Rule 2 - Definitions - Foreign Exchange Management (Overseas Investment) Rules, 2022

2. Definitions . (1) In these rules, unless the context otherwise requires, (a) Act means the Foreign Exchange Management Act, 1999 (42 of 1999); (b) Authorised Dealer Category-I bank or AD bank means a person authorised as such under sub-section (1) of section 10 of the Act and for the purposes of these rules, shall mean only the domestic branches of such AD bank; (c) control means the right to appoint majority of the directors or to control management or policy decisions exercisable by a person or persons acting individually or in concert, directly or indirectly, including by virtue of their shareholding or management rights or shareholders agreements or voting agreements that entitle them to ten per cent. or more of voting rights or in any other manner in the entity; (d) disinvestment means partial or full extinguishment of right, title or possession of equity capital acquired under these rules; (e) equity capital means equity shares or perpetual capital or instruments that are irredeemable or contribution to non-debt capital of a foreign entity in the nature of fully and compulsorily convertible instruments; (f) financial commitment means the aggregate amount of investment made by a person resident in India by way of Overseas Direct Investment, debt other than Overseas Portfolio Investment in a foreign entity or entities in which the Overseas Direct Investment is made and shall include the non-fund-based facilities extended by such person to or on behalf of such foreign entity or entities; (g) financial service regulator means a financial service regulator established under any law in force in India and include the Reserve Bank, the Securities and Exchange Board of India, the Insurance Regulatory and Development Authority and the Pension Fund Regulatory and Development Authority; (h) foreign entity means an entity formed or registered or incorporated outside India, including International Financial Services Centre that has limited liability: Provided that the restriction of limited liability shall not apply to an entity with core activity in a strategic sector; (i) host country or host jurisdiction means the country or jurisdiction, including the International Financial Services Centre, in which the foreign entity is formed, registered or incorporated, as the case may be; (j) Indian entity means (i) a company defined under the Companies Act, 2013 (18 of 2013); (ii) a body corporate incorporated by any law for the time being in force; (iii) a Limited Liability Partnership duly formed and incorporated under the Limited Liability Partnership Act, 2008 (6 of 2009); and (iv) a partnership firm registered under the Indian Partnership Act, 1932 ( 9 of 1932). (k) International Financial Services Centre or IFSC shall have the same meaning as assigned to it in clause (g) of section 3 of the International Financial Services Centres Authority Act, 2019 ( 50 of 2019); (l) last audited balance sheet means audited balance sheet as on date not exceeding eighteen months preceding the date of the transaction; (m) listed foreign entity means a foreign entity whose equity shares or any other fully and compulsorily convertible instrument is listed on a recognised stock exchange outside India; (n) listed Indian company means an Indian company that has equity shares or any of its fully and compulsorily convertible instruments listed on a recognised stock exchange in India and the expression unlisted Indian company shall be construed accordingly; (o) mutual fund means any fund registered as such with the Securities and Exchange Board of India; (p) net worth shall have the same meaning as assigned to it in clause (57) of section 2 of the Companies Act, 2013 (18 of 2013). Explanation . For the purposes of this clause, net worth of registered partnership firm or Limited Liability Partnership shall be the sum of the capital contribution of partners and undistributed profits of the partners after deducting therefrom the aggregate value of the accumulated losses, deferred expenditure and miscellaneous expenditure not written off, as per the last audited balance sheet; (q) Overseas Direct Investment or ODI means investment by way of acquisition of unlisted equity capital of a foreign entity, or subscription as a part of the memorandum of association of a foreign entity, or investment in ten per cent, or more of the paid-up equity capital of a listed foreign entity or investment with control where investment is less than ten per cent. of the paid-up equity capital of a listed foreign entity; Explanation . For the purposes of this clause, where an investment by a person resident in India in the equity capital of a foreign entity is classified as ODI, such investment shall continue to be treated as ODI even if the investment falls to a level below ten per cent. of the paid-up equity capital or such person loses control in the foreign entity; (r) Overseas Investment or OI means financial commitment and Overseas Portfolio Investment by a person resident in India; (s) Overseas Portfolio Investment or OPI means investment, other than ODI, in foreign securities, but not in any unlisted debt instruments or any security issued by a person resident in India who is not in an IFSC: Provided that OPI by a person resident in India in the equity capital of a listed entity, even after its delisting shall continue to be treated as OPI until any further investment is made in the entity. Explanation . For the purposes of this clause, the expression debt instruments means the instruments specified as such in clause (A) of rule 5; (t) relative shall have the same meaning as assigned to it in clause (77) of section 2 of the Companies Act, 2013, (18 of 2013); (u) resident individual means a person resident in India who is a natural person; (v) Resident Foreign Currency Account or RFC Account shall have the same meaning as assigned to it in the Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) Regulations, 2015; (w) SEBI means the Securities and Exchange Board of India established under section 3 of the Securities and Exchange Board of India Act, 1992 (15 of 1992); (x) Society means a society registered under the Societies Registration Act, 1860 (21 of 1860); (y) Subsidiary or step down subsidiary of a foreign entity means an entity in which the foreign entity has control; (z) strategic sector shall include energy and natural resources sectors such as oil, gas, coal, mineral ores, submarine cable system and start-ups and any other sector or sub-sector as deemed necessary by the Central Government; (za) sweat equity shares means such equity shares as are issued by an overseas entity to its directors or employees at a discount or for consideration other than cash, for providing their know-how or making available rights like intellectual property rights or value additions, by whatever name called; (zb) Trust means a trust registered under the Indian Trust Act, 1882 (2 of 1882); (zc) Venture Capital Fund means a fund registered as such with the SEBI. (2) The words and expressions used but not defined in these rules shall have the meanings respectively assigned to them in the Act or the rules or regulations made thereunder.