Overseas investment restructuring permits loss-based balance-sheet changes subject to proportionate diminution limits, valuation certification, reporting and documentation.

Rule 18 permits restructuring of a foreign entity's balance sheet following ODI where the entity has incurred losses for the preceding two years, supported by audited balance sheets. The resulting diminution in outstanding equity and debt dues must not exceed the proportionate accumulated losses, and reporting and documentation requirements apply. Arm's length valuation certification is required where the original investment exceeds USD 10 million or the diminution exceeds twenty per cent of outstanding dues. A qualifying certificate, issued within six months before the transaction, must be submitted to the designated AD bank.

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