The government has notified amendment to non-debt instrument rules under the Foreign Exchange Management Act (FEMA), paving the way for up to 20 percent foreign direct investment in Life Insurance Corporation (LIC), reported The Economic Times.
On March 14, the Department for Promotion of Industry and Internal Trade (DPIIT) amended the FDI policy to enable foreign investment in LIC ahead of its mega initial public offer.
FEMA notification was required to operationalise provisions DPIIT issued through press note including FDI policy changes that will allow large foreign investors to subscribe to LIC’s IPO, wrote The Economic Times.
“These changes, among others, were brought in to permit up to 20% foreign direct investment in LIC of India ahead of its IPO,” said Nischal S Arora, partner – regulatory at business consultant firm Nangia Andersen LLP.
Until now, the FDI policy did not prescribe any specific provision for foreign investment in LIC, which is a statutory corporation established under LIC Act, 1956.
Other amendments include extension of minimum mandatory conversion period of convertible notes issued by start-up companies recognised by DPIIT to 10 years from five years.