Companies that plan to increase their foreign institutional investor holding from 24 per cent to the foreign direct investment cap in the sector could soon be able to do so without having to pass a mandatory resolution by their board of directors and a special resolution by their general body.

The inter-ministerial committee on foreign institutional investment has recommended that the requirement be done away with. The committee submitted its report to Finance Minister P Chidambaram a few days ahead of the Budget.

Official sources told Business Standard that the proposal was part of the government's efforts to simplify the investment regime in the country and relax the norms for FIIs.

"The Securities and Exchange Board of India guidelines regarding the acquisition of shares and takeovers are comprehensive enough to prevent any attempt by individuals or companies acting in concert to acquire a company. Since there are sufficient safeguards, the requirement for a special resolution can be done away with," an official said.

As per the present norms, the aggregate foreign portfolio investment ceiling can be enhanced up to the sectoral cap across in all sectors except the print media where FIIs are been banned.

Companies wishing to enhance the FII holding beyond 24 per cent are permitted to do so only under a special procedure that requires approval by the board of directors and a special resolution by the general body of the company.

According to data with the Reserve Bank of India, the average FII inflow is around $2.2 billion a year. However, there has been a spurt in FII inflows last year. The FII inflow in 2003-04 stood at $10.92 billion against $0.38 billion in the previous year.