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Restriction and Prohibitions on Person Resident in India for making Overseas Direct Investment in Foreign Entity - FEMA Ready Reckoner - FEMAExtract Restriction and Prohibitions on Person Resident in India for making Overseas Direct Investment (ODI) in Foreign Entity Such Restriction and Prohibitions on Person Resident in India for making Overseas Direct Investment (ODI) in Foreign Entity may imposed by Rule 19 of Foreign Exchange Management (Overseas Investment) Rules, 2022. (1) Unless otherwise provided in the Act or these rules, No person resident in India shall make ODI in a foreign entity engaged in (a) real estate activity; real estate activity means buying and selling of real estate or trading in Transferable Development Rights but does not include the development of townships, construction of residential or commercial premises, roads or bridges for selling or leasing. (b) gambling in any form; and (c) dealing with financial products linked to the Indian rupee without specific approval of the Reserve Bank. (2) Any ODI in start-ups recognised under the laws of the host country or host jurisdiction as the case may be, shall be made by an Indian entity only from the internal accruals whether from the Indian entity or group or associate companies in India and in case of resident individuals, from own funds of such an individual. (3) No person resident in India shall make financial commitment in a foreign entity that has invested or invests into India, at the time of making such financial commitment or at any time thereafter, either directly or indirectly, resulting in a structure with more than two layers of subsidiaries: Exception of such restriction and Prohibition mention under rule 19(1), (2) (3) of shall not apply to the following classes of companies mentioned in sub-rule (2) of rule 2 of the Companies (Restriction on Number of Layers) Rules, 2017 as may be amended from time to time, namely:- (a) a banking company as defined in clause (c) of section 5 of the Banking Regulation Act, 1949 ; (b) a non-banking financial company as defined in clause (f) of section 45-I of the Reserve Bank of India Act, 1934 which is registered with the Reserve Bank and considered as systematically important non-banking financial company by the Reserve Bank; (c) an insurance company being a company which carries on the business of insurance in accordance with provisions of the Insurance Act, 1938 and the Insurance Regulatory and Development Authority Act, 1999 and (d) a Government company referred to in clause (45) of section 2 of the Companies Act, 2013 .
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