The Reserve Bank of India (RBI), through a circular on 19 March, stated that companies raising investment through foreign institutional investors (FII) and non-resident Indians (NRI) beyond the aggregate investment limits specified under the portfolio investment scheme must inform the RBI immediately.
Schedules 2 and 3 of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000, provide that the aggregate FII investment limit of 24% can be raised to the sectoral cap or statutory limit applicable to the company, and the aggregate NRI investment limit of 10% can be raised to 24% by a special resolution passed by the shareholders of the company.
Companies in this situation should also submit a certificate from their company secretary stating that all the relevant provisions of the regulations under the Foreign Exchange Management Act, 1999, and of the foreign direct investment policy, as amended from time to time, have been complied with.
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The update of court judgments is compiled by Bhasin & Co, Advocates, a corporate law firm based in New Delhi. The authors can be contacted at lbhasin@bhasinco.in or lbhasin@gmail.com. Readers should not act on the basis of this information without seeking professional legal advice.
