The RBI has amended regulation 14 of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000, to determine “ownership and control” by amending existing clause (i) and clause (ia) to state as follows:
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- A company shall be considered as owned by resident Indian citizens if more than 50% of the capital in it is beneficially owned by resident Indian citizens and/or Indian companies, which are ultimately owned and controlled by resident Indian citizens. An LLP will be considered as owned by resident Indian citizens if more than 50% of the investment in it is contributed by resident Indian citizens and/or entities which are ultimately owned and controlled by resident Indian citizens and such citizens and entities have a majority of the profit share;
- A company owned by non-residents shall mean an Indian company that is not owned by resident Indian citizens;
- “Control” shall include the right to appoint a majority of the directors, or to control the management or policy decisions including by virtue of their shareholding or management rights, or shareholders agreements or voting agreements.
Explanation: For the purpose of LLPs, “control” shall mean the right to appoint the majority of designated partners where such partners, with specific exclusions to others, have control over all the policies of the LLP.
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