Require clarification regarding ODI Investment in US

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ankit goyal (Querist)
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29 July 2021 We have a JV (ABC LLC) in US and hold 20% in it. Our JV out-licensed the IP rights and as a consideration received upfront cash and equity in the in-licensing company (XYZ Inc US listed Company). As there are no operations in ABC, so we are planning to liquidate and distribute its assets to members. So We will , would receive shares of XYZ and some cash on the liquidation of ABC We want to know the FEMA compliances required to be done for this transaction. Do we have to report to RBI about the change in investment in ODI from ABC to XYZ.

Please suggest.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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29 July 2021 Yes, you have to report.
B.11Post investment changes / additional investment (or financial commitment) in existing JV / WOS

A JV / WOS set up by the Indian Party as per the Regulations may diversify its activities / set up step down subsidiary / alter the shareholding pattern in the overseas entity (subject to compliance of Regulation 7 of the Notification ibid, in the case of financial services sector companies). The Indian Party should report to the Reserve Bank through the AD Category - I bank, the details of such decisions within 30 days of the approval of those decisions by the competent authority of the JV / WOS concerned in terms of local laws of the host country and include the same in the Annual Performance Report (APR - Part III of Form ODI) required to be forwarded to the AD Category-I bank.

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