{"id":3085,"date":"2022-08-23T05:25:00","date_gmt":"2022-08-23T05:25:00","guid":{"rendered":"https:\/\/rvkassociates.com\/blog\/?p=3085"},"modified":"2022-08-23T05:25:01","modified_gmt":"2022-08-23T05:25:01","slug":"foreign-exchange-management-overseas-investment-regulations-2022","status":"publish","type":"post","link":"https:\/\/rvks.in\/blogs\/foreign-exchange-management-overseas-investment-regulations-2022\/","title":{"rendered":"Foreign Exchange Management (Overseas Investment) Regulations, 2022"},"content":{"rendered":"\n<p class=\"has-text-align-right\">August 22, 2022<\/p>\n\n\n\n<p>In exercise of the powers conferred by sub-section (1) and clause (a) of sub-section (2) of section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999), the Reserve Bank hereby makes the following regulations, namely:\u2013<\/p>\n\n\n\n<ol class=\"is-style-none wp-block-list\"><li>1. Short title and commencement.\u2013 (1) These regulations may be called the Foreign Exchange Management (Overseas Investment) Regulations, 2022<\/li><\/ol>\n\n\n\n<p>(2) They shall come into force on the date of their publication in the Official Gazette.<\/p>\n\n\n\n<p><strong>2. Definitions.<\/strong>\u2013 (1) In these regulations, unless the context otherwise requires,\u2013<\/p>\n\n\n\n<p>(a) \u201cAct\u201d means the Foreign Exchange Management Act, 1999 (42 of 1999);<\/p>\n\n\n\n<p>(b) \u201cdebt instruments\u201d shall have the same meaning as assigned to it in the Foreign Exchange<br>Management (Overseas Investment) Rules, 2022;<\/p>\n\n\n\n<p>(2) The words and expressions used but not defined in these regulations shall have the meanings<br>respectively assigned to them in the Act or the Foreign Exchange Management (Overseas Investment)<br>Rules, 2022.<\/p>\n\n\n\n<ol start=\"3\" class=\"is-style-none wp-block-list\"><li>3. Financial commitment by Indian entity by modes other than equity capital,\u2013 (1) The Indian entity<br>may lend or invest in any debt instrument issued by a foreign entity or extend non-fund based<br>commitment to or on behalf of a foreign entity including overseas step down subsidiaries of such Indian<br>entity subject to the following conditions within the financial commitment limit as prescribed in the Foreign Exchange Management (Overseas Investment) Rules, 2022:\u2013<ol><li>(i) the Indian entity is eligible to make Overseas Direct Investment (ODI);<\/li><li>(ii) the Indian entity has made ODI in the foreign entity;<\/li><li>(iii) the Indian entity has acquired control in such foreign entity at the time of making such financial commitment.<\/li><\/ol><\/li><\/ol>\n\n\n\n<p>2. The financial commitments under regulations 4, 5, 6 and 7 shall be reckoned towards the financial<br>commitment limit referred to in sub-regulation (1).<\/p>\n\n\n\n<ol start=\"4\" class=\"is-style-none wp-block-list\"><li>4. Financial commitment by Indian entity by way of debt.\u2013 An Indian entity may lend or invest in any<br>debt instruments issued by a foreign entity subject to the condition that such loans are duly backed by a<br>loan agreement where the rate of interest shall be charged on an arm\u2019s length basis.<ol><li>Explanation.\u2013\u2013 For the purpose of this regulation, the expression \u201carm\u2019s length\u201d means a transaction between two related parties that is conducted as if they were unrelated, so that there is no conflict of interest.<\/li><\/ol><\/li><\/ol>\n\n\n\n<ol start=\"5\" class=\"is-style-none wp-block-list\"><li>5. Financial commitment by way of guarantee.\u2013 (1) The following guarantees may be issued to or on<br>behalf of the foreign entity or any of its step down subsidiary in which the Indian entity has acquired<br>control through the foreign entity, namely:\u2013<ol><li>(i) corporate or performance guarantee by such Indian entity;<\/li><li>(ii) corporate or performance guarantee by a group company of such Indian entity in<\/li><li>India, being a holding company (which holds at least 51 per cent. stake in the Indian<\/li><li>entity) or a subsidiary company (in which the Indian entity holds at least 51 per cent.<\/li><li>stake) or a promoter group company, which is a body corporate;<\/li><li>(iii) personal guarantee by the resident individual promoter of such an Indian entity;<\/li><li>(iv) bank guarantee, which is backed by a counter-guarantee or collateral by the Indian<\/li><li>entity or its group company as above, and issued, by a bank in India.<\/li><\/ol><\/li><\/ol>\n\n\n\n<p>(2) Where the guarantee is extended by a group company, it shall be counted towards the utilisation of its<br>financial commitment limit independently and in case of a resident individual promoter, the same shall be<br>counted towards the financial commitment limit of the Indian entity:<\/p>\n\n\n\n<p><strong>To Read More&#8230;.<br>Click the link below&#8230;.<\/strong><\/p>\n\n\n\n<p><strong>Notification :<\/strong> <a href=\"https:\/\/www.dropbox.com\/s\/21giql553p6tkpl\/FEMA400E3410E8B6F384DF982443E53E6688627.pdf?dl=0\">https:\/\/www.dropbox.com\/s\/21giql553p6tkpl\/FEMA400E3410E8B6F384DF982443E53E6688627.pdf?dl=0<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>August 22, 2022 In exercise of the powers conferred by sub-section (1) and clause (a) of sub-section (2) of section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999), the Reserve Bank hereby makes the following regulations, namely:\u2013 1. Short title and commencement.\u2013 (1) These regulations may be called the Foreign Exchange Management [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":1767,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11,14],"tags":[34],"class_list":["post-3085","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-notifications","category-rbi","tag-rbi"],"_links":{"self":[{"href":"https:\/\/rvks.in\/blogs\/wp-json\/wp\/v2\/posts\/3085","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/rvks.in\/blogs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/rvks.in\/blogs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/rvks.in\/blogs\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/rvks.in\/blogs\/wp-json\/wp\/v2\/comments?post=3085"}],"version-history":[{"count":1,"href":"https:\/\/rvks.in\/blogs\/wp-json\/wp\/v2\/posts\/3085\/revisions"}],"predecessor-version":[{"id":3086,"href":"https:\/\/rvks.in\/blogs\/wp-json\/wp\/v2\/posts\/3085\/revisions\/3086"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/rvks.in\/blogs\/wp-json\/wp\/v2\/media\/1767"}],"wp:attachment":[{"href":"https:\/\/rvks.in\/blogs\/wp-json\/wp\/v2\/media?parent=3085"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/rvks.in\/blogs\/wp-json\/wp\/v2\/categories?post=3085"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/rvks.in\/blogs\/wp-json\/wp\/v2\/tags?post=3085"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}