During the period of Covid, the Rule 6 of the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 was amended w.e.f. 22.04.2020. For persons from countries which share land border with India, prior Government approval was mandated before making investments. This was a measure to protect the national interests during Covid when the valuations were depressed.
Now, the Government had decided to extend these measures to the provisions of the Companies Act, 2013. The revisions are made in the following two rules to cover the cases of issue and transfer of securities.
- A proviso is added to Rule 14 of the Companies (Prospectus and Allotment of Securities) Rules, 2014. This Rule deals with private placement of securities. It mandates that the offer or invitation (circulation of private placement application cum allotment letter in Form PAS-4) shall be made only if the Government approval as above is obtained.
- The Companies (Share Capital and Debentures) Amendment Rules, 2022 take care of the same scenario by adding a declaration in the instrument for transfer in Form SH-4 from the transferee. The declaration is to the effect that the approval of the Government is either not required or is obtained.