Quick Summary
The Ministry of Finance has notified an amendment to the Foreign Exchange Management (Non-debt Instruments) Rules, 2019, allowing Indian companies operating in sectors where Foreign Direct Investment (FDI) is prohibited to issue bonus shares to existing foreign shareholders, subject to specific conditions. The Foreign Exchange Management (Non-debt Instruments) (Amendment) Rules, 2025, were notified via S.O. 2549(E) on June 11, 2025, and took effect immediately upon publication in the Official G
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FAQ :
The amendment allows Indian companies in sectors where FDI is prohibited to issue bonus shares to their existing foreign shareholders, provided the shareholding pattern remains unchanged.
The amendment took effect immediately upon publication in the Official Gazette on June 11, 2025.
No, the amendment specifically allows bonus share issuances to pre-existing foreign shareholders in sectors where FDI is prohibited, without altering the existing shareholding pattern.
Past issuances of bonus shares to foreign shareholders in these restricted sectors are now validated, meaning they are considered compliant with FEMA regulations.
Companies operating in restricted sectors like multi-brand retail, atomic energy, or lottery businesses with legacy foreign investments are expected to benefit from this regulatory clarity.
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