RBI proposes future-ready foreign investments rules to enhance ease of doing business
The Reserve Bank of India (RBI) has proposed simplified and future-ready rules related to foreign investments, including those pertaining to overseas listing of Indian companies. The proposed rules are aimed at rationalising provisions, harmonisation of definitions and simplifying regulatory architecture to enhance clarity and reduce regulatory complexity. Highlighting features of the proposed rules, the RBI said the rules will be aligned with the FDI policy, enhance ease of doing business and provide a future-ready regulatory framework. It noted that the rules will be finalised after wider public consultations. It has invited comments on the proposed rules by August 31.
On issue and listing on an international stock exchange, RBI has noted that public company may issue its equity or offer equity of existing shareholders on a foreign stock exchange, subject to certain conditions. One of the conditions is that the equity should be denominated in INR in the books of the company and held in dematerialised form. It added that if the company is not listed on a recognised stock exchange in India, then issue or offer of equity should be in compliance with the conditions or requirements prescribed by the Ministry of Corporate Affairs. Further, if initial listing of equity by a public company which is not listed on a recognised stock exchange in India, the price for issue or transfer of equity would be determined by a book-building process as permitted by the concerned international stock exchange.
Moreover, a person resident outside India or a foreign controlled entity (FCE) may make foreign investment on repatriation or non-repatriation basis, by way of subscription to an issue, purchase from any person or gift between natural persons. It added that an NRI or an OCI may subscribe to the National Pension System governed and administered by Pension Fund Regulatory and Development Authority (PFRDA), provided such person is eligible to invest as per the provisions of the PFRDA Act. The annuity/ accumulated saving will be repatriable.
