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Master Direction Direct Investment by Residents in Joint Venture (JV) / Wholly Owned Subsidiary (WOS) Abroad (Updated as on October 06 2016)

FEMA - 15/2015-16 - Dated:- 1-1-2016 - RBI/FED/2015-16/10 FED Master Direction No. 15/2015-16 January 1, 2016 (Updated as on October 06, 2016) To, All Authorised Dealer Category - I banks and Authorised banks Madam / Dear Sir, Master Direction - Direct Investment by Residents in Joint Venture (JV) / Wholly Owned Subsidiary (WOS) Abroad Direct investments by residents in Joint Venture (JV) and Wholly Owned Subsidiary (WOS) abroad are being allowed, in terms of clause (a) of sub-section (3) of sec .....

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ns to Authorised Persons under Section 11 of the Foreign Exchange Management Act (FEMA), 1999. These directions lay down the modalities as to how the foreign exchange business has to be conducted by the Authorised Persons with their customers/ constituents with a view to implementing the regulations framed. 3. Instructions issued on Direct Investment by Residents in Joint Venture (JV)/ Wholly Owned Subsidiary (WOS) Abroad have been compiled in this Master Direction. The list of underlying circul .....

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tomers/ constituents. The Master Direction issued herewith shall be amended suitably simultaneously. Yours faithfully, (A K Pandey) Chief General Manager INDEX Section A - General A.1 Introduction A.2 Statutory Basis A.4 Prohibitions A.5 General Permission Section B - Direct Investment (or financial commitment) outside India B.1 Automatic Route B.1.1 Investment (or financial commitment) through Special Purpose Vehicle (SPV) under Automatic Route B.1.2 Issue of guarantee by an Indian Party to ste .....

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B.9 Investments in energy and natural resources sector B.10 Overseas investments by proprietorship concerns and registered Trust/ Society B.11 Post investment changes / additional investment (or financial commitment) in existing JV / WOS B.12 Restructuring of the balance sheet of the overseas entity involving write off of capital and receivables B.13 Acquisition of a foreign company through bidding or tender procedure B.14 Obligations of Indian Party B.15 Transfer by way of sale of shares of a .....

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investments in foreign securities C.1 Permission for purchase/ acquisition of foreign securities in certain cases C.2 Pledge of a foreign security by a person resident in India C.3 General permission in certain cases C.4 Acquiring the shares of SWIFT by a resident bank C.5 Issue of Indian Depository Receipts C.6 Maintenance of Collateral by FIIS for Transactions in Derivative Segment - Opening of Demat Accounts by Clearing Corporations and Clearing Members Operational Instructions to Authorised .....

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rities under ADR / GDR linked Stock Option Scheme 9 Remittance towards Earnest Money Deposit or Issue of Bid Bond Guarantee 10 Transfer by way of sale of shares of a JV / WOS outside India 11 Verification of evidence of investment 12 Opening of Foreign Currency Account abroad by an Indian Party Appendix Master Direction - Direct Investment by Residents in Joint Venture (JV) / Wholly Owned Subsidiary (WOS) Abroad PART - I Section A - General A.1 Introduction (1) Overseas investments (or financial .....

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untry are other significant benefits arising out of such overseas investments (or financial commitment). They are also important drivers of foreign trade through increased exports of plant and machinery and goods and services from India and also a source of foreign exchange earnings by way of dividend earnings, royalty, technical know-how fee and other entitlements on such investments (or financial commitment). (2) In keeping with the spirit of liberalisation, which has become the hallmark of ec .....

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admissible for such transactions. Section 6(3) of the aforesaid Act provides powers to the Reserve Bank to prohibit, restrict or regulate various transactions referred to in the sub-clauses of that sub-section, by making Regulations. (2) In exercise of the above powers conferred under the Act, the Reserve Bank has in supersession of the earlier Notification No.FEMA19/RB-2000 dated 3rd May 2000 and subsequent amendments thereto, issued Foreign Exchange Management (Transfer or Issue of any Foreig .....

