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| « Durable makers for lower indirect taxes... | UP Vidhan Sabha passes VAT Bill... » |
FinMin notifies rules for foreign currency exchangeable bonds |
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| February, 19th 2008 |
Finance Ministry on Friday allowed companies to issue Foreign Currency Exchangeable Bonds (FCEB), with a maturity period of five years, to raise funds from the overseas market by unlocking part of the holding in group companies.
"The investment under the scheme shall comply with the foreign direct investment policy as well as the External Commercial Borrowing (ECB) Policy requirements," said a Finance Ministry statement adding these bonds will have lock-in period of five years but could be exchanged into equity shares of another company before the redemption.
The rate of interest on these bonds and issue expenses would be within ceiling prescribed by Reserve Bank under the ECB policy, it added.
The FCEB Scheme has been announced by the government in pursuance of Finance Minister's budgetary announcement last year.
FCEB would be denoted in foreign currency, and the principal and interest will also have to be paid in foreign currency.
These bonds to be issued by an Indian company, will be subscribed by non-residents in foreign currency and can be exchanged into equity shares of another company- either wholly or partly.
Finance Ministry said the company, which issues these bonds and the firm whose shares are exchanged against such bonds, must be part of same promoter group.
The proceeds of these bonds can be invested in the group companies subject to the end use norms prescribed by the ECB policy.
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