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How to report Foreign Direct Investment ("FDI") received by a Company (Form FC-GPR)

 Funding is the lifeblood of any organization and FDI is one of the major sources of funding for most startups. 

FDI in India is allowed under two routes a) Automatic Route b) Government Approval Route. 

The first and the foremost step before signing any share subscription agreement with the proposed investor is to check the FDI Policy for the business activity which your Company undertakes. If your business falls under the Automatic Route, there is no need to obtain any prior consent from any authority and you may proceed further with signing the share subscription agreement. However, if your business activity falls under Government Approval Route, the necessary application needs to be made to the respective ministry/department of the Government of India. 

Moving forward, once the Company has received the funding, the following procedure needs to be completed:

1) Allotment of Shares: As per the provisions of the Companies Act, 2013, the Company needs to allot the shares to the investor within 60 days of receipt of funds. If the same is done, the funds need to be refunded back within the next 15 days;

2) Filing of Form PAS-3: The Company needs to file Form PAS-3 within 30 days of allotment of shares with the Registrar of Companies;

Mandatory Attachments: 

1) Board Resolution for allotment of shares;

2) List of Allottees.

3) Filing of Form FC-GPR with the Reserve Bank of India ("RBI")

The Company needs to file Form FC-GPR within 30 days of allotment of shares in the following manner: 

Necessary Information: 

1) Entry Route: Here the Entry Route needs to be mentioned as per the FDI Policy taking into consideration the main business activity of the Company. As detailed above, there are two entry routes a) Automatic Route; b) Government Approval Route. If Government Approval Route is selected, a copy of the FDI approval letter needs to be attached. 

2) Applicable Sectoral Ceiling: Again FDI Policy needs to be mentioned and the percentage of permissible FDI for the business activity needs to be mentioned;

3) Whether the foreign investment is for a specific project/manufacturing unit: If the FDI is received for a specific purpose the same needs to be disclosed.

4) Date of issue: The date of Board Resolution in which the allotment of shares was approved needs to be mentioned;

5) Nature of issue: Here the Nature of issue vis-a-vis Rights, Preferential, Bonus, Merger/Amalgamation, Subscription to MOA, etc needs to be mentioned;

6) Details of Investors: The following details of the Foreign Investor needs to be disclosed: 

a) Name;

b) Address;

c) Country of Residence;

d) Constitution of the investor: Constitution vis-a-vis Person Resident Outside India excluding NRI/OCI, Erstwhile OCB, FPI, NRI/OCI, FVCI;

7) Details of Allotment like Type of Security, Issue Price, Premium Amount, etc needs to be disclosed;

8) Remittance Details like the Name of the Bank through which money is received, Address of the Bank, FIRC Number needs to be mentioned. Further, if the remitter is different from the investor, the following additional details and attachments are required: Name of the remitter, Relation with the investor, Country of Remitter needs to disclosed and a Board Resolution in this regard along with NOC and KYC of the remitter needs to be attached.

Attachments: A Copy of FIRC and KYC issued by the Indian Bank needs to be attached here.

9) Fair Value of Shares: The Fair value of shares needs to be mentioned. It may be noted that a Valuation Report from a CA/CMA/SEBI Regd Merchant Banker is mandatory if the shares are issued on a Private Placement Basis;

10) Declaration of Compliance along with the following attachments needs to be given: 

a) PCS Certificate confirming compliance of FEMA, Companies Act, and other relevant laws need to  be attached;

b) Declaration from the Company;

c) Clarification for excess amount needs to be attached if the amount received is more than the number of shares being allotted;

d) Delay letter needs to be attached if the reporting is done after the prescribed period of 30 days from the date of allotment;

e) Pre and Post Share Holding Pattern of the Company;

f) In case of rights issue, the acknowledgment of initial FC-GPR/FC-TRS as may be applicable needs to be attached;

g) MOA of the Company needs to be attached if the shares are allotted to subscribers to the MOA of the Company;

h) Debit Authorization Letter may be attached authorizing AD Bank to deduct charges from the bank account of the Company for processing the said Form FC-GPR;

I) Board Resolution for allotment of shares along with List of Allottees also needs to be attached.

The form shall thereafter be processed by the AD Bank and the RBI and if everything is found in order, the same shall be approved. 

Note: Late Submission Fee may be levied by the RBI if there is any delay in filing of the Form FC-GPR.  



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