policy, has decided to allow partly paid shares and warrants as
eligible capital instruments for the purposes of FDI policy.
Accordingly, the following amendments are made in the
'Consolidated FDI Policy Circular of 2015', effective from
May 12, 2015:
a. The definition of 'Capital' under FDI Policy shall
now mean equity shares; fully, compulsorily & mandatorily
convertible preference shares; fully, compulsorily &
mandatorily convertible debentures and warrants.
The equity shares issued in accordance with the provisions of
the Companies Act, as applicable, will include equity shares that
have been partly paid. Preference shares and convertible debentures
are required to be fully paid, and are mandatorily and fully
convertible. Further, 'warrant' includes Share Warrant
issued by an Indian Company in accordance to provisions of the
Companies Act, as applicable.
b. Insertion of a new para under the heading of Types of
Instruments of Consolidated FDI Policy Circular of 2015 is
made as follows:
"Acquisition of Warrants and Partly Paid Shares – An
Indian company may issue warrants and partly paid shares to a
person resident outside India subject to terms and conditions as
stipulated by the Reserve Bank of India in this behalf, from time
Prior to this Policy review, the warrants and partly paid shares
were issued to person/(s) resident outside India only after
approval through the Government route. Accordingly, now permission
will not be required for raising money through these instruments in
sectors where FDI is allowed under the automatic route.
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The MDO Guidelines further state that the intent of the MCA was for the purpose of achieving a standard contractual arrangement that may be entered into across the country for procurement of such services.
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