Module: General Practice
Q94: According to the Foreign Exchange Management (Overseas Investment) Rules, 2022, the total "Financial Commitment" made by an Indian Entity in all foreign entities shall not exceed:
✅ Correct Answer: C
400% of Net Worth.
Concept Definition: Financial Commitment (FC). Structural Breakdown: What counts as FC?
It is the sum of: 1. Amount of Equity/Compulsorily Convertible Preference Shares (CCPS). 2. Loan Amount provided to the foreign entity.
3. 100% of the amount of Corporate Guarantees issued.
4. 50% of the amount of Performance Guarantees.
The Limit: The aggregate FC must be within 400% of the Net Worth of the Indian entity.
Exception: Investments funded out of EEFC account balances or ADR/GDR proceeds are excluded from this 400% limit.
Concept Definition: Financial Commitment (FC). Structural Breakdown: What counts as FC?
It is the sum of: 1. Amount of Equity/Compulsorily Convertible Preference Shares (CCPS). 2. Loan Amount provided to the foreign entity.
3. 100% of the amount of Corporate Guarantees issued.
4. 50% of the amount of Performance Guarantees.
The Limit: The aggregate FC must be within 400% of the Net Worth of the Indian entity.
Exception: Investments funded out of EEFC account balances or ADR/GDR proceeds are excluded from this 400% limit.