Overseas Direct Investment

Investment in Unlisted Foreign Entity: Infusion of equity capital or subscribing to the Memorandum of Association of a foreign entity, regardless of the stake percentage.
Investment in Listed Foreign Entity (10% or More Stake): Investments in listed foreign entities where the stake is 10% or more of the paid-up equity capital.
Investment with Control (Less than 10% Stake in Listed Foreign Entity): Investments made with control, even if the stake is less than 10% of the paid-up equity capital of a listed foreign entity.Control implies the authority to appoint a majority of directors, influence management or policy decisions either directly or indirectly. This influence can stem from shareholding, management rights, shareholders agreements, voting agreements, or holding 10% or more of voting rights.

Permissible investors, under the automatic route, include the following Indian entities:

Companies under the Companies Act, 2013
Limited Liability Partnerships (LLPs) formed under the Limited Liability Partnership Act, 2008
Partnership firms registered under the Indian Partnership Act, 1932
Resident individuals (Only for the purpose of investment in equity capital)
Body Corporates incorporated by prevailing laws

Note: For more details please contact our AD Branch Click Here

Financial commitment by a person resident in India encompasses:

Aggregate investment into Equity capital
Debt excluding Overseas Portfolio Investment (OPI)
Non-fund based facilities extended to foreign entities by way of Guarantees (Corporate & SBLC)
Resident individuals are only permitted to invest in the equity capital of overseas entities.
Converting/Ploughing back profits into Equity.
Export Sale proceeds pumped into FE towards equity.

The financial commitment should not exceed 400% of the net worth as per the last audited balance sheet (not exceeding 18 months preceding the transaction date) or USD 1 (one) billion (or its equivalent) in a financial year, whichever is lower.
Any resident individual may make Overseas Direct Investment (ODI) in equity capital or OPI within the limits set by the Liberalized Remittance Scheme, capped at USD 250,000 per annum.

Real estate activity
Gambling in any form
Dealing with financial products linked to the Indian Rupee without specific approval from the Reserve Bank of India.
Additionally, Resident Individuals are barred from investing in the financial sectors and establishing Step-Down Subsidiaries (SDS).

Entities desirous of undertaking an ODI transactions needs to submit relevant Documents (FC Form and related Documents) at Authorized Dealer (AD) Branch
Scrutiny of Documents by AD Bank: The AD Bank examines the documents to ensure that the financial commitment falls within the purview of the automatic route.
Generation of Unique Identification Number (UIN): Upon successful completion of documentation to the satisfaction of the AD Branch a UIN is generated through RBI OID portal. Requested outward Remittance is then processed.
Subsequent Transactions Reporting: Subsequent transactions relating investment, disinvestment, APR Reporting, Change in Capital structure etc. are reported in the OID portal against the same UIN
Fulfilment of Obligations by Indian Entity/Individual: IE needs to fulfil the obligations such as submission of share certificates for the date of investment made within 6 months of change of capital structure/Shareholding pattern and the Annual Performance Report (APR) by the Indian Entity/Individual, Filing of annual return on Foreign Liabilities and Assets (FLA) within the stipulated timeline.

Note: For more details please contact our AD Branch Click Here

The content mentioned above is for information only and is in conjunction with the Foreign Exchange Management (Overseas Investment) Regulations, 2022.For more details, please refer above regulatory publication as amended from time to time.