RBI Overseas Direct Investment Declaration (India)

A RBI Overseas Direct Investment Declaration in India sets down the declarant's affirmation of the facts or intentions described, for reliance by the relevant parties.

Overseas Direct Investment means investment by Indian residents in foreign entities — by way of subscription to or acquisition of equity shares, compulsorily convertible preference shares (CCPS), or compulsorily convertible debentures (CCDs) — with the intention of establishing a lasting interest and management participation in a foreign entity. ODI is governed by the Foreign Exchange Management Act 1999 (FEMA), the OI Rules 2022 (replacing the earlier FEMA (Transfer or Issue of Any Foreign Security) Regulations 2004), and the RBI Master Direction on Overseas Investment 2022.

The RBI Master Direction on Overseas Investment 2022 thoroughly revised the Indian ODI framework, consolidating and liberalising the regulations. Under the revised framework, Indian entities making ODI under the Automatic Route do not require prior RBI approval — they can proceed after filing the required pre-investment reports through their AD bank. ODI in certain sectors (financial services, real estate) or above certain financial thresholds (400% of the Indian entity's net worth) requires prior approval from the RBI under the Approval Route.

The ODI framework distinguishes between three modes of overseas investment: Overseas Direct Investment (ODI) — acquiring 10% or more equity in a foreign entity or acquiring control regardless of percentage; Overseas Portfolio Investment (OPI) — acquiring listed securities below 10% equity without management control; and other financial commitments (loans and guarantees extended by Indian entities to their foreign subsidiaries and joint ventures). The ODI declaration covers the first category.

FEMA violations in ODI — including failure to file reporting forms, exceeding permitted investment limits, investing in prohibited activities, or round-tripping of funds — are adjudicated by the Enforcement Directorate (ED) under Section 16 of FEMA, with penalties up to three times the sum involved or ₹2,00,000 where the amount is unquantifiable. The RBI's Compounding Authority under Section 15 of FEMA can compound FEMA violations on payment of a compounding fee.

Parties executing a RBI Overseas Direct Investment Declaration (India) in India should confirm the document reflects current law, including any amendments enacted since the original drafting date.

An RBI Overseas Direct Investment Declaration is required when an Indian company, LLP, partnership firm, or resident individual proposes to make any of the following investments outside India that qualify as ODI.

Setting up a foreign wholly-owned subsidiary (WOS): When an Indian company incorporates a new company in any foreign jurisdiction (Singapore, UAE, USA, UK, Mauritius, Netherlands, Cayman Islands, or any other country) as its wholly-owned subsidiary, the ODI declaration and Form ODI-Part I must be filed through the AD bank before any remittance is made to the foreign entity.

Acquiring a stake in an existing foreign company: When an Indian company acquires shares in an existing foreign company — whether through a negotiated purchase, subscription to a capital raise, or through a share purchase agreement — and the acquisition results in a holding of 10% or more of the equity, or the acquisition results in management control, the ODI declaration is required.

Establishing a joint venture (JV) abroad: When an Indian company establishes a joint venture with a foreign partner in a third country, the ODI declaration covers the Indian company's equity contribution to the JV. Where the JV is in a country that requires local partnership (regulated sectors in Gulf countries, for example), the JV structure requires careful structuring under both the OI Rules 2022 and applicable local law.

Acquisition through stock-swap or merger: When an Indian company acquires a foreign entity through a stock-swap (exchanging Indian shares for foreign shares) or through a cross-border merger under Section 234 of the Companies Act 2013, the ODI framework applies to the Indian company's resulting holding in the foreign entity.

Incremental investment in existing ODI: When an Indian company makes additional investment in an existing foreign subsidiary or JV (whether through rights issue subscription, acquisition of additional shares from other shareholders, or capitalization of loans), each incremental investment requires a fresh ODI-Part I filing and post-investment ODI-Part II reporting.

Annual Performance Report (APR) filing: Every Indian entity that has made ODI must file an Annual Performance Report with the RBI by 31 December each year covering the financial performance of the foreign entity, dividends received, and continued compliance with ODI conditions. The APR is filed through the AD bank on the FIRMS portal.

A complete RBI Overseas Direct Investment Declaration and the accompanying FIRMS portal filings must contain specific information to comply with the OI Rules 2022 and the RBI Master Direction on Overseas Investment 2022.

Indian entity details: Full legal name of the Indian entity (company, LLP, or individual making the ODI); CIN or LLPIN (for companies and LLPs); PAN; registered office address; net worth of the Indian entity (audited, as per the most recent balance sheet); details of the authorised dealer bank through which the ODI is being made; and the name and designation of the authorised signatory.

Foreign entity details: Full legal name of the foreign entity in which ODI is being made; country of incorporation; registration number in the country of incorporation; business address; nature of business activity (the broad sector — technology, manufacturing, financial services, etc.); and the percentage of equity the Indian entity will hold after the investment.

Investment details: Amount of investment in USD (or the applicable foreign currency) and the equivalent INR amount at the exchange rate on the date of transaction; mode of investment (equity shares, CCPS, CCDs, direct subscription to fresh issue, or acquisition from existing shareholders); source of funds for the investment (internal accruals, foreign currency earnings, loans against property, ECB/FCCB proceeds — only permitted sources under the OI Rules 2022); and the investment route (Automatic Route or Approval Route).

Compliance declarations: Confirmation that the Indian entity is not under investigation by the Enforcement Directorate, Central Bureau of Investigation, SEBI, or any regulatory agency; not on the RBI's caution/defaulter list; has no outstanding reporting obligations to the RBI under FEMA; and that the total ODI (including the proposed investment) does not exceed 400% of the Indian entity's net worth.

Prohibited activity confirmation: Declaration that the foreign entity is not engaged in prohibited activities (real estate, gambling, chit fund businesses, or activities in FATF-blacklisted jurisdictions); and that the investment does not involve round-tripping (investment going abroad and returning to India as FDI into the same or related company).

Form ODI-Part I: The pre-investment report filed through the AD bank on the FIRMS portal, capturing all the above information and authorising the bank to remit the investment amount to the foreign entity. The AD bank verifies the filing and transmits it to the RBI's FIRMS system.

Form ODI-Part II: Post-investment confirmation filed within 30 days of receipt of share certificates or other documents confirming the creation of the ODI, confirming that the investment has been made as declared in ODI-Part I.

Forms-legal.com provides this template as a starting point for India-compliant documentation.