TMI BlogForeign Exchange Management (Overseas Investment) Regulations, 2022X X X X Extracts X X X X X X X X Extracts X X X X ..... he words and expressions used but not defined in these regulations shall have the meanings respectively assigned to them in the Act or the Foreign Exchange Management (Overseas Investment) Rules, 2022. 3. Financial commitment by Indian entity by modes other than equity capital, (1) The Indian entity may lend or invest in any debt instrument issued by a foreign entity or extend non-fund based commitment to or on behalf of a foreign entity including overseas step down subsidiaries of such Indian entity subject to the following conditions within the financial commitment limit as prescribed in the Foreign Exchange Management (Overseas Investment) Rules, 2022: (i) the Indian entity is eligible to make Overseas Direct Investment (ODI); (ii) the Indian entity has made ODI in the foreign entity; (iii) the Indian entity has acquired control in such foreign entity at the time of making such financial commitment. (2) The financial commitments under regulations 4, 5, 6 and 7 shall be reckoned towards the financial commitment limit referred to in sub-regulation (1). 4. Financial commitment by Indian entity by way of debt. An Indian entity may lend or invest in any debt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... art of the non-fund based commitment but be considered as lending. (5) Where a guarantee has been extended jointly and severally by two or more Indian entities, 100 per cent. of the amount of such guarantee shall be reckoned towards the individual limits of each of such Indian entities. (6) In case of performance guarantee, 50 per cent. of the amount of guarantee shall be reckoned towards the financial commitment limit. (7) Roll-over of guarantee shall not be treated as fresh financial commitment where the amount on account of such roll-over does not exceed the amount of original guarantee. 6. Financial commitment by way of pledge or charge, An Indian entity, which has made ODI by way of investment in equity capital in a foreign entity, may (a) pledge the equity capital of the foreign entity in which it has made ODI or of its step down subsidiary outside India, held directly by the Indian entity in a foreign entity and indirectly in step down subsidiary, in favour of an AD bank or a public financial institution in India or an overseas lender, for availing fund based or non-fund based facilities for itself or for any foreign entity in which it has made ODI or its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds the financial commitment limit referred to in sub-regulation (1) of regulation 3. 7. Acquisition or transfer by way of deferred payment . (1) Where a person resident in India acquires equity capital by way of subscription to an issue or by way of purchase from a person resident outside India or where a person resident outside India acquires equity capital by way of purchase from a person resident in India, and where such equity capital is reckoned as ODI, the payment of amount of consideration for the equity capital acquired may be deferred for such definite period from the date of the agreement as provided in such agreement subject to the following terms and conditions, namely: (i) the foreign securities equivalent to the amount of total consideration shall be transferred or issued, as the case may be, upfront by the seller to the buyer; (ii) the full consideration finally paid shall be compliant with the applicable pricing guidelines: Provided that the deferred part of the consideration in case of acquisition of equity capital of a foreign entity by a person resident in India shall be treated as non-fund based commitment. (2) The buyer may be indemnified by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on account of transfer or disinvestment of such ODI and the net realisable value of the assets on account of the liquidation of the foreign entity as per the laws of the host country or the host jurisdiction, as the case may be, within ninety days from the date when such receivables fall due or the date of such transfer or disinvestment or the date of the actual distribution of assets made by the official liquidator. (5) A person resident in India who is eligible to make ODI may make remittance towards earnest money deposit or obtain a bid bond guarantee from an AD bank for participation in bidding or tender procedure for the acquisition of a foreign entity: Provided that in case of an open-ended bid bond guarantee, it shall be converted into a close-ended guarantee not later than three months from the date of award of the contract. 10. Reporting requirements for Overseas Investment. (1) Unless otherwise provided in these regulations, all reporting by a person resident in India, as specified, shall be made through the designated AD bank in the manner provided in this regulation and in the format provided by the Reserve Bank. (2) A person resident in India who has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Indian entity or by a chartered accountant where the statutory audit is not applicable; (b) in case more than one person resident in India have made ODI in the same foreign entity, the person holding the highest stake in the foreign entity shall be required to submit APR and in case of holdings being equal, APR may be filed jointly by such persons; (c) the person resident in India shall report the details regarding acquisition or setting up or winding up or transfer of a step down subsidiary or alteration in the shareholding pattern in the foreign entity during the reporting year in the APR. (5) An Indian entity which has made ODI shall submit an Annual Return on Foreign Liabilities and Assets within such time as may be decided by the Reserve Bank from time to time, to the Department of Statistics and Information Management, Reserve Bank of India. 11. Delay in reporting. (1) A person resident in India who does not submit the evidence of investment within the time specified under sub-regulation (1) of regulation 9 or does not make any filing within the time specified under regulation 10, may make such submission or filing, as the case may be, along with Late Submissio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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