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utomatic Route outlined in paragraph B.1 and (ii) Approval Route outlined in paragraph B.8. A.3 Definitions In these Regulations, unless the context otherwise requires: (a) "Act" means Foreign Exchange Management Act, 1999 (42 of 1999); (b) "Authorised Dealer" means a person authorised as an authorised dealer under sub-section (1) of section 10 of the Act; (ba) Alternative Investment Fund means a fund as defined under the Securities and Exchange Board of India (Alternative In .....

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ribution to the capital or subscription to the Memorandum of Association of a foreign entity or by way of purchase of existing shares of a foreign entity either by market purchase or private placement or through stock exchange, but does not include portfolio investment; [(ea) "Domestic Depository" shall have the same meaning as assigned to it in the Companies (Issue of Indian Depository Receipts) Rules, 2004; (eb) "Eligible Company" means a Company eligible to issue Indian De .....

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an company expressed in foreign currency, and the principal and interest in respect of which is payable in foreign currency; (h) "Global Depository Receipt (GDR)" means a security issued by a bank or a depository outside India against underlying rupee shares of a company incorporated in India; (i) "Host country" means the country in which the foreign entity receiving the direct investment from an Indian Party is registered or incorporated; (j) "Indian Depository Receipts .....

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ludes any other entity in India as may be notified by the Reserve Bank: Provided that when more than one such company, body or entity make an investment in the foreign entity, all such companies or bodies or entities shall together constitute the "Indian Party"; (l) "Investment Banker" means an investment banker registered with the Securities and Exchange Commission in USA, or the Financial Services Authority in UK, or appropriate regulatory authority in Germany, France, Sing .....

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in Transferable Development Rights (TDRs) but does not include development of townships, construction of residential/commercial premises, roads or bridges; (q) "Wholly Owned Subsidiary (WOS)" means a foreign entity formed, registered or incorporated in accordance with the laws and regulations of the host country, whose entire capital is held by the Indian Party; (qa) "Venture Capital Fund" means a fund as defined under the Securities and Exchange Board of India (Venture Capit .....

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of which is payable in foreign currency, issued by an issuing company and subscribed to by a person who is a resident outside India in foreign currency and exchangeable into equity share of offered company, in any manner, either wholly, or partly or on the basis of any equity related warrants attached to debt instruments; (t) "Issuing company" means a company registered under the Companies Act, 1956 (1 of 1956) and eligible to issue Foreign Currency Exchangeable Bond under these regul .....

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t. A.4 Prohibitions (a) Indian Parties are prohibited from making investment (or financial commitment) in foreign entity engaged in real estate (meaning buying and selling of real estate or trading in Transferable Development Rights (TDRs) but does not include development of townships, construction of residential/commercial premises, roads or bridges) or banking business, without the prior approval of the Reserve Bank. (b) An overseas entity, having direct or indirect equity participation by an .....

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o persons residents in India for purchase / acquisition of securities in the following manner: a. out of the funds held in RFC account; b. as bonus shares on existing holding of foreign currency shares; and c. when not permanently resident in India, out of their foreign currency resources outside India. General permission is also available to sell the shares so purchased or acquired. Section B - Direct Investment (or financial commitment) outside India B.1 Automatic Route (1) In terms of Regulat .....

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roval of the Reserve Bank even when the total FC of the Indian Party is within the eligible limit under the automatic route (i.e., within 400% of the net worth as per the last audited balance sheet). (2) For the purpose of making investment / undertaking financial commitment in overseas Joint Ventures (JV) / Wholly Owned Subsidiaries (WOS), the Indian Party should approach an Authorised Dealer Category - I bank with an application in Form ODI (Master Document on Reporting) and prescribed enclosu .....

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rantee issued by a resident bank on behalf of JV or WOS of the Indian Party provided the bank guarantee is backed by a counter guarantee / collateral by the Indian Party. f. 50% of the amount of performance guarantee issued by the Indian Party provided that if the outflow on account of invocation of performance guarantee results in the breach of the limit of the financial commitment in force, prior permission of the Reserve Bank is to be obtained before executing remittance beyond the limit pres .....

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e laws of the host country permit incorporation of a company without equity participation by the Indian Party. Indian entities may offer any form of guarantee - corporate or personal (including the personal guarantee by the indirect resident individual promoters of the Indian Party)/ primary or collateral / guarantee by the promoter company / guarantee by group company, sister concern or associate company in India provided that: i. All the financial commitments, including all forms of guarantees .....

