Schedule III - Manner of making Overseas Investment by resident individual - Foreign Exchange Management (Overseas Investment) Rules, 2022

Schedule III [See rule 13] Manner of making Overseas Investment by resident individual 1. Manner of making OI . (1) Any resident individual may make ODI by way of investment in equity capital or OPI in the manner provided in this Schedule and unless otherwise provided hereunder, shall be subject to the overall ceiling under the Liberalised Remittance Scheme of the Reserve Bank. (2) A resident individual may make or hold Overseas Investment by way of, (i) ODI in an operating foreign entity not engaged in financial services activity and which does not have subsidiary or step down subsidiary where the resident individual has control in the foreign entity: (ii) OPI, including by way of reinvestment; (iii) ODI or OPI, as the case may be, by way of (a) capitalisation, within the time period, if any, specified for realisation under the Act, of any amount due from the foreign entity the remittance of which is permitted under the Act or does not require prior permission of the Central Government or the Reserve Bank; (b) swap of securities on account of a merger, demerger, amalgamation or liquidation; (c) acquisition of equity capital through rights issue or allotment of bonus shares; (d) gift as per the conditions laid down under this Schedule; (e) inheritance; (f) acquisition of sweat equity shares; (g) acquisition of minimum qualification shares issued for holding a management post in a a. foreign entity; (h) acquisition of shares or interest under Employee Stock Ownership Plan or Employee Benefits Scheme: Provided that ODI in respect of clauses (e), (f), (g) and (h) may be made in a foreign entity whether or not such foreign entity is engaged in financial services activity or has subsidiary or step down subsidiary where the resident individual has control: Provided further that the acquisition of less than ten per cent. of the equity capital, whether listed or unlisted, of a foreign entity without control under clauses (f), (g) and (h), shall be treated as OPI. Explanation. For the purposes of this Schedule, a foreign entity will be considered to be engaged in the business of financial services activity if it undertakes an activity, which if carried out by an entity in India, requires registration with or is regulated by a financial sector regulator in India. 2. Acquisition by way of gift or inheritance. (1) A resident individual may, without any limit, acquire foreign securities by way of inheritance from a person resident in India who is holding such securities in accordance with the provisions of the Act or from a person resident outside India. (2) A resident individual, without any limit, may acquire foreign securities by way of gift from a person resident in India who is a relative and holding such securities in accordance with the provisions of the Act. (3) A resident individual may acquire foreign securities by way of gift from a person resident outside India in accordance with the provisions of the Foreign Contribution (Regulation) Act, 2010 ( 42 of 2010) and the rules and regulations made thereunder. 3. Acquisition of shares or interest under Employee Stock Ownership Plan or Employee Benefits Scheme or sweat equity shares. (1) A resident individual, who is an employee or a director of an office in India or branch of an overseas entity or a subsidiary in India of an overseas entity or of an Indian entity in which the overseas entity has direct or indirect equity holding, may acquire, without limit, shares or interest under Employee Stock Ownership Plan or Employee Benefits Scheme or sweat equity shares offered by such overseas entity, provided that the issue of Employee Stock Ownership Plan or Employee Benefits Scheme are offered by the issuing overseas entity globally on a uniform basis. Explanation. For the purposes of this paragraph, the expression, (i) indirect equity holding means indirect foreign equity holding through a special purpose vehicle or step down subsidiary; (ii) Employee Benefit Scheme means any compensation or incentive given to the directors or employees of any entity which gives such directors or employees ownership interest in an overseas entity through ESOP or any similar scheme. (2) Notwithstanding anything contained in these rules, a resident individual may acquire Employee Stock Ownership Plans under any scheme of the Central Government.