Amendments To Foreign Exchange Management (Non-Debt Instruments) Rules, 2019

BACKGROUND

The Ministry of Finance has recently notified amendments to the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 ('NDI Rules') vide the Foreign Exchange Management (Non-Debt Instruments) (Fourth Amendment) Rules, 2024 ('Amendment'). The key amendments are summarized below:

SWAP OF SHARES

1.1. Before the amendment¹:

• Indian companies were permitted to issue equity instruments to persons resident outside India against the swap of equity instruments of another Indian company.
• Thus, the issue of shares by an Indian company to a non-resident against acquisition of shares of a Foreign company was not permitted.

1.2. Amendment¹:

a) The amendment now allows Indian companies to issue equity instruments to persons resident outside India against the swap of equity capital of a foreign company, popularly known as FDI – ODI swap.