Can NRIs receive rights or bonus shares from Indian companies?
Yes, under FEMA (Foreign Exchange Management Act) regulations, Indian companies are permitted to issue rights shares and bonus shares to their non-resident shareholders, including NRIs, subject to certain conditions.
FEMA conditions for issuance
- Sectoral cap compliance:
The company must ensure that post-issuance foreign shareholding does not breach the permitted sectoral cap under FEMA guidelines. - Eligibility:
NRIs holding shares on a repatriation or non-repatriation basis are eligible to receive these additional shares in the same proportion. Mode of allotment:
- Rights and bonus shares can be credited to the same Demat account where the original holdings are maintained.
- Payment for rights issues (if applicable) should be made using NRE/NRO funds, based on the original investment mode.
What if...
| Scenario | What you should know |
|---|
| You hold shares in a company issuing rights/bonus | You are eligible to receive them without requiring fresh RBI approval |
| You want to subscribe to a rights issue | Use the same account (NRE/NRO) that you used to purchase the original shares |
| The issuance exceeds the sectoral limit | The company cannot proceed without RBI clearance for the overshoot |
FYERS automatically reflects any bonus or rights entitlements in your holdings. For rights issues requiring payment, use funds from the correct bank account type (NRE or NRO) to avoid compliance issues.
Last updated: 24 Jun 2025