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Our Bureau

New Delhi April 30 The Finance Ministry said on Monday that fully convertible preference shares issued to foreign investors by Indian companies would henceforth be treated as part of share capital and would be counted for calculating the foreign equity limits specified for various sectors.

In its new guidelines for foreign investment in preference shares, the Government has also said that foreign investment coming through any other type of preference shares (non-convertible, optionally convertible or partially convertible) would be considered as debt and that such investments would have to conform to ECB guidelines/ECB caps.

These guidelines are to take immediate effect.

Any foreign investment as non-convertible or optionally convertible or partially convertible preference shares as on and up to April 30 would continue to be outside the sectoral cap till their current maturity, an official release said.

Issue of preference shares of any type would continue to conform to the guidelines of RBI/SEBI and other statutory bodies and would be subject to all statutory requirements, the release added.

More Stories on : Preferential Allotments | Foreign Direct Investment

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