Border sharing countries can’t invest in private securities without Govt.’s nod

NOTIFICATION No. G.S.R 338(E), Dated 05.05.2022

The MCA has notified the Companies (Prospectus and Allotment of Securities) Amendment Rules, 2022. As per the amended norms, a company shall not make any offer or invitation of securities to a body corporate incorporated in, or a national of, a country sharing a land border with India unless prior approval of Govt. has been taken by the body corporate under the FEM (Non-debt Instruments) Rules, 2019. The same is required to be attached with private placement offer cum application letter (PAS-4).

Subsequently, ‘Private Placement Offer Cum Application Letter’ i.e. Form PAS-4 has been revised to include a declaration from the applicant that:

a) No Govt. approval is required under the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 prior to the subscription of shares or

b) Where the applicant is required to obtain the Govt. approval prior to the subscription of shares, the same has been obtained and enclosed herewith the form.”

Under the extant norms no such declaration was required.

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