A profit making company wants to increase the share capital by issuing shares to existing share holders( one in india and one outside india).
The share holder within india is not wiiling to invest and giving no objection letter.
The share holder outside india wants to invest in the company.
can the company issue shares at par value to share holder outside india ?
You have to go through provisions of Foreigh Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations 2000. Rule 5 of Schedule-I dealing with issue price, reads as under:
5. Price of shares issued to persons resident outside India under this Schedule, shall not be less than :—
(a) the price worked out in accordance with the SEBI guidelines, as applicable, where the shares of the company is listed on any recognized stock exchange in India;
(b) the fair valuation of shares done by a SEBI registered Category-I Merchant Banker or a Chartered Accountant as per the discounted free cash flow method, where the shares of the company is not listed on any recognized stock exchange in India; and
(c) the price as applicable to transfer of shares from resident to non-resident as per the pricing guidelines laid down by the Reserve Bank from time to time, where the issue of shares is on preferential allotment.
Thanks
CAclubindia
