FDI compliance- Steps for successfully filing form FC-GPR

If a company accepts foreign investment, the Reserve Bank of India issues forms FC-GPR. As a result, the corporation will grant shares in exchange for a foreign investor’s investment. Additionally, the corporation must submit information on this share allotment using Form FC-GPR. In this post, we take a close look at filling out form FC-GPR.

 Essential requirements for filling form FC-GPR

Any business with foreign investment must notify RBI. The circumstances for FDI should be taken into account as follows:

• Foreign Direct Investment (FDI) policies should be followed when making foreign investments.
• The management of foreign exchange should issue securities. However, the only securities taken into account under FDI are equity shares, convertible preference shares, and convertible debentures.

Deadline for filling out Form FC-GPR

Within 30 days of the day that the securities were issued, the corporation must submit Form FC-GPR to the RBI. The applicant is expected to gather the following information when filling out the form before reporting the transactions.

• The reporting of advance international remittances requires a Unique Identification Number from the RBI.
• The beneficiary must provide a KYC report if the remitter and beneficiary are from different entities.
• Company secretary’s (CS) certificate
• A certificate from a merchant banker or character accountant who is registered with SEBI stating details of how the price of the shares allocated to the individual or person living outside of India was determined.
• Disclaimer certificate
• Certificate from a Statutory Auditor Format for a Board Resolution
• Allocated Loan Registration Number (LRN)
• If applicable, a certified copy of the Foreign Investment Promotion Board (FIPB), details of the share transfer, and a No Objection Certificate (NOC) from the sender for the shares allocable to the third party specifying their relationship are all necessary.
• A copy of the letter from the overseas investor outlining the justifications for the remitter’s subscription to shares on his behalf.
• Copy of the investment company’s board resolution or agreement authorizing the issuance and distribution of shares to non-remitters who are foreign investors
• Reason for filing delays in case any.   

What are the documents required for filling out form FC-GPR?

The list of documents that must be provided with the FC-GPR form is as follows.

• Declaration: Declarations should be included as additional attachments in the manner specified in the RBI user handbook.
• CS certificate: By the format specified in the RBI user handbook, a CS certificate must be included as one of your other documents.
• Valuation certificate: As required and necessary by FEMA 20(R), a valuation certificate should be submitted in the form of the valuation certificate. However, the valuation certificate is not necessary for the rights issue. The rights issued to persons or individuals residing outside of India cannot be priced lower than the price supplied to a person residing in India, based on a declaration that can be included in plain paper.
• Acknowledgment letter: Regarding FC-TRS/FC-TRS submitted for the initial investment for rights or bonus issue, appropriate acknowledgment letters must be included as additional attachments.
• Memorandum of Association: If there is any MOA it must be attached along with it.
• Board Resolution: it must be attached along with the important document.
• FIRC: Foreign Inward Remittance Certificate and KYC must be attached along with important documents.
• Mergers, demergers, and amalgamations: These must have the necessary permissions from the appropriate authorities at the designated attachment location and the relevant extracts.

Stepwise filling of form FC-GPR

Step 1: Registration of the user

• Any applicant reporting a transaction to the RBI may log in using the credentials issued to him or her for that purpose.
• However, visit the official website of the company to register as a new business user.
• Further, to register as a new business user, click the registration link and complete the form.

Step 2: Log in to the firm

One should log in to the business with the username and the password received on the registered mail id.

Step 3: Single Master Form

You can log in to the companies and SMF and access your workspace after completing the new user registration process.

Step 4: Pick Form as the Return type-FC GPR

To view various forms, choose Return type. Then, choose Form FC -GPR, which has pre-filled information such as the CIN, PAN number, and company name. However, some information must be filed manually. 

Step 5: Details about the investment

Now, the Single Master Form i.e., Form FC-GPR must be used to record investment information such as shareholding patterns and the date of share issuance.

Step 6: All Details of the Issue 

Details like the nature of the issue, date of issue, and initial FC-GRP reference number in case of the subsequent filing have to be provided.

Step 7: Details about FDI

Details like the number of investors, their nature of investing, etc. must be made on the record.

Step 8: Amount of issue

The amount of the inflow and the sum of the amount on which the capital instrument is issued must be filled out carefully.

Step 9: Particulars of the issue

Now, enter the fair market value of the issue in rupees in accordance only with the valuation certificate attached as the valuation certificate and issued by the appropriate authority.

Step 10: Shareholding

• Under the option shareholding, the value of equity shares and the indirect foreign investment value of equity shares will be shown.
• Additionally, based on the information entered into the form, pre-transaction, and post-transaction values are automatically calculated.
• The user must then comply with providing accurate information so that the automatically derived shareholding pattern is accurate.

Step 11: Submission of the Form

After filing all the required details on the form, save it and submit it. Post reviewing the form, RBI either accepts it or requests any further information they may need before eventually recording it.

Takeaway

Therefore, FDI reporting is a requirement that cannot be evaded at any cost, regardless of whether the FDI is made for the first time by establishing a wholly owned subsidiary of a foreign firm in India or by purchasing an equity stake in an established company because it can cause serious penalties and problem for the Companies.