Returns for FDI in India

Considering our understanding of the previous article, "A Brief about Foreign Direct Investment in India," now we should be aware about the Returns that must be filed with the Reserve Bank of India.

WHAT RETURNS MUST BE FILED AFTER RECEIVING FOREIGN DIRECT INVESTMENTS?

Foreign Investment in India is regulated in terms of sub-section 2A of Section 6 and Section 47 of the Foreign Exchange Management Act, 1999 (FEMA) read with Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 (NDI Rules).

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After receipt of Foreign Direct Investment, the Indian Company shall file the following returns:

1. FC-GPR (Foreign Currency Gross Provisional Return) - in case of allotment of Equity Instruments
2. FC-TRS Foreign Currency Transfer) - In case of transfer between PROI (Person Resident Outside India) and PRI (Person Resident in India)
3. FLA (Foreign Liabilities and Assets) - An annual return on foreign liabilities and assets

WHAT IS FC-GPR?

• After receipt of inward remittance, Company shall,within 60 days, call a board meeting and pass Board Resolution u/s 179(3) of Companies Act, 2013 for issue and allotment of equity instruments.
• A company shall not utilise monies raised through private placement unless allotment is made and the return of allotment is filed with the Registrar [Proviso to sub section (4) of section 42 of Companies Act, 2013]within 15 days from the date of the allotment[sub section (8) of section 42 of Companies Act, 2013]
• In case of Right Issue -The Company shall file the form PAS-3 within 30 daysfrom the date of the allotment.
• An Indian company issuing equity instruments (equity shares or securities convertible into equity shares) to a person resident outside India as Foreign Direct Investment, shall report such issue in Form FC-GPR, within thirty days from the date of allotment.
• To file the form FC-GPR visit Click Here and login as Business User.

Following Documents are required for filing FC-GPR

1. Valuation report by Merchant Banker / Chartered Accountant indicating Fair Value of securities
2. KYC of PROI issued by the Bank
3. Foreign Inward Remittance Certificate of PROI issued by Bank
4. Certificate by Practising company secretary for compliance of provisions of Companies Act and FEMA (Click Here)
5. Board Resolution of Allotment

RBI may ask for additional documents and usually RBI ask for following additional documents

1. Copy of Form PAS-3 filed for allotment along with copy of challan(challan is optional)
2. List of Allottees
3. Pre and Post-Transaction Shareholding of Company
4. Agreement or Terms and Conditions of issuance - in case of convertible securities
5. Declaration by Practising Company Secretary confirming details of allotment
6. Declaration by Authorised representative of Company (Click Here)
7. Certificate by Practising Company Secretary for securities issued on same price to resident as well
8. Undertaking by Director for FDI Compliance
9. Undertaking by Director for Conversion price
10. Declaration by PROI for inward remittance

For user manual on filing of form FC-GPR, kindly visit Click Here

WHAT IS FC-TRS?

• Form FC-TRS shall be filed for transfer of capital instruments between:

1) A PROI holding capital instruments in an Indian company on a repatriable basis and a PROI holding capital instruments on a non-repatriable basis; and

2) A PROI holding capital instruments in an Indian company on repatriable basis and a PRI.

Note: Transfer of capital instruments between a PROI holding capital instruments on a non-repatriable basis and PRI is not required to be reported in Form FC-TRS.

The form FCTRS shall be filed with the Authorised Dealer bank within sixty days of:

1. Transfer of capital instruments or
2. Receipt/ remittance of funds (whichever is earlier)

Following Documents are required for filing FC-TRS

1. Share Transfer Deed (Form SH-4)
2. Share Certificate after Transfer of shares (Form SH-1)
3. Valuation Report by Merchant Banker / Chartered Accountantindicating Fair Value of securities
4. Agreement of share Transfer, if any
5. Board Resolution of Company to approve and acknowledge the securities transfer
6. Pre and Post Transaction Shareholding of Company
7. Declaration by Non-Resident
8. Identity and Address proofifTransferor / Transferee is Resident
9. FIRC and KYC received from the AD Bank if Transferor / Transferee is non-resident
10. Declaration from the Seller to the effect that he is eligible to acquire capital instruments Click Here
11. Declaration from the buyer to the effect that he is eligible to acquire capital instruments
12. Self-certified Copy of Passport of the Non-resident investor.
13. If transferor and transferee are Companies, then Board Resolution approving the purchase and sale of securities.
14. For user manual on filing of form FC-TRS, kindly visit Click Here

WHAT IS FLA?

An Indian Company/LLP which has Foreign Direct Investment/ Overseas Direct Investmentason31st Marchshall submit form FLA with RBI on or before the 15th day of July of each year. Click Here

• Indian Company/LLPshall submit the FLA return up to 15th July based on unaudited financial statements on 31st March.
• Indian Company/LLP is permitted to re-submit the FLA return up to 30th September based on audited financial statement on 31st March where substantial changes are existed between unaudited financial statement and audited financial statements.

For user manual on how to file FLAor to file FLA, visit Click Here

Notes:

• Indian Company/LLP is not required to submit the FLA return where 100% non- resident shareholding already transferred to Resident of India (ROI) before March 31st.
• Indian corporate entity is not required to submit the FLA return where FDI is received from non-resident investor on non- repatriable basis

Important Links

• FAQS on FLA: Click Here
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