| FDI Update – Pricing on Allotment
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| Presently, a person resident outside India or an entity incorporated outside India may purchase shares or convertible debentures of an Indian company under Foreign Direct Investment Scheme, subject to compliance with the issue price specified in Para 5 of Schedule 1 of the Notification No. FEMA 20 / 2000-RB dated May 03, 2000. |
| As per extant pricing guidelines, the price of shares issued to persons resident outside India under the FDI Policy, shall not be less than the price worked out in accordance with the SEBI guidelines, as applicable, where the shares of the company is listed on any recognised stock exchange in India. Where the shares of the company are not listed on any recognised stock exchange in India, the price of shares shall not be less than 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. |
| Reserve Bank of India has now decided that in cases, where non-residents (including NRIs) make investment in an Indian company in compliance with the provisions of the Companies Act, 1956, by way of subscription to Memorandum of Association, such investments may be made at face value subject to their eligibility to invest under the FDI Scheme. |
| The above decision of Reserve Bank of India is contained in their A.P. (DIR Series) Circular No. 36 dated September 26, 2012 |