Foreign investment definitions: thresholds and instrument treatment determine FDI versus FPI character and conversion rules.

Regulation 2 sets out operative terminology for foreign investment and securities transfers under the Regulations, defining Capital Instruments, payment and conversion rules for partly paid shares and share warrants, and the classification of pre cutoff convertible instruments. It defines Convertible Note for startups, distinguishes FDI and FPI by post issue thresholds on a fully diluted basis, and specifies key persons, entities, account types, investment vehicles, sectoral cap treatment, and incorporation of Act level definitions, thereby establishing the rules for characterising and treating foreign investment and instruments.

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