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k the prior approval of the Reserve Bank before remitting funds from India, on account of such invocation. iv. In terms of Regulation 5 (b) of Notification No. FEMA 8/2000-RB dated May 3, 2000, an authorised dealer in India may also give a Bank guarantee/ issue SBLC to a joint venture company or a wholly-owned subsidiary of a company in India in connection with its business abroad provided that the terms and conditions stipulated in Foreign Exchange Management (Transfer and Issue of Foreign Secu .....

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b) The Indian Party should not be on the Reserve Bank s Exporters' caution list / list of defaulters to the banking system circulated by the Reserve Bank / Credit Information Bureau (India) Ltd. (CIBIL) / or any other credit information company as approved by the Reserve Bank or under investigation by any investigation / enforcement agency or regulatory body. c) All transactions relating to a JV / WOS should be routed through one branch of an Authorised Dealer bank to be designated by the I .....

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hares, irrespective of the amount, valuation of the shares will have to be made by a Category I Merchant Banker registered with SEBI or an Investment Banker outside India registered with the appropriate regulatory authority in the host country. Approval of the Foreign Investment Promotion Board (FIPB) will also be a prerequisite for investment by swap of shares. f) In case of investment in overseas JV / WOS abroad by a registered Partnership firm, where the entire funding for such investment is .....

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heme, 1993, and the guidelines issued there under from time to time by the Government of India, provided: (i) ADRs/GDRs are listed on any stock exchange outside India; (ii) The ADR and/or GDR issued for the purpose of acquisition is backed by underlying fresh equity shares issued by the Indian Party; (iii) The total holding in the Indian entity by persons resident outside India in the expanded capital base, after the new ADR and/or GDR issue, does not exceed the sectoral cap prescribed under the .....

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ny, as recommended by the Investment Banker in its due diligence report in other cases. (5) Investments / financial commitments in Nepal are permitted only in Indian Rupees. Investments / financial commitments in Bhutan are permitted in Indian Rupees as well as in freely convertible currencies. All dues receivable on investments (or financial commitment) made in freely convertible currencies, as well as their sale / winding up proceeds are required to be repatriated to India in freely convertibl .....

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is not appearing in the Reserve Bank's caution list or is under investigation by the Directorate of Enforcement or included in the list of defaulters to the banking system circulated by the Reserve Bank/any other Credit Information company as approved by the Reserve Bank. Indian Parties whose names appear in the defaulters' list require prior approval of the Reserve Bank for the investment (or financial commitment). B.1.2 Issue of guarantee by an Indian Party to step down subsidiary of J .....

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d. (b) Further, the issuance of corporate guarantee on behalf of second generation or subsequent level step down operating subsidiaries will be considered under the Approval Route, provided the Indian Party indirectly holds 51 per cent or more stake in the overseas subsidiary for which such guarantee is intended to be issued. B.2 Investment (or financial commitment) in unincorporated/ incorporated entities overseas in oil sector under the Automatic Route (1) Investments (or financial commitment) .....

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d the proposal has been approved by the competent authority and is duly supported by certified copy of the Board resolution approving such investment. Investment in excess of the prescribed limit shall require prior approval of the Reserve Bank. B.3 Construction and maintenance of submarine cable systems under the Automatic Route (1) Indian Parties are also permitted to participate in a consortium with other international operators to construct and maintain submarine cable systems on co-ownershi .....

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tment. (2) Accordingly, these transactions may be reported by the Indian Parties investing in the consortium to the AD Category-I banks in Form ODI for enabling online submission of the same by the AD Category-I banks to the Reserve Bank for allotment of Unique Identification Number. B.4 Method of Funding (1) Investment (or financial commitment) in an overseas JV / WOS may be funded out of one or more of the following sources: i. drawal of foreign exchange from an AD bank in India; ii. capitalis .....

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an Party and vii. proceeds of foreign currency funds raised through ADR / GDR issues. In respect of (vi) and (vii) above, the limit of financial commitment vis-à-vis the net worth will not apply. However, all investments (or financial commitment) made in the financial sector will be subject to compliance with Regulation 7 of the Notification ibid, irrespective of the method of funding. (2) General permission has been granted to persons resident in India for purchase/ acquisition of securi .....

