FERA Companies

FERA Companies The Foreign Exchange Regulation Act (FERA) 1973 seeks, among other things, to dilute foreign ownership to less than 40% in companies operating in India by imposing certain restrictions, such as no diversification and no expansion. Foreign companies which hold more than 40% equity shares of their Indian subsidiaries are permitted to operate in India only if they Indian subsidiaries are permitted to operate in India only if they fall in the priority sector or export 65% or more of their products. All the others have been made to liquidate their foreign equity holding to 40% or less. There are stilla large numbers of companies with more than 40% equity participation by foreigners, and they are FERA companies.

Shares of FERA companies are generally highly prized by investors because of their professional management, excellent performance, and high profitability.

FERA restrictions are now considerably relaxed.

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