Companies with FDI ban can issue bonus shares to pre-existing shareholders

The government on Monday clarified that any Indian company engaged in a sector where foreign direct investment (FDI) is prohibited could issue bonus shares to its pre-existing non-resident shareholders.

- SHREYA NANDI

However, after the issue of bonus shares, the shareholding pattern of the pre-existing non-resident shareholder would remain the same, according to a government notification.

The move is set to give the much-needed clarity to companies in the tobacco sector that have been seeking clarity regarding the issuance of bonus shares, experts said.

Under the FDI policy, tobacco is among the eight sectors where FDI is prohibited.