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ARTICLE · 06 FEBRUARY 2020

The Many Faces Of Foreign Investment

Khaitan & Co.
Khaitan & Co.
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There has been a lot of ambiguity on whether a foreign portfolio investor registered under the SEBI (Foreign Portfolio Investor) Regulations 2019 can make investments in unlisted equity shares of an Indian company ...

IndiaGovernment, Public Sector
Siddharth Shah
Siddharth Shah
Vivek Mimani
Vivek Mimani
Gaurita Udiyawar
Gaurita Udiyawar
Shivangi Agarwalla
Shivangi Agarwalla
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A. Introduction

There has been a lot of ambiguity on whether a foreign portfolio investor (FPI) registered under the SEBI (Foreign Portfolio Investor) Regulations 2019 (FPI Regulations) can make investments in unlisted equity shares of an Indian company under the foreign direct investment (FDI) route specified under Foreign Exchange Management (Transfer or Issue of Security in Person Resident outside India) Regulations 2017 (FEMA 20), which have now been superseded by the Foreign Exchange Management (Non-debt instruments) Rules 2019 (FEMA NDI Rules).

This ambiguity has arisen as the list of permitted instruments in which FPIs can make investments does not include unlisted equity shares but only permits FPIs to invest in equity shares of a body corporate listed or to be listed on a recognized stock exchange in India.

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