The Department for Promotion of Industry and Internal Trade (“DPIIT”), under the Ministry of Commerce and Industry, vide Press Note No. 2 (2025 Series), dated April 07, 2025, clarified the issuance of bonus shares by Indian companies operating in sectors where Foreign Direct Investment (“FDI”) is prohibited.[1] The provisions laid hereunder shall come into effect upon the issuance of notifications under the Foreign Exchange Management Act, 1999.
Currently, under the Consolidated FDI Policy Circular of 2020, dated October 15, 2020, Indian companies are permitted to issue bonus shares to existing non-resident shareholders, subject to the adherence of the sectoral cap.
Accordingly, a clarification has been issued by the DPIIT to state that Indian companies operating in sectors where FDI is prohibited, may issue bonus shares to their existing non-resident shareholders, provided that such issuance shall not result in any change in the shareholding pattern of those existing non-resident shareholders.
[1] https://dpiit.gov.in/sites/default/files/pn2_07April2025.pdf