The Ministry of Finance (DEA) has amended the FEMA (Non-Debt Instruments) Rules, 2019, through a notification dated June 11, 2025, effective from the date of its publication in the Official Gazette.
As part of this amendment, a new clause has been inserted in Rule 7, allowing Indian companies operating in FDI-prohibited sectors to issue bonus shares to their existing non-resident shareholders, subject to the following conditions:
- The shareholding pattern remains the same (i.e., no change in ownership percentage); and
- The issuance is in compliance with applicable laws, rules, and guidelines.
This amendment aligns with the clarification earlier issued by the Ministry of Commerce & Industry vide Press Note No. 2 (2025 Series) dated April 7, 2025, modifying Para 1 of Annexure 3 of the FDI Policy dated October 15, 2020.
For more details, refer to the Ministry of Finance notifications:
https://egazette.gov.in/WriteReadData/2025/263729.pdf
https://dpiit.gov.in/sites/default/files/pn2_07April2025.pdf
DISCLAIMER: – The summary information herein is based on notification issued by Ministry of Finance dated 11th June, 2025. While the information is believed to be accurate, we make no representations or warranties, express or implied, as to the accuracy or completeness of it. Readers should conduct and rely upon their own examination and analysis and are advised to seek their own professional advice. This note is not an offer, advice or solicitation. We accept no responsibility for any errors it may contain, whether caused by negligence or otherwise or for any loss, howsoever caused or sustained, by the person who relies upon it.
PDF version of this update is attached: Bonus Issue to Non-Resident Shareholders Permitted in FDI-Prohibited Sectors