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sultancy, managerial and other services within the ceilings applicable. Capitalisation of export proceeds remaining unrealised beyond the prescribed period of realization will require prior approval of the Reserve Bank. (2) Indian software exporters are permitted to receive 25 per cent of the value of their exports to an overseas software start-up company in the form of shares without entering into Joint Venture Agreements, with prior approval of the Reserve Bank. B.6 Investments (or financial c .....

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rities concerned both in India and abroad for venturing into such financial sector activity; and iv. has fulfilled the prudential norms relating to capital adequacy as prescribed by the concerned regulatory authority in India. (2) Any additional investment (or financial commitment) by an existing JV/WOS or its step down subsidiary in the financial services sector is also required to comply with the above conditions. (3) Regulated entities in the financial sector making investments (or financial .....

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overseas / rated debt instruments (1) Portfolio investments by listed Indian companies Listed Indian companies are permitted to invest up to 50 per cent of their net worth as on the date of the last audited balance sheet in (i) shares and (ii) bonds / fixed income securities, rated not below investment grade by accredited / registered credit rating agencies, issued by listed overseas companies. (2) Investment by Mutual Funds Indian Mutual Funds registered with SEBI are permitted to invest within .....

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ts rated not below investment grade; vi) repos in the form of investment, where the counter party is rated not below investment grade. The repos should not, however, involve any borrowing of funds by mutual funds; vii) government securities where the countries are rated not below investment grade; viii) derivatives traded on recognized stock exchanges overseas only for hedging and portfolio balancing with underlying as securities; ix) short-term deposits with banks overseas where the issuer is r .....

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y basis by the AD banks in the format as prescribed by the Reserve Bank from time to time (3) A limited number of qualified Indian Mutual Funds, are permitted to invest cumulatively up to USD 1 billion in overseas Exchange Traded Funds as may be permitted by SEBI. (4) Domestic Venture Capital Funds / Alternative Investment Funds registered with SEBI may invest in equity and equity linked instruments of off-shore Venture Capital Undertakings, subject to an overall limit of USD 500 million. Accord .....

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ases of direct investment (or financial commitment) abroad. For this purpose, application together with necessary documents should be submitted in Form ODI through their Authorised Dealer Category - I banks. (2) Reserve Bank would, inter alia, take into account the following factors while considering such applications: a. Prima facie viability of the JV / WOS outside India; b. Contribution to external trade and other benefits which will accrue to India through such investment (or financial commi .....

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financial commitment. AD Category - I banks may forward such applications from their constituents to the Reserve Bank as per the laid down procedure. B.10 Overseas investments by proprietorship concerns and registered Trust/ Society (1) Keeping in view the changes in the definition / classification of the exporters as per the Foreign Trade Policy of the Ministry of Commerce and Industry, issued from time to time, the following revised terms and conditions are required to be complied with for co .....

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ck record, i.e., the export outstanding does not exceed 10% of the average export realisation of the preceding three years and a consistently high export performance; c. The Authorised Dealer bank is satisfied that the proprietorship concern / unregistered partnership firm in India is KYC (Know Your Customer) compliant, engaged in the proposed business and has turnover as indicated; d. The proprietorship concern / unregistered partnership firm in India has not come under the adverse notice of an .....

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partnership firm in India, whichever is lower. (2) Registered Trusts and Societies engaged in manufacturing/ educational/ hospital sector are allowed to make investment (or financial commitment) in the same sector(s) in a JV/WOS outside India, with the prior approval of the Reserve Bank. Eligibility Criteria: (a) Trust i) The Trust should be registered under the Indian Trust Act, 1882; ii) The Trust deed permits the proposed investment overseas; iii) The proposed investment should be approved by .....

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andum of Association and rules and regulations permit the Society to make the proposed investment which should also be approved by the governing body / council or a managing / executive committee. iii) The AD Category - I bank is satisfied that the Society is KYC (Know Your Customer) compliant and is engaged in a bonafide activity; iv) The Society has been in existence at least for a period of three years; v) The Society has not come under the adverse notice of any Regulatory / Enforcement agenc .....

