FIPB rejects WWIL's fund rising plan

By siliconindia   |   Tuesday, 20 January 2009, 17:43 IST
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New Delhi: As per the decision by Foreign Investment Promotion Board (FIPB), companies in India would not be able to issue partly paid-up equity shares to foreign investors. In a fresh move, FIPB has rejected a proposal from Wireless and Wireless India (WWIL), a multi system operation (MSO), asking for permission issue partly paid-up equity shares pursuant to its rights issue, reported Business Standard. WWIL has intended to issue shares to non-residents, including FIIs, venture capital funds, multilateral and bilateral development financial institutions and eligible NRIs for cash aggregating up to Rs 450 crore. Earlier, the company has informed FIPB that it has a foreign shareholding of 23.12 percent, of which 12.11 percent by FII registered with Sebi. Though issue of partly paid-up equity shares is permitted under the companies Act , according to FIPB, it is not envisaged in the FDI guidelines. "Issue of partly paid-up equity shares need not be encouraged, keeping in view the spirit of FDI," stated FIPB. In fact, the department of economic affairs and information and broadcasting ministry do not have any objection to the proposal. However, Subhash Chandra-owned WWIL has appealed to the FIPB to reconsider the proposal. The company has been given prior approval to take up to 49 percent foreign direct equity.