Press Note 3 Gets A Reset: India Clarifies BO Rules For Land Border Investments

Introduction

Ever since the introduction of Press Note 3 (No. 5(5)/2020-FDI Policy, dated 17/04/2020) (“PN 3”), one of the most fundamental questions investors have grappled with when structuring India transactions is the identification of the ‘beneficial owner’ (“BO”). 

In theory, the concept appeared straightforward. In practice, it rarely was. The authorised dealer banks (“AD Banks”), investors, and regulators often approached the same issue differently. Applications involving exposure to countries sharing a land border with India (“LBCs”) frequently sat in regulatory limbo for months—and in some cases, years—without clear acceptance or rejection. Practitioners working on such transactions will recognise the pattern.