To expeditiously approve disinvestment proposals by foreign investors, the RBI has announced guidelines for disinvestment. The salient features are:
The RBI permits on a near 'automatic' basis the transfer of shares, bonds and debentures provided the sale is effected through the stock exchange or through a registered merchant banker or a stock broker.
The RBI also gives special permission where the foreign investor wishes to transfer his shareholding, not through a stock exchange but on a private basis to a resident including one of the co-promoters.
As regards pricing of the disinvestment, in case of transfer from a non-resident to a resident, the RBI will satisfy itself that the shares have been sold at a price arrived at by taking the average of quotations for one calendar-month preceding the date of application, or the prevailing market price on the date of application, or the price sought by the applicant, whichever is lower. In the case of shares of unlisted companies or in the case of listed companies where the shares are not regularly traded, the RBI will be guided by the net asset value and earnings per share.
In case of transfer of shares, bonds and debentures of an Indian company by a non-resident or foreign national to another non-resident, no permission is required to be sought.
Centre for Monitoring Indian Economy, Bombay
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Last updated: May 1995.