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ODI Regulations Liberalized

Published on Tue, Jan 06,2015 | 22:00, Updated at Tue, Jan 06 at 22:08Source : 

The Reserve Bank of India (RBI), pursuant to its circular dated 29 December 2014, (a copy of which can be accessed from here) (Circular) and Notification No. FEMA.322/2014-RB dated 14 October 2014 (effective from 3 December 2014) (a copy of which can be accessed from here), has introduced significant relaxations in the security that may be created by Indian companies and their offshore joint ventures (JV) / wholly owned subsidiaries (WOS), in three distinct aspects:

1.  Creating security over shares of the overseas JV / WOS (including step down subsidiaries regardless of the level);
2.  Creating security over assets of the Indian company as well as its group companies and individual promoters and directors; and
3.  Creating security over assets of the overseas JV / WOS, including step down subsidiaries.
Wide latitude has been granted in respect of such permitted security such that it is available for loans granted to the Indian company, its group companies as well as the overseas JV / WOS / step down subsidiaries. This Trilegal alert summarizes the impact of the RBI Circular.

Attachments : 31 December 2014.pdf

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