Official Gazette Notification – G.S.R. 646(E), August 22, 2022

• Description: The Foreign Exchange Management (Overseas Investment) Rules, 2022, issued by the Ministry of Finance, are published in the Gazette of India. This document contains the full text of the rules, including Rule 2(h), which defines "Overseas Investment" as including "acquisition of unlisted equity capital or subscription to the Memorandum of Association of a foreign entity or investment in 10% or more of the paid-up equity capital of a listed foreign entity or investment with control in a foreign entity."
• Relevance: Rule 2(h) explicitly states that holding control or ownership, including initial subscription, triggers ODI compliance. This is critical for Indian founders setting up US LLCs or C-Corps.

RBI Notification – FEMA 400/2022-RB

• Description: The RBI’s notification, issued on August 22, 2022, formally notifies the Foreign Exchange Management (Overseas Investment) Rules, 2022. It serves as the official announcement and links to the rules and regulations.
• Relevance: This notification confirms the applicability of Rule 2(h) and related provisions, ensuring that any form of ownership or control in a foreign entity, including LLC membership interests, is considered ODI.

1. RBI Master Direction on Overseas Investment, 2024
   • Description: The RBI’s Master Direction on Overseas Investment, updated in 2024, consolidates the 2022 Rules, Regulations, and Directions. It includes detailed explanations of terms like "Overseas Investment" and clarifies that membership interests in LLCs are treated as equity capital.
   • Relevance: This document elaborates on Rule 2(h) and Para 2(i), Schedule III, confirming that membership interests in an LLC are equivalent to equity capital for ODI purposes, as stated in the original document.
   • Access:
     • RBI Master Direction on Overseas Investment, 2024
     • Search for sections on "Definitions" and "Schedule III" to locate Rule 2(h) and Para 2(i).
2. Schedule III, Para 2(i) – Foreign Exchange Management (Overseas Investment) Rules, 2022
   • Description: Schedule III of the OI Rules, 2022, outlines the manner of making Overseas Investment by resident individuals. Para 2(i) specifies that investments can include "capital or any other form, including subscription as a part of the memorandum or purchase of equity capital or contribution towards membership interest in case of limited liability entities."
   • Relevance: This paragraph directly addresses LLCs, confirming that membership interests are considered a form of investment under ODI, triggering compliance requirements.
   • Access:
     • Refer to the Gazette Notification G.S.R. 646(E), pages 14–15, for Schedule III, Para 2(i).
     • Alternatively, legal databases like Tax Management India provide annotated versions: Schedule III Details.
3. RBI Circular – A.P. (DIR Series) Circular No. 10, August 22, 2022
   • Description: This circular provides operational instructions for the 2022 OI Rules and Regulations, including clarifications on what constitutes ODI. It supports the definition in Rule 2(h) by emphasizing that even initial subscriptions or control over a foreign entity require compliance.
   • Relevance: The circular reinforces that any form of ownership, including LLC membership interests, is subject to ODI rules, aligning with Para 2(i), Schedule III.
4. Tax Management India – Commentary on OI Rules
   • Description: Tax Management India provides detailed commentary and breakdowns of the 2022 OI Rules, including Rule 2(h) and Schedule III. It explains how membership interests in LLCs are treated as equity capital for ODI compliance.
   • Relevance: This is a secondary source that simplifies the legal text for practitioners and founders, making it easier to understand the implications of Rule 2(h) and Para 2(i).