Regions

The Reserve Bank of India announced that foreign direct investments should follow its newly released guidelines that define the control and ownership of a company. This came after controversy sprang when a United Arab Emirates company Etihad acquired Jet Airways in a buyout earlier.

The new guidelines stipulated that a firm will be defined as 'controlled by non-residents' if they have the power to elect a majority of the firm's directors.

This notification has been pending release for the past four years.  The release of the new guidelines shall be used to provide foreign direct investments standard ceilings and other across the board rules.

In the guidelines, the terms 'owned' and 'controlled' were critically defined, so as to decrease conflicts and to be precise when referring to foreign companies of domestic firms.

"RBI shall consider treating such cases as compliant with these guidelines within a period of 6 months or such extended time as considered appropriate by RBI in consultation with Government of India," said the statement.