FEMA AND RBI COMPLIANCES
i. Online Reporting of Advance Foreign Inward Remittance FC GPR to Reserve Bank of India via RBI Firms portal
ii.Annual Return (FLA Return) of Foreign Investments (FDI) by Indian Companies/ Firms
1) Online Reporting of Advance Foreign Inward Remittance & FC GPR to Reserve Bank of India via RBI Firms portal.
The money received from the foreign investor for purchase of shares in the Indian Company will be accounted under share application money. The Indian Company is required to issue shares within 180 days from the date of inward remittance to the foreign investor, to avoid violation of the FEMA regulations and required to intimate the same to the RBI within the period of 30 days from the date of issue of shares via filing of form FC-GPR on RBI firm’s portal.
Annual Return (FLA Return) of Foreign Investments (FDI) by Indian Companies/ Firms
The annual return on Foreign Liabilities and Assets (FLA) is required to be submitted directly by all the Indian companies which have received FDI (foreign direct investment) and/or made FDI abroad (i.e. overseas investment) in the previous year(s) including the current year i.e. who holds foreign Assets or Liabilities in their Balance Sheets.
However, if the company has not ‘received any fresh FDI and/or ODI (overseas direct investment)’ in the latest year but the company has outstanding FDI and/or ODI, then that company is also required to submit the FLA Return every year by 15 th July.
FAQ’s
Annual return on Foreign Liabilities and Assets has been notified under FEMA 1999 and it is required to be submitted by all the India resident companies which have received FDI and/ or made overseas investment in any of the previous year(s), including current year by July 15 every year. Non-filing of the return before due date will be treated as a violation of FEMA and penalty clause may be invoked for violation of FEMA.
If the company’s accounts are not audited before the due date of submission, i.e. July 15, then the FLA Return should be submitted based on unaudited (provisional) account. Once the accounts gets audited and there are revisions from the provisional information submitted by the company, they are supposed to submit the revised FLA return based on audited accounts by end – September.
The annual return on Foreign Liabilities and Assets (FLA) is required to be submitted directly by all the Indian companies which have received FDI (foreign direct investment) and/or made FDI abroad (i.e. overseas investment) in the previous year(s) including the current year i.e. who holds foreign Assets or Liabilities in their Balance Sheets.
If the Indian company does not have any outstanding investment in respect of inward and outward FDI as on end-March of reporting year, the company need not submit the FLA Return.
If the company has not ‘received any fresh FDI and/or ODI (overseas direct investment)’ in the latest year but the company has outstanding FDI and/or ODI, then that company is required to submit the FLA Return every year by July 15.
FLA return is mandatory under FEMA 1999 and companies are required to submit the same based on audited/ unaudited account by July 15 every year.
FCGPR Form which a company submits to RBI for reporting the issue of eligible instruments to the overseas investor against the FDI inflow.
Within 30 days from the date of issue of shares, form FC-GPR must be filed with the RBI along with the
following documents.
1)Certificate from the Company Secretary of the company accepting investment from persons resident outside India certifying that
o The company has complied with the procedure for issue of shares as laid down under the FDI scheme as indicated in the Notification No. FEMA 20/2000-RB dated 3rd May 2000, as amended from time to time; AND
o The investment by the Foreign Investor in the Company is within the sectoral cap/statutory ceiling permissible under the Automatic Route of the Reserve Bank and it fulfills all the conditions laid down for investments under the Automatic Route; OR
o Shares in the company have been issued to the Foreign Investor in terms of SIA/FIPB approval number and date. A copy of the Foreign Investment Promotion Board (FIPB) must be attached.
2)Certificate from Statutory Auditors/ SEBI registered Merchant Banker / Chartered Accountant indicating the manner of arriving at the price of the shares issued to the persons resident outside India.