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erseas Investment Division, Central Office, Amar Building, 5th Floor, Fort, Mumbai 400 001, through the AD Category - I bank. AD Category - I banks may forward the application to the Reserve Bank, after ensuring the above terms and conditions along with their comments and recommendations, for consideration. B.11 Post investment changes / additional investment (or financial commitment) in existing JV / WOS A JV / WOS set up by the Indian Party as per the Regulations may diversify its activities / .....

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erformance Report (APR - Part II of Form ODI) required to be forwarded to the AD Category-I bank. B.12 Restructuring of the balance sheet of the overseas entity involving write off of capital and receivables In order to provide more operational flexibility to the Indian corporates, the Indian promoters who have set up WOS abroad or have at least 51 per cent stake in an overseas JV, may write off capital (equity / preference shares) or other receivables, such as, loans, royalty, technical knowhow .....

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he Reserve Bank through the designated AD Category-I bank within 30 days of write-off/ restructuring. The write-off / restructuring is subject to the condition that the Indian Party should submit the following documents for scrutiny along with the applications to the designated AD Category -I bank under the Automatic as well as the Approval Routes: a) A certified copy of the balance sheet showing the loss in the overseas WOS/JV set up by the Indian Party; and b) Projections for the next five yea .....

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rty (IP) and Resident Individual (RI)2 (1) An IP/ RI which has made direct investment abroad is under obligation to, (i) receive share certificates or any other document as an evidence of investment in the foreign entity to the satisfaction of the Reserve Bank within six months, or such further period as Reserve Bank may permit, from the date of effecting remittance or the date on which the amount to be capitalised became due to the Indian Party or the date on which the amount due was allowed to .....

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Reserve Bank from time to time. The APR, so required to be submitted, has to be based on the audited annual accounts of the JV/WOS for the preceding year, unless specifically exempted by the Reserve Bank. AD Category - I bank is required to monitor the receipt of such documents and satisfy itself about the bonafides of the documents. It is further advised that - a. the online OID application has been suitably modified to enable the nodal office of the AD bank to view the outstanding position of .....

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ent Individuals and self-certification may be accepted; c. in case multiple IPs / RIs have invested in the same overseas JV / WOS, the obligation to submit APR shall lie with the IP / RI having maximum stake in the JV / WOS. Alternatively, the IPs / RIs holding stake in the overseas JV / WOS may mutually agree to assign the responsibility for APR submission to a designated entity which may acknowledge its obligation to submit the APR in terms of Regulation 15 (iii) of Notification, ibid, by furn .....

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Party certify that the un-audited annual accounts of the JV / WOS reflect the true and fair picture of the affairs of the JV / WOS and b. That the un-audited annual accounts of the JV / WOS have been adopted and ratified by the Board of the Indian Party. (4) An annual return on Foreign Liabilities and Assets (FLA) is required to be submitted directly by all the Indian companies which have received FDI and/or made FDI abroad (i.e. overseas investment) in the previous year(s) including the current .....

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e to another Indian Party which complies with the provisions of Regulation 6 of FEMA Notification 120/RB-2004 dated July 7, 2004 as amended from time to time, or to a person resident outside India, any share or security held by it in a JV or WOS outside India subject to the following conditions: i. the sale does not result in any write off of the investment (or financial commitment) made. ii.the sale is effected through a stock exchange where the shares of the overseas JV/ WOS are listed; iii. i .....

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the JV or WOS; v. the overseas concern has been in operation for at least one full year and the Annual Performance Report together with the audited accounts for that year has been submitted to the Reserve Bank; vi. the Indian Party is not under investigation by CBI / DoE/ SEBI / IRDA or any other regulatory authority in India. (2) The Indian Party is required to submit details of such disinvestment through its designated AD category-I bank within 30 days from the date of disinvestment. B.16 Tran .....

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100 crore; iii. where the Indian Party is an unlisted company and the investment (or financial commitment) in the overseas venture does not exceed USD 10 million. and iv. where the Indian Party is a listed company with net worth of less than ₹ 100 crore but investment (or financial commitment) in an overseas JV/WOS does not exceed USD 10 million. (2) Such disinvestments shall be subject to the conditions listed at B.15 (1) items (ii) to (vi) and B 15 (2) (3) An Indian Party, which does not .....

