TaxTMI 
TaxTMI 
TaxTMI 
Guidelines for calculation of total foreign investment i.e. direct and indirect foreign investment in Indian companies.
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....Indian company would have indirect foreign investment if the Indian investing company has foreign investment in it. The indirect investment can be a cascading investment i.e. through multi-layered structure also. 2.0 The method of calculation of total foreign investment in an Indian company including indirect foreign investment through other Indian companies has been detailed out in entry 10 of Press Note 2(2000), Press Note 1(2006), Press Note 3(2007) and entry 24 of Press Note 7 (2008). The methodology for some sectors is also separately contained in either sectoral regulations or rules and regulations under specific statutes. Essentially the present FDI guidelines provide for three different regimes for calculation of Indirect Foreign ....
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....any shall include all types of foreign investments i.e. FDI, investment by FIIs(holding as on March 31), NRIs, ADRs, GDRs, Foreign Currency Convertible Bonds (FCCB) and convertible preference shares, convertible Currency Debentures regardless of whether the said investments have been made under Schedule 1, 2, 3 and 6 of FEMA (Transfer or Issue of Security by Persons Resident Outside India) Regulations. 4.2 The term 'Resident Indian Citizen' shall be interpreted in line with the definition of 'person resident in India' as per FEMA, 1999, read in conjunction with the Indian Citizenship Act. 4.3 A 'non resident entity' means a 'person resident outside India' as defined under FEMA 1999. 4.4 The term 'Indian Company' means a company regist....
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....nies, which are owned and controlled by resident Indian citizens, have the power to appoint a majority of its directors . 5.2.2 For cases where condition 5.2.1 above is not satisfied or if the investing company is owned or controlled by 'non resident entities', the entire investment by the investing company into the subject Indian Company would be considered as indirect foreign investment, 5.2.2.1 Provided that, as an exception, the indirect foreign investment in only the 100% owned subsidiaries of operating-cum-investing/investing companies, will be limited to the foreign investment in the operating-cum-investing/ investing company. For the purposes of explanation, it is clarified that this exception is being made since the downstream ....
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....5 in the total investment of Company B in Company A. 5.3 The total foreign investment would be the sum total of direct and indirect foreign investment. 5.4 The above methodology of calculation would apply at every stage of investment in Indian Companies and thus to each and every Indian Company. 5.5 Additional conditions: 5.5.1 The full details about the foreign investment including ownership details etc. in Indian company(s) and information about the control of the company(s) would be furnished by the Company(s) to the Government of India at the time of seeking approval. 5.5.2 In any sector/activity, where Government approval is required for foreign investment and in cases where there are any inter-se agreements between/amongst s....
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....ction 6 of the Companies Act, 1956. (c) A company/ group of companies in which the individual shareholder/HUF to which he belongs has management and controlling interest. (ii) In the case of an Indian company, (a) The Indian company (b) A group of Indian companies under the same management and ownership control. 5.5.4.2 For the purpose of this Clause, "Indian company" shall be a company which must have a resident Indian or a relative as defined under Section 6 of the Companies Act, 1956/ HUF, either singly or in combination holding at least 51% of the shares. 5.5.4.3 Provided that, in case of a combination of all or any of the entities mentioned in Sub-Clauses (i) and (ii) of clause 5.5.4.1 above, each of the parties shall have ....