FDI Reporting UNDER FEMA, 1999

Whenever a company accepts any foreign Investment, the company has to report to Reserve Bank of India (RBI) about the inflow of funds in Form FC-GPR. The form is to be filed on the website of Reserve Bank of India (RBI) through the link www.rbifirms.gov.in. The forms are filed and submitted in a Single master Form (SMF) through which the companies and LLPs report to RBI in the form of FC-GPR. FC-TRS, LLP-I, LLP-II, ESOP, DI, DRR, InVi. The RBI on September 1, 2018, released a user manual (the “SMF Manual”) to clearly set out the procedure for filing a single master form (“SMF”) which it introduced on June 7, 2018, to integrate the existing reporting norms for foreign investment in India.

What is FC-GPR?

Form FC-GPR is to be filed when the Indian Company issues shares to a person/ company resident/ incorporated outside India. The form is issued by RBI under Foreign Exchange Management Act, 1999. Whenever, a company receives foreign investment and issues shares against such investment, then it is the duty of the company to file details of such allotment to RBI within 30 days of such allotment by using Form FC-GPR (Foreign Currency- Gross Provisional Return). 

HOW INVESTMENT IN INDIA CAN BE MADE BY FOREIGN INVESTORS?

An Indian company can receive foreign investment through following modes:

• Remittance through normal banking channels.
• Debit to NRE/FCNR account of a person concerned maintained with a Bank.
• Conversion of royalty/lump sum/ technical know-how fee due for payment or conversion of ECB shall be treated as consideration for issue of shares.
• Conversion of import payables/pre-incorporation expenses/share swap can be treated as consideration for the issue of shares with the approval of FIPB.
• Debit to non-interest bearing Escrow account in Indian Rupees in India which is opened with the approval from AD Category – I bank and is maintained with the AD Category I bank on behalf of residents and non-residents towards payment of share purchase consideration.

DETAILS TO BE SUBMITTED TO THE RBI?

Within 30 days of receipt of share application money/ amount of consideration from the foreign investor, the Indian Company must report details of FDI inflow to the Foreign Exchange Department, Reserve Bank of India. The report must be submitted to the regional office of the Reserve Bank of India under whose jurisdiction its registered office is located by giving in the following details:

• Name and Address of the foreign Investor
• Date of receipt of funds and the Rupee Equivalent (Foreign Inward Remittance Certificate i.e. FIRC)
• Name and Address of the authorized dealer through whom the funds have been received.
• Details of Govt Approval, if any
• KYC report (identity and address proof) of the non-resident investor from the overseas bank remitting the amount of consideration.

CHECKLIST FOR FILING FORM FC-GPR:

Before reporting the details of the transaction to RBI, the applicant company needs to obtain the following documents:

1. FOR INITIAL ISSUE OF SHARES (OR SAY SUBSCRIBER TO MOA)
2. Copy of PAN Card of the Authorized Signatory.
3. MOA of the Company
4. Copy of PAN Card of the Company
5. KYC Report for the beneficiary even if the beneficiary and remitter are different entities.
6. Foreign Inward Remittance Certificate (FIRC) from the Bank in whose account the foreign investment is received.
7. CS Certificate.
8. Certificate from SEBI registered Merchant Banker/ Chartered Accountant indicating the manner of arriving at the price of the shares issued to the persons resident outside India.
9. Statutory Auditor Certificate.
10. Board resolution.
11. Debit Authorization to the Bank of the recipient for deduction of FC-GPR fees as imposed.
12. Declaration from the company for as to the compliance of FEMA Regulation, 1999 or as amended from time to time.
13. Copy of Documents of Investors.       
14. Copy of FIPB approval (if required).
15. No Objection certificate from the remitter for the shares being allotted to the third party mentioning their relationship.
16. Copy of Agreement/Board resolution from the investor company for issue and allotment of shares to the foreign investors, other than remitter.
17. Reason for delay in submission (if required.)

1. FOR FURTHER ALLOTMENT OF SHARES
2. Copy of PAN card of the Authorised Representative
3. KYC Report for the beneficiary even if the beneficiary and remitter are different entities.
4. Foreign Inward Remittance Certificate (FIRC) from the Bank in whose account the foreign investment is received.
5. Copy of Documents of the Investor.
6. Debit Authorization to the Bank of the recipient for deduction of FC-GPR fees as imposed.
7. Declaration from the company for as to the compliance of FEMA Regulation, 1999 or as amended from time to time.

PROCESS FOR FILLING FC-GPR:

Reporting of FC-GPR can be done by following steps:

1. Registration for Entity Master
2. Afterwards, a password will be generated from RBI.
3. Then login to the portal, which on logging in, will prompt you to change the password.
4. After successful change of Password, create the entity data.
5. Then, process for Registration for Business User.
6. Afterwards, Log in to FIRMS Portal. 
7. Reach out to your workspace.
8. Then, Select the Return Type.
9. Fill in the Common Investment details, Details for issue of shares, Foreign Investment Detail, Amount of Issue, Particulars of Issue. Shareholding Pattern.
10. After filling all the required details, then submit the Form.