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institution in India or an overseas lender, for availing of fund based or non-fund based facility for itself (i.e. the Indian Party) or for its JV / WOS / SDS whose shares have been pledged, or for any other JV / WOS / SDS of the Indian Party subject to the terms and conditions prescribed under Regulation 18 of the Notification and A.P. (DIR Series) Circular No.54 dated December 29, 2014. B.18 Rollover of guarantees (1) It has been decided not to treat / reckon the renewal / rollover of an exist .....

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nt of the guarantee except the validity period; d. the reporting of the rolled over guarantee would be done in Form ODI - Part I; and e. if the Indian Party is under investigation by any investigation / enforcement agency or regulatory body, the concerned agency / body shall be kept informed about the same. (2) In case, however, the above conditions are not met, the Indian Party shall obtain prior approval of the Reserve Bank for rollover / renewal of the existing guarantee through the designate .....

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ia subject to the terms and conditions prescribed under Regulation 18A of the Notification and A.P. (DIR Series) Circular No.54 dated December 29, 2014. (2) An Indian Party may create charge (by way of mortgage, pledge, hypothecation or otherwise) on the assets of its overseas JV or WOS or SDS in favour of an AD bank in India as security for availing of the fund based and/or non-fund based facility for itself or its JV or WOS or SDS outside India subject to the terms and conditions prescribed un .....

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Joint Venture (JV) or Wholly Owned Subsidiary (WOS) outside India. The limit of overseas direct investment by the resident individual shall be within the overall limit prescribed by the Reserve Bank of India under the provisions of Liberalised Remittance Scheme, as prescribed by the Reserve Bank from time to time. B.21 Hedging of overseas direct investments (1) Resident entities having overseas direct investments (or financial commitment) are permitted to hedge the foreign exchange rate risk ar .....

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the extent of market value as on that date. B.22 Opening of Foreign Currency Account abroad by an Indian Party In terms of the conditions stipulated under A.P. (DIR Series) Circular No. 101 dated April 02, 2012, eligible Indian Party may open, hold and maintain Foreign Currency Account (FCA) abroad for the purpose of overseas direct investments subject to the following terms and conditions: I. The host country regulations stipulate that the investments into the country are required to be routed .....

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redits in the FCA on yearly basis to the designated AD bank with a certificate from the Statutory Auditors of the Indian party certifying that the FCA was maintained as per the host country laws and the extant FEMA regulations / provisions as applicable. The FCA so opened shall be closed immediately or within 30 days from the date of disinvestment from JV / WOS or cessation thereof. SECTION C - Other investments in foreign securities C.1 Permission for purchase/ acquisition of foreign securities .....

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reign company under its ESOP Schemes, if he is an employee, or, a director of an Indian office or branch of a foreign company, or, of a subsidiary in India of a foreign company, or, an Indian company in which foreign equity holding, either direct or through a holding company/Special Purpose Vehicle (SPV) irrespective of the percentage of the direct or indirect equity stake in the Indian company. AD Category - I banks are permitted to allow remittances for purchase of shares by eligible persons u .....

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ttances / beneficiaries, etc. (2) A person resident in India may transfer by way of sale the shares acquired as stated above provided that the proceeds thereof are repatriated immediately on receipt thereof and in any case not later than 90 days from the date of sale of such securities. (3) Foreign companies are permitted to repurchase the shares issued to residents in India under any ESOP Scheme provided (i) the shares were issued in accordance with the Rules / Regulations framed under Foreign .....

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dent in India in accordance with the provisions of Foreign Exchange Management Act, 1999 or Rules or Regulations made thereunder are allowed to be pledged for obtaining credit facilities in India from an AD Category - I bank / Public Financial Institution. C.3 General permission in certain cases Residents are permitted to acquire a foreign security, if it represents - a. qualification shares for becoming a director of a company outside India to the extent prescribed as per the law of the host co .....

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force at the time of acquisition; c. rights shares provided that the rights shares are being issued by virtue of holding shares in accordance with the provisions of law for the time being in force; d. purchase of shares of a JV / WOS abroad of the Indian promoter company by the employees/directors of Indian promoter company which is engaged in the field of software where the consideration for purchase does not exceed the ceiling as stipulated by Reserve Bank from time to time; the shares so acqu .....

