Is RBI permission necessary for foreigner / NRI / OCB to subscribe to Memorandum and Articles of Association ?
Ans. Indian companies are permitted to issue shares to non-resident investors in terms of the Automatic Route as indicated in the Schedule I to the Foreign Exchange Management (Transfer or Issue of Security by a person resident outside India) Regulations 2000. It has been clarified that non-resident investors can subscribe to the Memorandum & Articles of Association of those companies which are eligible to issue shares under the Automatic Route in terms of the Regulations mentioned above. In respect of companies not covered by the Automatic Route, foreign investors can subscribe to the Memorandum & Articles of Association after necessary approval for investment is obtained from SIA / FIPB.
