SS Retail caps aggregate foreign portfolio ownership at 24%

SS Retail Limited caps aggregate foreign portfolio investor ownership at 24% of paid-up Equity Share Capital on a fully diluted basis because it operates in multi-brand retail trading. The prospectus says specified non-residents cannot use the foreign direct investment route in the offer, while each foreign portfolio investor must remain below 10% of post-offer capital.

Why does SS Retail cap foreign portfolio ownership at 24%?

SS Retail’s 24% aggregate foreign portfolio ownership limit reflects the foreign-investment treatment of multi-brand retail trading. Under the Consolidated Foreign Direct Investment Policy Circular issued by the Department for Promotion of Industry and Internal Trade on October 15, 2020, foreign direct investment, or FDI, in multi-brand retail trading is permitted up to 51% of paid-up share capital only through the government approval route and subject to prescribed conditions.

The company identifies multi-brand retail trading as its operating sector and says its business is therefore under the restricted FDI route. This differs from sectors not listed in the Consolidated FDI Policy, where FDI is permitted up to 100% of paid-up share capital under the automatic route, subject to prescribed conditions. The 51% sectoral FDI ceiling does not give offer bidders a 51% portfolio-investment entitlement because SS Retail separately specifies the portfolio route and its limits.

The prospectus states that foreign portfolio investors, or FPIs, may hold up to 10% individually and up to 24% in aggregate, measured against SS Retail’s paid-up Equity Share Capital on a fully diluted basis. The offer-specific FEMA Rules description is more precise on the individual threshold: an FPI holding must remain below 10% of post-offer paid-up capital on a fully diluted basis. The aggregate FPI limit is currently subject to the sectoral or statutory cap.

All percentage limits in the FPI and NRI or OCI rows are stated by SS Retail on a fully diluted basis. NRI means non-resident Indian, and OCI means overseas citizen of India. The 24% FPI ceiling and the 24% NRI or OCI ceiling apply to separate investor categories rather than forming one stated combined cap.

Can non-residents use the FDI route in SS Retail’s offer?

No. SS Retail says non-resident investors, including FPIs, eligible NRIs and alternative investment funds, cannot invest in the offer through the FDI route because its multi-brand retail business is under the restricted route. The prospectus says those investors must use the foreign portfolio investment route, subject to applicable individual and aggregate limits.

The Foreign Exchange Management Act, or FEMA, regulates the manner in which foreign investment is made, while the Industrial Policy, 1991 sets sectoral limits and conditions. The Ministry of Finance’s Department of Economic Affairs notified the FEMA Rules on October 17, 2019, replacing the 2017 regulations governing transfer and issue of security by a person resident outside India. SS Retail says foreign investment in the offer will be made under those FEMA Rules.

Under the FEMA Rules described in the prospectus, non-resident participation is restricted to FPIs under Schedule II and eligible NRIs under Schedule IV on a non-repatriation basis. Schedule II participation is subject to an FPI holding below 10% of SS Retail’s post-offer paid-up capital on a fully diluted basis. Schedule IV identifies the permitted eligible-NRI route, while the prospectus does not present it as an FDI-route subscription.

Overseas corporate bodies, or OCBS, cannot participate in the offer under existing government policy, according to SS Retail. That exclusion applies even though the company’s November 29, 2025 Board resolution and December 8, 2025 shareholder resolution addressed a limit described as applying to NRIs and OCBS. Investor eligibility therefore depends on both the holder’s category and the available FEMA route.

How do SS Retail’s FPI and NRI limits differ?

SS Retail applies different individual thresholds to FPIs and to NRIs or OCIs, although each category has a 24% aggregate limit. An FPI must remain below 10% of post-offer paid-up capital on a fully diluted basis, whereas each NRI or OCI may hold no more than 5% of paid-up Equity Share Capital on a fully diluted basis.

SS Retail’s Board resolved on November 29, 2025, and shareholders resolved on December 8, 2025, to increase the investment limit by NRIs and OCBS from 10% to 24%. The prospectus states that total NRI and OCI shareholding may not exceed 24% of paid-up Equity Share Capital on a fully diluted basis, or any lower limit prescribed by applicable law. The change was 14 percentage points from the previous 10% limit.

The difference between individual and aggregate limits means that available capacity is affected by total holdings in the relevant category. Several FPIs can collectively reach 24% while each remains below 10%, and several NRIs or OCIs can collectively reach 24% while each stays at or below 5%. SS Retail directs bidders to ensure that the shares bid for do not exceed the limits applicable to them.

A resident-to-non-resident share transfer is separately described in the prospectus as not requiring prior Reserve Bank of India approval only when, among other conditions, the investee company’s activity is under the automatic route, foreign ownership is within sectoral limits, pricing follows Securities and Exchange Board of India and Reserve Bank of India guidelines, and the transfer does not trigger takeover regulations. SS Retail’s stated multi-brand retail classification does not place its FDI position under that automatic-route condition.

What other approval rules can affect SS Retail bidders?

SS Retail says investors linked to countries sharing a land border with India may require prior government approval. Press Note No. 3 of 2020, dated April 17, 2020, and the Foreign Exchange Management (Non-debt Instruments) Amendment Rules, effective April 22, 2020, cover an investment where the investor or beneficial owner is situated in, or is a citizen of, such a country.

The prospectus also records an amendment through Press Note No. 2 of 2026, dated March 15, 2026. Under its description, approval is required where citizens or entities of a land-border country hold rights or entitlements exceeding 10% of an investor entity’s shares, capital or profits, exercise control over that investor, or exercise ultimate effective control over the Indian investee entity.

The policy update applies even where the investor entity is incorporated or registered outside a land-border country if the stated ownership or control tests are met. SS Retail also notes that a multilateral bank or fund of which India is a member is not treated as an entity of a particular country, nor is any country treated as the beneficial owner of its investments in India, under the Fourth Amendment Rules effective December 8, 2020.

Where approval is required and obtained, SS Retail requires a bidder to notify the company and the registrar in writing, with a copy of the approval, during the bid or offer period. The prospectus says its foreign-ownership section is provided for bidders’ benefit and is not a complete analysis of restrictions on acquiring or transferring Indian securities.

Conclusion

SS Retail’s 24% aggregate foreign portfolio ownership cap is distinct from the 51% FDI ceiling for multi-brand retail trading. The sector allows FDI only through government approval, but SS Retail says specified non-residents cannot subscribe through the FDI route in the offer. The disclosed framework instead uses FPI participation below 10% per FPI and up to 24% in aggregate, alongside separately measured NRI and OCI limits.

What to watch next is capacity under the stated 24% aggregate limits and compliance with the category-specific individual thresholds. Bidders subject to the land-border-country rules must also assess the March 15, 2026 beneficial-ownership, control and ultimate-effective-control tests, because SS Retail requires notification if the necessary government approval has been obtained.