Valuation Need for ODI Investments

  • Valuation is required for investment in Existing Company outside India
  • Valuation Certificate to be obtained by Category I Merchant Baker registered with SEBI or investment Banker/Merchant Banker outside India registered with the appropriate regulatory authority in the host country, if Investment exceeds USD 5 Million (Together with Other parties), and in other cases, by a Chartered Accountant or a Certified Public Accountant.

Reporting for ODI Investments

  1. Form ODI: The resident individual, making overseas direct investments shall submit Part I of the Form ODI, duly completed, to the designated authorised dealer.
  2. Annual Performance Report (APR): APR is to be submitted to the Reserve Bank, through the designated Authorised Dealer, every year on or before December 31, an Annual Performance Report (APR) in Part II of Form ODI in respect of each JV or WOS outside India.
  3. Form ODI – Part IV: The disinvestment by the resident individual may be reported by the designated AD to the Reserve Bank in Form ODI Part IV within 30 days of receipt of disinvestment proceeds.

(III)(A) Gifting of Shares

  • Generally, as per FEMA Regulations, any Indian Resident who receives gift has a responsibility to bring them back to India.
  • As an exception, as per provisions of Regulation 22(1) (I) of FEMA 120, a Resident Individual is allowed to acquire Foreign Equity from a Person Resident Outside India and retain the same. There is no need for him to sell the shares immediately and bring it back to India.
  • However, the above exception is applicable only if the gift is received from Person Resident Outside India and gift received are Foreign Equities/securities.
  • Prior approval from RBI needs to be taken while structuring a transaction, which ultimately leads to a structure where Indian resident is holding shares in overseas entity which in turn is holding shares in an Indian company (commonly referred to as Round Tripping).
S.No.Asset GiftedDonorRepatriable
1Foreign Equities/ SecuritiesPerson Resident outside IndiaNeed not be repatriable immediately. Can be held as asset outside India
2Foreign Equities/ SecuritiesResidentGeneral permission is not provided to receive it from Resident. Also, to be repatriated immediately.

(III)(B) Inheritance of Shares

  • As per provisions of Regulation 22(1) (I) of FEMA 120, Inheritance of shares from both resident and non-resident is permitted.
  • Such shares which were received as inheritance, can be retained. No compulsion for the individuals to sell and bring back the amount immediately.
S.NoAsset InheritedDonorRepatriable
1Foreign EquityPerson Resident outside IndiaNeed not be repatriable immediately. Can be held as asset outside India
2Foreign EquityResidentNeed not be repatriable immediately. Can be held as asset outside India

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