M. K. Sons Fine Jewels Limited lifts aggregate FPI limit to 100%

M. K. Sons Fine Jewels Limited raised its aggregate foreign portfolio investor (FPI) limit from 24% to 100% of paid-up equity share capital through resolutions in March 2026. The jewellery retailer also increased the combined limit for non-resident Indians (NRIs) and Overseas Citizens of India (OCIs), investing on a repatriation basis, from 10% to up to 24%.

Why did M. K. Sons Fine Jewels lift its aggregate FPI limit to 100%?

M. K. Sons Fine Jewels lifted its aggregate FPI limit to 100% because its single-brand jewellery retail activity has a 100% foreign-investment sectoral cap under the automatic route, subject to applicable conditions. An FPI is a Securities and Exchange Board of India (SEBI)-registered foreign investor that may purchase Indian shares within the applicable ownership limits. The company’s previous aggregate FPI ceiling was 24% of paid-up equity share capital.

The change was approved through a board resolution dated March 5, 2026 and a shareholders’ resolution dated March 6, 2026. The prospectus states that these resolutions increased the aggregate FPI investment limit from 24% to 100% of M. K. Sons Fine Jewels’ paid-up equity share capital. The resolutions establish available ownership capacity and do not state that FPIs will hold 100% after listing.

How do M. K. Sons Fine Jewels’ FPI limits apply to individual investors?

M. K. Sons Fine Jewels’ 100% aggregate FPI limit does not remove the restriction on an individual FPI. The prospectus states that each FPI’s investment cannot exceed 10% of total paid-up equity share capital, while SEBI-registered FPIs buying shares through the offer are subject to an individual FPI or sub-account limit of less than 10% on a fully diluted basis.

The aggregate limit measures the combined holdings of all FPIs rather than the position of one institution. For FPI participation in the offer, the prospectus says the 24% aggregate threshold included direct and indirect foreign investments and was measured against paid-up equity capital on a fully diluted basis. Fully diluted basis means the equity capital is calculated on the assumption that all securities convertible into equity shares have converted.

Before April 1, 2020, a company could set a lower aggregate FPI threshold of 24%, 49% or 74% through board and shareholder approvals. From April 1, 2020, the aggregate FPI limit increased to the sectoral cap applicable to the Indian company, provided the company complied with Foreign Direct Investment Policy conditions. M. K. Sons Fine Jewels used its March 2026 approvals to replace its 24% threshold with the 100% sectoral ceiling.

Why is the 100% foreign-investment ceiling available to M. K. Sons Fine Jewels?

M. K. Sons Fine Jewels can use a 100% ceiling because it operates in single-brand product retail trading in the jewellery sector. Under the Consolidated Foreign Direct Investment Policy, 2020 issued by the Department for Promotion of Industry and Internal Trade (DPIIT), read with the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019, foreign direct investment (FDI) in that activity is permitted up to 100% of paid-up share capital under the automatic route, subject to prescribed conditions.

The automatic route permits foreign investment without the separate government-approval route when the applicable policy conditions are met. The prospectus identifies the foreign-investment framework as including the Foreign Exchange Management Act (FEMA), rules, master circulars, DPIIT press notes, press releases and clarifications. M. K. Sons Fine Jewels’ aggregate FPI ceiling therefore matches the sectoral cap for its business rather than exceeding the 100% limit available under the policy.

The prospectus separates sectoral eligibility from conditions on a share transfer between an Indian resident and a non-resident. Such a transfer does not need prior Reserve Bank of India approval only if specified conditions are met, including that the investee activity is under the automatic route, foreign ownership remains within sectoral limits and pricing follows SEBI or Reserve Bank of India guidelines. The transfer must also not attract the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.

What changed for M. K. Sons Fine Jewels’ NRI and OCI ownership?

M. K. Sons Fine Jewels raised the combined investment ceiling for NRIs and OCIs investing on a repatriation basis from 10% to up to 24%. The board resolution of March 5, 2026 and the shareholders’ resolution of March 6, 2026 approved this separate increase. The prospectus describes the limit as applying to the aggregate paid value of shares purchased by all eligible NRIs and OCIs on a repatriation basis.

The revised NRI and OCI ceiling remains separate from the aggregate FPI ceiling. Each eligible NRI or OCI investing on a repatriation basis is subject to a 5% individual limit of total paid-up equity capital on a fully diluted basis. Before the resolutions, NRIs and OCIs together could hold no more than 10%, while a special resolution allowed the combined ceiling to be increased to 24%.

The FPI and NRI/OCI decisions changed ownership capacity by different amounts. The aggregate FPI limit rose 76 percentage points, from 24% to 100%, while the combined NRI and OCI limit rose 14 percentage points, from 10% to 24%. The prospectus does not disclose current FPI, NRI or OCI holdings, so the resolutions do not establish actual post-listing foreign ownership.

Which foreign-investor restrictions still apply to M. K. Sons Fine Jewels?

M. K. Sons Fine Jewels remains subject to investor-eligibility, beneficial-ownership and foreign-investment rules. Under DPIIT Press Note No. 3 of 2020, dated April 17, 2020, an investment by an entity from a country sharing a land border with India, or where the beneficial owner falls within that category, requires prior government approval under the FDI Policy and FEMA framework.

DPIIT Press Note No. 2 of 2026, dated March 15, 2026, amended the policy to define beneficial owner and provide that approval would be required only where relevant citizens or entities directly or indirectly hold more than 10% of an investor’s shares, capital or profits, exercise control over that investor, or exercise ultimate effective control over the investee entity. The prospectus says the amendment will take effect only after notification of corresponding amendments to the FEMA Non-Debt Instruments Rules, which were awaited as of the prospectus date.

Overseas corporate bodies cannot participate in the offer under existing Government of India policy. M. K. Sons Fine Jewels’ equity shares have not been and will not be registered under the U.S. Securities Act of 1933, and the prospectus states that they are offered and sold only outside the United States in offshore transactions relying on Regulation S and applicable local laws. The 100% FPI limit and 24% NRI and OCI limit therefore operate alongside investor-specific eligibility and compliance requirements.

Conclusion

M. K. Sons Fine Jewels expanded the potential foreign-investor ownership capacity available after listing by moving its aggregate FPI threshold to the 100% sectoral cap and its combined NRI and OCI threshold to up to 24%. The March 2026 resolutions changed company-level aggregate limits, while the individual FPI limit of less than 10% and the individual NRI or OCI limit of 5% continue to apply on the bases stated in the prospectus.

The disclosed matter to watch is the implementation of DPIIT Press Note No. 2 of 2026 through corresponding FEMA Non-Debt Instruments Rules amendments, which the prospectus says were still awaited. Foreign participation must also remain within the automatic-route conditions for single-brand product retail trading, applicable pricing requirements and the relevant sectoral ceiling.