FOREIGN INVESTORS CAN GET EQUITY IN LIEU OF DIVIDEND

In a significant liberalisation of the Foreign Direct Investment (FDI) policy, the government has permitted the issuance of additional equity shares to a foreign investor that already has shareholding in a company in lieu of its dividend income. The approval will, however, be subject to the regular conditions on valuation and pricing norms laid down by the Reserve Bank of India (RBI). Such transactions are not permitted under the prevailing policy. The issue of shares other than against
cash requires Foreign Investment Promotion Board (FIPB) clearance. But, the policy does not provide for the issuance of equity shares in lieu of dividend to foreign investors.