Foreign portfolio investors allowed to invest in non-convertible / redeemable preference shares: SEBI

The Securities and Exchange Board of India (SEBI) has allowed foreign portfolio investors (FPIs) to invest in non-convertible / redeemable preference shares or debentures of Indian companies pursuant to the Reserve Bank of India (RBI) decision to allow the same.

Accordingly, domestic companies to issue non-convertible / redeemable preference shares or debentures to non-resident shareholders, including the depositories that act as trustees for the ADR / GDR holders by way of distribution as bonus from its general reserves under a scheme of arrangement approved by a court in India under the provisions of the Companies Act, as applicable, subject to no-objection from the income tax authorities.

FPIs are permitted to invest on repatriation basis, in non-convertible / redeemable preference shares or debentures issued by an Indian company in terms of the above RBI circular and listed on recognised stock exchanges in India.

"The investments by FPIs in the above-mentioned securities shall be reckoned against the Corporate Debt Investment Limits ($51 billion)," SEBI noted.