Mulla & Mulla & Craigie Blunt & Caroe
India:
Liberalization Of Overseas Direct Investment
08 October 2007
Mulla & Mulla & Craigie Blunt & Caroe
To print this article, all you need is to be registered or login on Mondaq.com.
Presently, an Indian company is permitted to undertake direct investment in all its Joint Ventures (JV) and/ or Wholly Owned Subsidiaries (WOS) abroad engaged in bona fide business activities, provided that the total financial commitment / overseas investment of the Indian company in such JV or WOS does not exceed 300% of its net worth, by virtue of the provisions of the Foreign Exchange Management (Transfer or Issue of any Foreign Security) Regulations, 2004 ("Regulations").
In order to provide flexibility to the foreign investment transactions of Indian companies, the Reserve Bank of India has vide its Circular dated 26th September 2007 notified amendments to the Regulations.
As per the new norms, the ceiling on investment of Indian corporates in their overseas JVs and WOSs has been raised to 400 per cent of their net worth as against the earlier limit of 300 per cent, as on the date of the last audited balance sheet of the Indian company. Such investment would be permitted under the automatic route.
The enhanced investment limits would henceforth also be extended to overseas investments by registered partnership firms.
The content of this article is intended to provide a general guide
to the subject matter. Specialist advice should be sought about your
specific circumstances.
POPULAR ARTICLES ON: Corporate/Commercial Law from India
Private Equity And M&A In India: What To Expect In 2024?
Nishith Desai Associates
2023 was a year of unexpected headwinds, such as the hiking of interest rates by governments across the world, the banking sector instability in the US and Europe, the Russia-Ukraine and Israel-Hamas conflict, to name a few.
Revisiting Representation And Warranty Clauses
Obhan & Associates
Clauses related to representations, warranties and indemnifications are widely negotiated clauses of commercial contracts especially in M&A transactions. The interests of the parties to a contract typically do not align with respect ...
A Guide To Share Purchase Agreements
Gravitas Legal
Share Purchase Agreement is an agreement entered into between the buyer and seller(s) of shares of a target company. Usually Share Purchase Agreements entail that the buyer would be taking over...
ESOPs And SARs: From Ownership To Appreciation
Alaya Legal
Louis Ortho Kelso, a political economist and lawyer, back in 1956, created the first employee stock ownership scheme based on his belief that the ownership of a company...