The Reserve Bank of India (RBI) on Thursday, the 11th day of February, 2016 has issued circular RBI/2015-16/319 A.P. (DIR Series) Circular No. 52 to the Authorised Dealer Category – I Banks, Pursuant to paragraph 14 of the Sixth Bi-Monthly Monetary Policy Statement for 2015-16 RBI_Press Release_Sixth Bi-monthly Monetary Policy Statement, 2015-16_02.02.16, RBI vide Press Release dated February 2, 2016, had announced that in case of startups, certain permissible transactions under the existing regulatory framework shall be clarified. One of the issues related to issue of shares without cash payment by the investor through sweat equity or against any legitimate payment owed by the company remittance of which does not require any permission under FEMA, 1999.

The said circular can be accessed at the following link: RBI 2015-16_319_A.P. (DIR Series) Circular No. 52_Regulatory Relaxations for Startups- Clarifications relating to Issue of shares_11.02.2016