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inked stock option schemes. The issue of employees stock option by a listed company shall be governed by SEBI (Employees Stock Option and Stock Purchase Scheme) Guidelines, 1999 and the issue of employees stock option by an unlisted company shall be governed by the guidelines issued by the Government of India for issue of ADR/GDR linked stock options. The consideration for the purchase should not exceed the ceiling as stipulated by the Reserve Bank from time to time. C.4 Acquiring the shares of .....

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(IDRs) through a Domestic Depository. The permission has been granted subject to compliance with the Companies (Issue of Depository Receipts) Rules, 2004 and subsequent amendments made thereto and the SEBI (DIP) Guidelines, 2000, as amended from time to time. In case of raising of funds through issuance of IDRs by financial/banking companies having presence in India, either through a branch or subsidiary, the approval of the sectoral regulator(s) should be obtained before the issuance of IDRs. .....

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collateral by FIIs; ii) to remit the proceeds arising from corporate action, if any, on such foreign sovereign securities; and iii) to liquidate such foreign sovereign securities if the need arises. Clearing Corporations shall report, on a monthly basis, the balances of foreign sovereign securities, held by them as non-cash collaterals of their clearing members to the Chief General Manager, Reserve Bank of India, Foreign Exchange Department, Foreign Investment Division, Central Office, Mumbai. T .....

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gulation 2 of Regulation 6 of the Notification ibid. All communication from the Indian Parties, to the Reserve Bank, relating to the investment (or financial commitment) outside India should be routed through the same branch of the AD Category - I bank that has been designated by the Indian investor for the investment (or financial commitment). The designated AD Category - I bank while forwarding the request from their customers to the Reserve Bank, should also forward its comments / recommendat .....

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n form ODI together with form A-2, duly filled in, from the Indian Party (ies)/ Resident Individual (RI) making investments (or financial commitment) in a JV/WOS abroad subject to their complying with the conditions specified in Regulation 6 of Notification FEMA No.120/RB-2004 dated July 7, 2004, as amended from time to time. Investment (or financial commitment) in financial services should also comply with the norms stipulated at Regulation 7 of Notification FEMA No.120/RB-2004 dated July 7, 20 .....

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3. General procedural instructions (1) The reporting system for overseas investment (or financial commitment) has been revised and incorporated in the FED Master Direction No. 18/2015-16 dated January 1, 2016. (2) With effect from March 2, 2010 online reporting of the ODI forms has been operationalised in a phased manner. The system enables online generation of the Unique Identification Number (UIN), acknowledgment of remittance/s (or financial commitment), filing of the Annual Performance Repor .....

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eported online. a.The application for overseas investment (or financial commitment) under the approval route would continue to be submitted to the Reserve Bank in physical form as hitherto, in addition to the online reporting of Part I as contemplated above, for approval purposes. b. In case of disinvestment by way of closure / winding up / voluntary liquidation / merger/ amalgamation of JV/ WOS under the Automatic Route, in terms of A. P. (Dir Series) Circular No. 29 dated March 27, 2006/ A. P. .....

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er, subsequent remittances (or financial commitment) under the automatic route and remittances (or financial commitment) under the approval route should be made and reported online, only after receipt of auto generated e-mail from RBI confirming the UIN. (3) In cases where the investment (or financial commitment) is being made jointly by more than one Indian Party, Reserve Bank would allot only one Unique Identification Number to the overseas JV/ WOS. (4) AD Category - I banks should allow remit .....

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ommitment) under Regulation 11 of Notification No. FEMA.120/2004-RB dated July 7, 2004 In terms of Regulation 11 of the Notification, Indian Parties are permitted to make direct investment (or financial commitment) in JV / WOS abroad by way of capitalisation of exports or other dues/entitlements like royalties, technical know-how fees, consultancy fees, etc. In such cases also, the Indian Party is required to submit details of the capitalisation in form ODI to the designated branch of the AD Cat .....

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ther with the revised form ODI. Capitalisation of export proceeds or other entitlements, which are overdue, would require prior approval of the Reserve Bank for which the Indian Parties should make an application in form ODI to the Reserve Bank for consideration. 5. Allotment of Unique Identification Number (UIN) The Unique Identification Number allotted to each JV or WOS abroad, is required to be quoted in all correspondence with the Reserve Bank. AD Category - I banks may allow additional inve .....

