Securities issued with option clauses made enforceable

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The RBI has recently made an amendment to the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000, recognizing issuance of equity shares or convertible securities containing an optionality clause as eligible instruments which may be issued to non-residents under the foreign direct investment route. However, the amendment specifies that such an instrument cannot contain an option or right to exit at an assured price.

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The business law digest is compiled by Nishith Desai Associates (NDA). NDA is a research-based international law firm with offices in Mumbai, New Delhi, Bangalore, Singapore, Silicon Valley and Munich. It specializes in strategic legal, regulatory and tax advice coupled with industry expertise in an integrated manner.