As per the Foreign Exchange Management (Transfer or Issue of any Foreign Security) Regulations, 2004 (Regulations), presently, listed Indian companies are permitted to invest upto 35 per cent of their net worth as on the date of their last audited balance sheet, in the shares of overseas companies listed on a recognized stock exchange and having a shareholding of atleast 10 per cent in any domestic listed company as also in rated bonds and fixed income securities issued by the overseas company.
The Reserve Bank of India (RBI), as part of its liberalization policy, has amended the Regulations, pursuant to which, the investment limits of listed Indian companies under the portfolio investment scheme have been enhanced and the requirement of a 10 per cent reciprocal shareholding in the domestic companies, has been done away with.
Listed Indian companies may now invest upto 50 percent of their net worth as on the date of their latest audited balance sheet, in shares and rated bonds and fixed income securities issued by the overseas companies listed on recognized stock exchanges.
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