MCA amends rules related to Private Placement of Securities to Investors of border nations
The ministry of corporate affairs (MCA) has amended the Companies (Prospectus and Allotment of Securities) Rules, 2014 on issuing prospectus and allotting shares to ensure that companies seeking investments follow the government’s foreign direct investment (FDI) norms relating to investors from countries with which India shares a land border. The move puts the onus of compliance on the recipient of investments. The government in 2020 directed that all FDI from border countries would go through the approval route to curb opportunistic takeovers during the pandemic.
As per the Companies (Prospectus and Allotment of Securities) Amendment Rules, 2022 issued by MCA, no offer of any securities is to be made to an entity or a national of a country which shares land border with India, unless prior approval has been obtained from the Indian government as per Foreign Exchange Management (Non-debt Instruments) Rules, and is submitted along with the private placement offer-cum-application letter.
