FDI - Issuence of new shares

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

28 December 2010 Dear All,

Can a Pvt Ltd company issue more shares to Foreign Investor, that what is permitted through Right Issue?

eg

FDI current holding - 1000 shares (51%)
Right issue (1:0.3) - 300 shares

Company wants to issue 400 shares to foreign investomer. Pls advice.

Regds

Jayashree S Iyer

Jayashree S Iyer (Expert)
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28 December 2010 No there cannot be a differential ratio. Uniform ratio has to be maintained for all the existing shareholders. On the denial of the existing shareholders, the denied shares can be alloted to anyone as the Board think most beneficial to the company.

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Ajay Mishra

Ajay Mishra (Expert)
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28 December 2010 Hi

Please also check Master Circular issued by RBI on FDI on July 1, 2010 for sectoral cap.

Regards

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Ajay Mishra

Ajay Mishra (Expert)
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28 December 2010 Hi

Please also check Master Circular issued by RBI on FDI on July 1, 2010 for sectoral cap.

Regards

Querist : Anonymous

Querist : Anonymous (Querist)

29 December 2010 Sir,

Can you pls provide the link. On searching I am finding so many links for the same.

Is it 13/2010-11? If yes than it is only giving a clause "adherence to sectoral cap" but not defining what is sectoral cap.

Can you pls guide me what is the sectoral cap for FDI for "Loan giving NBFC"

Regds

CA. Anuj Gupta

CA. Anuj Gupta (Expert)
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09 March 2011 You can't allow differential ratio.
The answer given by Jaya is absolutely correct.

Also the FDI rules don't have any say in the Company law matters which you need to follow in the present case.

Anuj
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