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FCGPR - Reporting of Foreign Direct Investment(FDI) in India

Foreign Direct Investments (FDI) can be made by Non-residents in Indian companies in shares, fully and compulsorily convertible preference shares and debentures. 

There are broadly two entry routes for FDI's; first is automatic route and the other is approval route. In automatic route, neither the foreign investor nor the Indian company needs any approval from the  Government of India (GOI) or the Reserve Bank of India (RBI) for the investments. On the other hand prior approval is required from the  GOI & RBI under approval route.

As per RBI regulations, the Indian Company needs to report the investments from foreign sources to RBI whenever a share or debenture is issued under FDI policy. The amount of consideration including each call payments and each upfront payments needs to be reported to the regional offices of RBI through AD Category 1 Banks. This reporting to RBI needs to be done within 30 days from the date of receipt of payments in the advance reporing form which can be downloaded from the RBI website.

Few relevant points:-

1. Foreign Inward Remittance Certificate (FIRC) should be submitted evidencing the receipt of consideration:- FIRC defines the purpose of receipt of foreign money into India. Details of the receipt of amount of consideration for issue of shares/debentures should be reported to RBI through AD Category 1 bank along with the FIRC evidencing the receipt of money. KYC of non-resident Indian should also be attached with it. This report will be acknowledged by the regional office of the RBI and an Unique Identification Number (UIN) will be allotted for the amount reported.

2. Issue of shares within 180 days: After receipt of the consideration and reporting the same through filing of FIRC, it is the obligation of the Indian company to issue the shares/debentures within 180 days of receipt of the Inward remittance. If shares/debentures are not issued within 180 days of inward remittance, then the money should be refunded immediately through outward remittance through normal banking channels or by credit to the NRE/FCNR/ESCROW account as the case may be.

NON compliance in the above mentioned FDI provisions would be considered as a serious contravention to the Foreign Exchange Management Act (FEMA) and could attract penal provisions. However, in exceptional cases delay beyond 180 days can be condoned by the RBI on the marits of the case.

FC-GPR (Reporting of issue of shares with RBI) - FC-GPR stands for "Foreign Currency-General Permission". After issue of shares by Indian company, it has to report the same to the regional office of RBI through AD category 1 Banks in FORM FC-GPR, Non compliance of the same may attract penal provisions under FEMA.

Form FC-GPR needs to be filled up and signed by the Director and along with all the annexures, needs to be submitted to the regional office of RBI through AD Category 1 banks.

The following annexures needs to be prepared:-

A. A certificate from the Company Secretary certifying that:

1. All the requirements of the Companies Act, 2013 has been complied with;

2. Terms and conditions of the Government Approval has been complied with;

3. The Company is eligible to issue shares under the regulations;

4. The Company has all the original certificates issued by AD banks in India evidencing the receipt of consideration.

B. A Certificate by Chartered Accountant indicating the manner of arriving at the price of the shares issued to the persons resident outside India.

Please contact the expert team of Fundscoop Advisors at info@fundscoop.in or call us at 9330560978 to get this compliance done for your company at the earliest.

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