| Tuesday, December 26, 2006 |
| 49% foreign investment in Indian stock exchanges permitted |
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In a pioneering effort, the Union Government has allowed 49 per cent foreign investment in the stock exchanges. The move comes close on the heels of the Securities and Exchange Bureau of India’s (Sebi) move to allow public shareholding in bourses.
According to reports, within the 49 per cent, there is a separate foreign direct investment cap of 26 per cent and a foreign institutional investment ceiling of 23 per cent. The policy for foreign investments will apply to all companies in the securities market, including bourses, depositories and clearing corporations, the reports added.
It is learnt that FDI will be allowed with prior approval of the Foreign Investment Promotion Board (FIPB), while FII will be allowed only through purchases in the secondary market. This apart, foregn institutional investors will not get representation on the boards of the exchanges.
Reports further said that an overall cap of 5 per cent has been imposed on a single foreign investor, including persons acting in concert.
Significantly, the Bombay Stock Exchange has been awaiting guidelines to complete its demutualisation and corporatisation process and announce its plans for a strategic sale of 26 per cent.
It may be recalled that Sebi had earlier notified offers for sale, placement of existing shares held by members and also private placement of fresh shares to increase the public shareholding of stock exchanges. It had said that no entity, either individually or together with persons acting in concert, shall be allowed to acquire or hold more than 1 per cent of the paid-up capital of the exchanges without prior approval of the stock markets regulator.Labels: Business |
| posted by a correspondent @ 2:30 AM |
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