General Knowledge & Current Affair for Competitive Exams- 2014

The Reserve Bank of India (RBI) has granted permission to Indian companies to issue non-convertible or redeemable preference shares or debentures to non-resident shareholders from their general reserves as bonus. This facility will also include the depositories that act as trustees for the ADR/GDR holders. The issue of preference shares (excluding non-convertible/redeemable preference shares) and convertible debentures (except optionally convertible or partially convertible debentures) would be subject to Foreign Direct Investment Scheme.

As per the notification issued by the RBI, the step has been taken with a view to rationalize and simplify the norms following references from some Indian companies to issue non-convertible or redeemable bonus preference shares or debentures to non-resident shareholders from the general reserve under a scheme of arrangement by a court, under the provisions of the Companies Act.   Until now, RBI was granting permission for such issuances on a case-to-case basis.