The Reserve Bank of India on Wednesday allowed foreign companies to issue their shares under employee stock option plans even if they indirectly control a company in India.
The apex bank said with a view to further liberalising overseas investment, it has done away with the need for prior permission of the apex bank for the issue of ESOPs if a foreign company had indirect shareholding in an Indian company.
The indirect holding could be through a special purpose vehicle or a step-down subsidiary, but the minimum holding should be 51 per cent.
Till now, the Reserve Bank of India accorded permission on a case-to-case basis for holding shares of the ultimate parent company which has investment in India through a holding company or a special purpose vehicle.
RBI said the liberalisation has been carried out under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999, and is without prejudice to permissions/approvals, if any, required under any other law.
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