Regulatory Relaxations for Startups- Clarifications relating to Issue of Shares

a. Issue of shares without cash payment through sweat equity:

RBI  has permitted Indian companies to issue sweat equity, subject to the fact that:

·       The scheme has been drawn in terms of the SEBI Act, 1992 in respect of listed companies or

·       In terms of The Companies (Share Capital and Debentures) Rules, 2014 under the Companies Act 2013 in respect of other companies.

b.    Issue of shares against legitimate payment owed:

RBI has permitted Indian companies to issue equity shares against any other funds payable by the investee company, remittance of which does not require prior permission of the Government of India or Reserve Bank of India subject to adherence to FDI policy and applicable tax laws.

Based on RBI Circular dt 11/02/16. Please visit www.rbi.org.in for any further clarification if required…..       Poppy