Definitions and Associated Details
The Master Direction outlines definitions for key terms, including “foreign entity”, “strategic sector”, “control”, “Indian entity”, “subsidiary”/”step down subsidiary (SDS)”, “Overseas Direct Investment (ODI)”, “equity capital”, “financial commitment”, and “Overseas Portfolio Investment (OPI)”.
General Provisions
The direction provides exemptions from applicability of OI Rules/Regulations/Directions, and outlines the permission process for making overseas investments, including approval from the Central Government and the Reserve Bank.
It also covers the requirement for a No Objection Certificate (NOC) from the lender bank/regulatory body/investigative agency, as well as provisions for rights issue and bonus shares.
Specific Provisions
The direction includes specific provisions for the acquisition of a foreign entity through a merger/amalgamation, and for the disinvestment of an overseas joint venture/wholly owned subsidiary.
Operational Instructions to AD Banks
The direction provides operational instructions to Authorized Dealer (AD) banks, including reporting requirements and compliance with FEMA regulations.
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Download: Master Direction – Overseas Investment