Indian companies, including those which have already enhanced the aggregate ceiling from the normal level of 24 per cent to 30 per cent of its issued and paid up capital, would now be permitted to allow Foreign Institutional Investors (FII) investment under Portfolio Investment Scheme (PIS), up to 40 per cent of their issued and paid up capital subject to :

1. the approval by the board of directors of the company to the enhanced limit up to 40 per cent ;
2. a special resolution passed by the general body of the company approving the enhanced limit up to 40 per cent.

All other conditions applicable to FII portfolio investment continue to be operative as before. The revised alert limits would continue to be 2 per cent less than the overall respective ceiling limits.

It may be recalled that enhancement of the aggregate ceiling for FII investments under the Portfolio Investment Scheme in Indian companies from the normal level of 24 per cent to 40 per cent of the issued and paid up capital of these companies under the specified procedure was announced by the Finance Minister in his recent Budget Speech 2000-2001. The government had notified the enhancement on March 1, 2000.