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The Government Notified Changes in the FDI Policy

Sep 12, 2013 12:04 IST

The Union Government of India on 10 September 2013 notified changes in the FDI policy under FEMA regulations, paving the way for larger overseas investments in sectors, such as multi-brand retail and telecom.It is effective from 22 August 2013. As per the revised guidelines, the government relaxed norms for multi-brand retail trading and eased the mandatory 30 per cent local sourcing norms for companies. It has also widened the definition of the term control for mergers and acquisitions, involving overseas companies, a move that will provide more clarity to foreign investors.The government notification follows the Cabinet decision of 2 August 2013 to relax overseas investment norms.

As per the notification, control will include the right to appoint a majority of directors or to control the management or policy decisions including by virtue of their shareholding or management rights or shareholders agreement or voting agreements.

The expanded reach of the term control will help calculate the total foreign investment; direct and indirect in Indian companies. Prior to this, control was considered the entity with the power to appoint the majority of directors in a company.

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