ODI Compliances, Contraventions and Compounding under FEMA

3 replies
  1. CA Uma Mahesh
    CA Uma Mahesh says:

    Dear Sir/ Madam,
    Can an India Company carry out ODI in the Equity Shares of a foreign Company (20% stake) in exchange of Transfer of its Patents.
    Is it an approved transaction as per RBI guidelines.

  2. eswaramma
    eswaramma says:

    Can you please let me know, where I can look for investment as an associate(25%equity) in foreign company as an ODI. I can find out regulations for only investing as Joint venture or wholly owned subsidiary

    • Vinod Kothari Consultants
      Vinod Kothari Consultants says:

      Thank you for reaching to us.

      As per the definitions given under the master direction – https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=10637&fn=5&Mode=0#C13

      “Joint Venture (JV)” means a foreign entity formed, registered or incorporated in accordance with the laws and regulations of the host country in which the Indian Party makes a direct investment.

      “Indian Party” means a company incorporated in India or a body created under an Act of Parliament or a partnership firm registered under the Indian Partnership Act, 1932, or a Limited Liability Partnership (LLP), registered under the Limited Liability Partnership Act, 2008 (6 of 2009), making investment in a Joint Venture or Wholly Owned Subsidiary abroad, and includes 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”.

      Therefore, the definition of joint venture itself covers all foreign companies. Further, refer FAQ-3 to know the scope of investment in foreign companies by an Indian party. Link of FAQs – http://vinodkothari.com/2014/06/faqs-on-overseas-direct-investment/


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