ISSUING AUTHORITY : RESERVE BANK OF INDIA
DATE OF ISSUE : 16/01/2014
EFFECTIVE DATE : IMMEDIATE EFFECT
CIRCULAR NO. 94
Companies can convert their Overseas Borrowings through the ECB route into Equity Shares at the foreign exchange rate applicable on the date of swap agreement.
It is clarified that the ECB conversion by an Indian company can be below its fair value. However, the fair value of the equity shares to be issued shall be worked out with reference to the date of conversion only.
This rule shall also apply to a liability denominated in foreign currency where lump sum fees/royalties, etc. are permitted to be converted to equity shares or other securities to be issued to a foreign investor subject to other conditions.
For detailed Circular, please follow the link below:
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