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Amendment of the existing policy on Foreign Direct Investment

Government of India

Ministry of Commerce & Industry

Department of Industrial Policy & Promotion

 Press Note No.4 (2013 Series)

Subject: Amendment of the existing policy on Foreign Direct Investment – definition of the term control, for calculation of total foreign investment i.e. direct and indirect foreign investment, in Indian companies.

1.0 Present Position:

1.1 As per paragraph 2.1.7 of ˜Circular 1 of 2013-Consolidated FDI Policy™- effective from April 5, 2013, the term control is defined as under:

A company is considered as controlled by resident Indian citizens if the resident Indian citizens and Indian companies, which are owned and controlled by resident Indian citizens, have the power to appoint a majority of its directors in that company.

2.0 Revised Position:

2.1 The Government of India has reviewed the above position and decided to amend paragraph 2.1.7 of the existing policy. The revised definition of the term control will be as under;

˜Control™ shall include the right to appoint a majority of the directors or to control the management or policy decisions including by virtue of their shareholding or management rights or shareholders agreements or voting agreements.

3.0 The above decision will take immediate effect.

(Anjali Prasad)

Additional Secretary to the government of India

 dated- 22 August, 2013

Tags: Asiaforeign direct investmentGovernment of IndiaIndiaIndian nationality lawList of companies of IndiaMinistry of Commerce & IndustryShareholders' agreement

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