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ch as number of shares received / allotted, premium paid / received, brokerage paid / received, etc., and also confirmation to the effect that the inward leg of transaction has been approved by FIPB (if required) and the valuation has been done as per the laid-down procedure and that the overseas company s shares are issued / transferred in the name of the Indian investing company. AD Category - I bank may also obtain an undertaking from the applicants to the effect that future sale / transfer o .....

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specific approvals granted by the Reserve Bank and report the same to the Chief General Manager, Foreign Exchange Department, Central Office, Overseas Investment Division, Amar Building, 5th floor, Mumbai 400 001 in form ODI. 8. Purchase of foreign securities under ADR / GDR linked Stock Option Scheme AD Category - I banks may make remittances for purchase of foreign securities in the knowledge based sector under the ADR / GDR linked ESOPs, up to the ceiling as stipulated by the Reserve Bank fr .....

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ning Form A2 duly filled in or may issue bid bond guarantee on their behalf for participation in bidding or tender procedure for acquisition of a company incorporated outside India. On winning the bid, AD banks may remit the acquisition value after obtaining Form A2 duly filled in and report such remittance (including the amount initially remitted towards EMD) to the Chief General Manager, Foreign Exchange Department, Central Office, Overseas Investment Division, Amar Building, 5th floor, Mumbai .....

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in the bid / tender decides not to proceed further with the investment, AD banks should submit full details of remittance allowed towards EMD / invoked bid bond guarantee, to the Chief General Manager, Foreign Exchange Department, Central Office, Overseas Investment Division, Amar Building, 5th floor, Mumbai 400 001. (iii) In case the Indian Party is successful in the bid, but the terms and conditions of acquisition of a company outside India are not in conformity with the provisions of Regulati .....

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urities shall be repatriated to India immediately on receipt thereof and in any case not later than 90 days from the date of sale of the shares / securities. 11. Verification of evidence of investment The share certificates or any other document as evidence of investment, where share certificates are not issued shall, henceforth, be retained by the designated AD Category -I bank, who would be required to monitor the receipt of such documents and satisfy themselves about the bonafides of the docu .....

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ar No. 101 dated April 02, 2012. APPENDIX List of Notifications/ Circulars consolidated in the Master Directions on Direct Investment in Joint Ventures/ Wholly Owned Subsidiaries Abroad Notifications (published in the official gazette by the Government of India on various dates) 1. Notification No. FEMA 120/2004-RB July 7, 2004 2. Notification No. FEMA 132/2005-RB March 31, 2005 3. Notification No. FEMA 135/2005-RB May 17, 2005 4. Notification No. FEMA 150/2006-RB August 21,2006 5. Notification .....

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B November 22, 2012 15. Notification No. FEMA 263/2013-RB March 5, 2013 16. Notification No. FEMA 277/2013-RB May 8, 2013 17. Notification No. FEMA 283/2013-RB August 14, 2013 18. Notification No. FEMA 299/2014-RB March 24, 2014 19. Notification No. FEMA 314/2014-RB July 3, 2014 20. Notification No. FEMA 326/2014-RB November 12, 2014 21. Notification No. FEMA 322/2014-RB October 14, 2014 22. Notification No. FEMA 325/2014-RB November 12, 2014 23. Notification No FEMA 326/2014-RB November 12, 201 .....

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10. A.P. (DIR Series) Circular No. 41 April 20, 2007 11. A.P. (DIR Series) Circular No. 49 April 30, 2007 12. A.P. (DIR Series) Circular No. 50 May 4, 2007 13. A.P. (DIR Series) Circular No. 59 May 18, 2007 14. A.P. (DIR Series) Circular No. 68 June 1, 2007 15. A.P. (DIR Series) Circular No. 72 June 8, 2007 16. A.P. (DIR Series) Circular No. 75 June 14, 2007 17. A.P. (DIR Series) Circular No. 2 July 19, 2007 18. A.P. (DIR Series) Circular No. 11 September 26, 2007 19. A.P. (DIR Series) Circular .....

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