CORPORATE LAW

New Notification

The Reserve Bank of India (“RBI”) vide its notification A.P. (DIR Series) Circular No.31 dated September 17, 2014 (“Notification”) has permitted the issue of equity shares against any type of funds to payable by the investee company, remittance of which does not require prior permission of the Government of India or RBI under FEMA subject to the following conditions:

1. The equity shares shall be issued in accordance with the extant FDI guidelines on sectoral caps, pricing guidelines etc. as amended by Reserve bank of India, from time to time;
   Explanation: Issue of shares/convertible debentures that require Government  approval in terms of paragraph 3 of Schedule 1 of FEMA 20 or import dues deemed as ECB or trade credit or payable against import of second hand machinery  shall continue to be dealt in accordance with the extant guidelines;
   
   
2. The issue of equity shares shall be subject to tax laws as applicable to the funds payable and the conversion to equity should be net of applicable taxes.