Foreign Direct Investment (FDI) Scheme, investments can be made in shares, mandatorily and fully convertible debentures and mandatorily and fully convertible preference shares of an Indian company by non-residents through two routes Automatic Route and Approval Route.
FDI reporting procedures
Indian companies are required to report the details of the receipt of the amount of consideration for issue of shares / convertible debentures, through an AD bank, together with a copy of the FIRC evidencing the receipt of the remittance (in the Advance Reporting Form) along with the Know Your Customer report on the non-resident investor from the overseas bank remitting the amount not later than 30 days from the date of receipt of the amount of consideration. First we need to be registered as Entity Master in firms portal and then to be registered as Business user for filings with RBI.
After issue of shares / convertible debentures / convertible preference shares, the Indian company has to file Form SMF-FCGPR, through it’s AD bank, not later than 30 days from the date of issue of shares.
Form FC-GPR has to be duly filled up and signed by Managing Director/Director/Secretary of the Company and submitted to the Authorised Dealer of the company. The following documents have to be submitted along with Form FC-GPR:
- A certificate from the Company Secretary of the company
- A certificate from SEBI registered Merchant Banker or Chartered Accountant indicating the manner of arriving at the price of the shares issued to the persons resident outside India.
RMC provides services in terms of preparation of the documentation for obtaining FIRC from recipient bank, KYC which is given by AD bank but prepared on the basis of SWIFT code sent by the remitter bank, allotment of shares, certification from Company Secretary, valuation of shares by chartered accountant and filing the FCGPR on behalf of the clients.
An annual return on Foreign Liabilities and Assets (FLA) is required to be submitted directly by all the Indian companies which have received FDI and / or made FDI abroad (i.e. overseas investment) in the previous year(s) including the current year to the Reserve Bank of India, by July 15th of every year.
RMC provides services in terms of preparation and filing of annual return on Foreign Liabilities and Assets (FLA) with the RBI.
Transfer of Shares between Residents and Non-Residents
Any transaction involving the transfer of shares between residents and non residents is to be reported by the resident Indian (transferor / transferee) in Form FC-TRS. The Form FC-TRS should be submitted to the AD bank, within 60 of transfer of capital instruments or receipt/ remittance of funds which ever is earlier.
RMC provides services in terms of preparation of the documentation for obtaining FIRC from recipient bank, KYC from remitter bank, and valuation of shares by chartered accountant, filing the FCTRS on behalf of the clients.