A company by way of resolution authorised foreign participation in the equity share capital of the company to the extent of 74%. After obtaining all necessary approvals this was implemented and share of foreign participa

Answer 2(a) - Board Note on Foreign Participation In order to attract employees, the company makes a scheme to offer sweat equity to the employees. In fact, there is wealth creation amongst the employees due to sweat equity. Board Note: The Management of the Company is preferential wherein the share of the Premier is 10%. Due to its performance, foreign participation remains very high and the limit of 74% is fully held by foreign participants. In 2010, the foreign participation was: Paid Up Capital: ₹500 Crore Foreign Participants @ 74%: ₹370 Crore Given the fact that the limit was reached, foreign participants were not allowed to purchase shares of the company from the share market. Now the paid-up share capital has increased to ₹600 Crore and thus foreign participants can increase their shares to ₹444 Crores (74% of ₹600 Crore). It means foreign participants can buy shares from the share market to the extent of the limit of 74% of the total paid-up capital, which is around 44,40,00,000 shares of ₹10 each. Necessary approval from RBI, NSE, BSE and other authorities can be taken as a procedural matter. It does not require approval of shareholders. Due to the demand for the stock from foreign participants, the shares will be purchased from the share market and there will be purchase movement of share price as soon as the foreign participants are allowed. Since it is a price-sensitive information, all the rules of confidentiality and permissions of various regulations of Insider Trading shall be adhered to. Case Study (Example) Bringing the figures, this is the case of HDFC Bank, wherein foreign participation was allowed. The price of HDFC Bank in the share market was up sharply, the day the trading was opened in the share market. Regularly the stocks kept a strong vigilance and participation of foreign participants, which gets stopped during the trading hour at 1:30 PM. This was a unique case in the history of stock market in India, wherein the interest of foreign participants was at peak. Thanks to the excellent performance of HDFC Bank.