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Can a foreign investor invest in Preference Shares? What are the regulations applicable in case of such investments?

April 26, 2017applicable Case foreign invest investments investor regulations Shares

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Can a foreign investor invest in Preference Shares? What are the regulations applicable in case of such investments?

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Ans. Yes. Foreign investment through preference shares is treated as foreign direct investment. However, the preference shares should be fully and mandatorily convertible into equity shares within a specified time to be reckoned as part of share capital under FDI. Investment in other forms of preference shares requires to comply with the ECB norms.