A person resident in India made Overseas Direct Investment in a foreign entity permit for Restructuring - FEMA Ready Reckoner - FEMA

A person resident in India made Overseas Direct Investment in a foreign entity permit for Restructuring Yes , Rule 18 of Foreign Exchange Management (Overseas Investment) Rules, 2022 may allowed to a person resident in India who has made ODI in a foreign entity may permit for Restructuring For the Restructuring following condition to be fulfilled namely The balance sheet by such foreign entity, which has been incurring losses for the previous two years as evidenced by its last audited balance sheets, subject to ensuring compliance with reporting, documentation requirements and subject to the diminution in the total value of the outstanding dues towards such person resident in India on account of investment in equity and debt, after such restructuring not exceeding the proportionate amount of the accumulated losses : The amount of Diminution in value in case of such diminution where the amount of corresponding original investment is more than USD 10 million or in the case where the amount of such diminution exceeds 25% of the total value of the outstanding dues towards the Indian entity or investor, the diminution in value shall be duly certified on an arm s length basis by a registered valuer as per the Companies Act, 2013 or corresponding valuer registered with the regulatory authority or certified public accountant in the host jurisdiction the certificate dated not more than six months before the date of the transaction shall be submitted to the designated Authorised Dealer bank. Restructuring [ As per Para 14 of FED Master Direction No. 15/2024-25 dated 24.07.2024 ] (1) A person resident in India who has made ODI in a foreign entity, may permit restructuring of the balance sheet by such foreign entity in accordance with rule 18 of OI Rules. The aggregate investment in both the equity and debt of the foreign entity shall be taken into consideration for computing the proportionate amount of accumulated losses. However, in case the restructuring involves only equity, investment only in equity of the foreign entity may be taken into consideration for computing proportionate losses. (2) The certificate required to be furnished in accordance with rule 18 of OI Rules shall mention the amount of accumulated losses as per the audited balance sheet of the foreign entity, the proportionate amount of accumulated losses based upon the share of the Indian entity/investor, the amount of diminution in the value of the outstanding dues towards the Indian entity/investor post restructuring and that such diminution does not exceed the proportionate amount of accumulated losses. (3) These provisions shall not be used where the assets are simply revalued in the books of the Indian entity without any restructuring of the balance sheet of the foreign entity.