The Reserve Bank on Monday (6 January, 2014) allowed Indian companies to issue non-convertible or redeemable preference shares or debentures to non-resident shareholders from their reserves as bonus.
"On a review and with a view to rationalising and simplifying the procedures, it has been decided that an Indian company may issue non-convertible/redeemable preference shares or debentures to non-resident shareholders...by way of distribution as bonus from its general reserves," RBI said in a notification.
This facility will also encompass the depositories that act as trustees for the ADR/GDR holders, it said.
So far, RBI was granting permission for such issuances on a case-to-case basis.
The permission has been given only for issue of non- convertible/redeemable preference shares or debentures to non- resident shareholders by way of distribution as bonus from the general reserves.
Further RBI clarified that issue of preference shares (excluding non-convertible/redeemable preference shares) and convertible debentures (except optionally convertible or partially convertible debentures) would be subject to Foreign Direct Investment Scheme.