What is the Meaning of Foreign Direct Investment(FDI)?

Foreign Direct Investment of upto 100% is allowed into Indian Private Limited Company and Limited company for most of the sectors. The amount of FDI into India has increased manifold over the last few years due to a booming economy and welcoming environment for foreign investors

Need of FDI Reporting:

An Indian company which has received amount of consideration for issue of capital instruments and where such issue is reckoned as Foreign Direct Investment for the purpose of these regulations, shall report such receipt (including each upfront/ call payment) in ARF to the Regional Office concerned of the Reserve Bank, not later than 30 days from the date of receipt

What is the Meaning of FCGPR?

An Indian company issuing capital instruments to a person resident outside India and where such issue is reckoned as Foreign Direct Investment, has to issue the same within 60 days from the date of receipt of amount of consideration and shall report such issue in Form FC-GPR to the Regional Office concerned of the Reserve Bank under whose jurisdiction the Registered office of the company operates, not later than thirty days from the date of issue of capital instruments. Issue of ‘participating interest/ rights’ in oil fields shall be reported in Form FC-GPR

Timelines for Reporting FC-GPR:

  • Allocation of Shares against the investment should be completed within 60 days of receipt of amount of consideration.
  • The company should file the FC-GPR form within 30 days of allotment of capital instruments.
Documents

Documents Required for SMF Filing:

  • Foreign Inward Remittance Certificate from the bank evidencing the receipt of the remittance(FIRC).
  • KYC report for the beneficiary if the beneficiary and remitter are different entities.
  • CS certificate
  • 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
  • Board resolution
  • Copy of FIPB approval (if required)
  • Details of Transfer of shares if any
  • No objection certificate from the remitter for the shares being allotted to the third party mentioning their relationship
  • Letter from the foreign investor explaining the reason for making subscription to shares by the remitter on his behalf
  • Copy of agreement/Board resolution from the investee company for issue and allotment of shares to the foreign investor, other than the remitter
  • Reason for delay in submission (if required).