The A to Z of FC-GPR Reporting: A Must-Know for Investors and Companies

Introduction to FC-GPR Reporting - FDI Compliance

In order to cope up with the dynamic business environment, a corporate needs to expand and grow. One of the best strategies to do so is by attracting foreign investment.

The most common way of getting foreign investment is by issuance of equity thereby diluting the stake and passing some ownership of the entity to the foreign investor. By FC-GPR Reporting, the government aims to regulate such transactions between the recipient and the foreign investor and ensures that all compliances are in place.

What is FORM FC-GPR?

Foreign Currency Gross Provisional Return (FC-GPR) is required to be filed by the Indian Company when it receives foreign investment by alloting shares to the foreign investor. Once the shares are alloted , RBI shall be notified of such transaction within 30 days of allotment by filing the Form FC-GPR on the FIRMS Portal of RBI.

However one must ensure that the following two conditions have been fulfilled

1. Foreign investment should be in compliant to Foreign Direct Investment (FDI) policy.
2. Securities issued should be in accordance with the foreign exchange management.

Documents Required for filing FORM FC-GPR

• Declaration to be filed by the authorised representative of the Indian company as per the format given in the RBI user manual.
• A certificate by the Company Secretary to ensure that all the requirements of the Companies Act, 2013 have been complied with.
• Valuation certificate as prescribed and applicable under FEMA or the rules and regulations framed, or directions issued thereunder, as amended from time to time and as applicable
• PAS 3 or Board Resolution to be attached as "other attachments"
• Memorandum of Association to be attached as "other attachments"
• Merger/ Demerger/ Amalgamation, if applicable relevant extracts to be attached at the specified attachment
• In case of Rights/ Bonus issue the Acknowledgement letter of FC-GPR as applicable, of the original investment.
• FIRC (Foreign Inward Remittance Certificate) and KYC to be attached in the place of the specified attachments.
• Government approvals, if any

Detailed Steps for filing FORM FC-GPR on the FIRMS Portal

1. User Registration

• In order to get registered, visit the FIRMS portal of RBI. Applicant shall get registered as business user by clicking on the New Business User link.
• Fill in the details as required and submit the form after attaching the required documents. The details are verified by the concerned AD bank. The approval or rejection would be intimated to the applicant through email
• Once the submission is done and approved, the login credentials will be shared via mail.

2. Filing Form FC-GPR

• Login to the FIRMS Portal by entering the username and password you have received in your email.
• Select Single Master Form by clicking on the Navigation Tab
• Click on the return type drop-down menu and choose Form FC-GPR
• In the Issue Details tab, you have to provide details such as the nature of the issue, the date of the issue, the initial FCGPR reference number, etc.
• Provide information about the investors' names, residential addresses, and the structure and nature of the investment entity under the Foreign Investment Details tab.
• The total amount of inflow and the amount for which the capital instrument has been issued must be entered in the Amount of Issue tab.
• In the Particulars of Issue tab, the fair value of shares shall be disclosed along with the valuation certificate.
• In the Shareholding Pattern tab, the value of the equity shares along with the foreign investment value of equity shares are displayed
• Once completed, submit the form.

Securities considered under FDI

• Equity Shares
• Convertible Preference shares
• Convertible Debentures

Penal Provisions

Reserve Bank of India imposes penalties for late or non-filing of Form FC-GPR.

• Late Filing - The late penalty is 1% of the total investment amount, with a minimum of INR 5,000 and a maximum of INR 5 lakhs per month or part thereof for the first six months of delay. After six months the penalty rate doubles to 2% per month until the non-compliance is rectified.
• Non-Filing - The penalty is also known as "compounding". The penalty must be paid online into a designated account with the RBI.