Clarifications on the permissibility of issuance of bonus shares to existing non-resident shareholder(s) by Indian companies engaged in sectors prohibited for FDI. - FEMA - Press Note No. 2 (2025 Series)

Government of India Ministry of Commerce and Industry Department for Promotion of Industry and Internal Trade FDI (Policy, Facilitation Data) Section FDI Policy Cell Press Note No. 2 (2025 Series) Subject: Clarifications on the permissibility of issuance of bonus shares to existing non-resident shareholder(s) by Indian companies engaged in sectors prohibited for FDI. As per the Consolidated FDI Policy Circular of 2020 dated 15.10.2020 , as amended from time to time (FDI Policy), Indian companies are permitted to issue bonus shares to existing non-resident shareholders, subject to adherence to sectoral cap, if any. Accordingly, the following clarification is inserted under Para 1 Annexure 3 of the FDI Policy: An Indian Company engaged in a sector/activity prohibited for FDI, is permitted to issue bonus shares to its pre-existing non-resident shareholder(s) provided that the shareholding pattern of the pre-existing non-resident shareholder(s) does not change pursuant to the issuance of bonus shares 2. Issuance of bonus shares must comply with the applicable rules/laws/regulations/guidelines. 3. The above clarification will be effective from the date of issue of the applicable FEMA notifications. (Sandhya Bhullar) Joint Secretary to the Government of India Dated 07.04.2025