Wednesday, August 14, 2013

New definition for 'control'

In an effort to bring more clarity in Foreign Direct Investment (FDI) policy, the Government has approved new definition of 'control' of an Indian company. The new definition will be used for calculating the direct and indirect foreign investment in a company. Normally control would mean anyone having more than 50 per cent shares will steer the company. The new definition of control includes the right to appoint majority of directors. It also includes "control of the management or policy decisions by virtue of shareholding or management right or shareholder agreement or voting agreement." This new definition will come into effect from the date of notification. A decision in this regard was taken in the meeting of Cabinet Committee on Economic Affairs (CCEA).

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