Procedure for filing FCGPR, FCTRS and FLA

Filing Form FC-GPR

FC-GPR means Foreign Currency- Gross Provisional Return. When a company received the foreign Investment, Form FC-GPR is filed with the Reserve Bank of India. The company will issue the share to the foreign investor for such investment made by the foreign investor in the Indian Company. Form FC-GPR is a Single Master Form (SMF) issued by the Reserve Bank of India.

Purpose of filing Form FC-GPR

When the Indian Company issue equity instrument in the form of allotment of shares/compulsorily transferable preference shares/compulsorily transferable debentures, whether at the time of incorporation or after incorporation of the companies, the company require filing the Form FC-GPR.

Time Limit for Filing

The form FCGPR shall be filed with the authorized dealer bank within 30 days from the date of issue of capital instruments.
Documents required for filing the FC-GPR form

The following list of documents is to be submitted along with the FC-GPR form:

• Declaration: Declaration needs to be included as extra annexures following the RBI user manual guidelines.
• CS Certificate: The CS certificate must be included as extra attachments following the format provided in the RBI user manual.
• Certificate of Valuation: A Certificate of Valuation should be replaced by a Certificate of Valuation as specified in FEMA 20(R). Nevertheless, a valuation certificate is not necessary for rights issuance. A simple paper statement can be included stating that the price offered to a person residing outside India for the rights issue is no less than the price offered to a person residing in India..
• Resolution of the board of directors: The Board resolution shall be attached as attachments with relevant extracts.
• Memorandum of Association: The Memorandum of Association (MOA) is to be attached as annexures with relevant extracts if any.
• FIRC and KYC: Foreign Inward Remittance Certificate (FIRC) and KYC are to be attached.

Procedure for filing the Form FC-GPR

The applicant reporting the transaction has registered for the entity user and the corporate user in the single main form on the FIRMS portal. Detailed explanations of the registration procedure are as follows:

1.    Registration for Business User:

The applicant needs to go to the FIRMS official website to sign up as a new business user and complete the registration process described below:

• To register, select the option for new business users and complete the form.
• Once the business user completes the information, they must send in the registration form for verification by the appropriate branch of the authorized dealer bank.
• Business users will get email to notify them of the decision to accept or reject their request in their registered email address.

2.    Log in to the Single Master Form (SMF)

• To access the company's systems, the applicant needs to use the username and password provided via email for logging in..
• The applicant chooses FC-GPR as the return type and enters the information in the tabs provided.

3.    Details in FC-GPR

• Entity Details: Details of the invested company such as CIN, Company Name, and PAN are automatically filled in, while other information like entry route and sector cap/statutory cap must be provided separately.
• Issue details: Issue date, type of issue, and original FC-GPR reference number if filing again. If the adjustment in the ownership structure due to this noted transaction has already been reflected in the initial shareholding pattern, indicate yes or no.
• Details of Foreign Investors: Basic information like the amount of investors, title, location, citizenship, and type of investing organization. Information such as the name and address of AD Bank, payment method, transfer date and amount, and FIRC number must be included.
• Issue amount: The inflow total and the amount of equity instruments issued will be filled automatically based on previously entered data.
• Issue Particulars: Information such as the category of equity instruments, quantity of instruments, conversion rate, total number of shares, nominal value, additional cost, pricing per instrument, and the worth of allotted shares will be provided in the document.

The valuation report from a merchant banker/chartered accountant registered with SEBI determines the fair value of the issue. The appraisal report will be included within the Certificate of Valuation section. In conclusion, the applicant would provide a statement.

Shareholder Pattern

The applicant must make sure that the information in the form is accurately completed to ensure the accuracy of the automatically calculated shareholder pattern. Pre-transaction values are derived automatically from the primary entity. Post-transaction values are automatically determined by the information inputted into the form.

After the transaction, the value of shares is equal to the value of shares before the transaction plus the value of shares reported in the form.

4.    Form Submission

Save and submit the form after filling in all the details with following documents-

• Submit a copy of FIRC
• Copy of KYC (Know Your Customer) report of the sender.
• Declaration of Authorized Representative of Indian Company as per the format provided.
• Submit the CS Certificate according to the format given in RBI’s user manual which states that all the requirements have been fulfilled.
• Also, submit the valuation report duly approved by Chartered Accountant/ Merchant Banker stating the methods to get the value of equity instruments which is issued to a person residing outside India.
• Board Resolution for the allotment of Equity and Memorandum of Associations.
• Previous approval letter of FC-GPR if any.
• Pre and Post Shareholding Pattern

Penalty for Late Filing  LSF Amount (INR): 7500 + (0.025% × A × n) Notes: a) “n” is the number of years of delay in submission rounded-upwards to the nearest month and expressed  up to 2 decimal points. b) “A” is the amount involved in the delayed reporting.

Filing Form FC-TRS

FC-TRS means Foreign Currency -Transfer of shares. Form FC-TRS is filed where there is a transfer of shares of an Indian Company from Resident in India to Non-Resident/Non-Resident of India or vice versa within 60 days of date of remittance or date of transfer, whichever is earlier.

Requirements and Procedure of Filing FC-TRS

Requirements:

• Buyers and Sellers Consent: A consent is needed from buyer and seller to proceed with the share transfer.
• Valuation Report: A valuation report is required to correctly determine the value of shares being transferred. This report helps in creating the equitable market value of the stocks and assists in computing any relevant taxes or charges.
• Shareholder Agreement: In the event of a shareholder agreement between the parties, a certified true copy of the agreement must be included with the FC-TRS form. This agreement describes shareholders’ rights and responsibilities, participating in the transfer.
• Board Resolution: A copy of the certified board resolution duly approving the transfer of share must be attached.
• FIRC and KYC: The Foreign Inward Remittance Certificate (FIRC) is compulsory to submit. You must also know your Customer (KYC) documents. The FIRC provides proof of settlement, while the KYC documents confirm the identity and address details of the parties involved in the transfer.
• Declaration by Non-Resident Transferor/Transferee: A completed declaration form confirming their non-resident status, signed by either the transferor or transferee, must be submitted. This guarantees that the transfer follows the applicable rules for both resident and non-resident transactions.

Procedure for filing the Form FC-TRS

• Login into the FIRMS portal: To log in to the FIRMS Portal, use the given Entity User and Business User ID credentials.
• Select the Return Type: In the FIRMS Portal, go to the "File Return" tab and choose "Single Master Form." Select "Form FC-TRS" from the dropdown list for the Return Type and then select "Add New Return" in the menu.”
• Enter Details: Complete the information concerning FDI-Entry Route and Sectoral Cap in the designated tabs.
• Enter Common Details: Details such as the type of transfer (gift or sale), information about the individual transferring and receiving the property, as well as the transfer date were given.
• Enter Particulars of Transfer: Information on capital instruments such as the type, quantity, conversion ratio, face value, and transfer price for each instrument must be provided
• Enter Remittance Details: You need to enter the mode of payment, IFSC Code, name of the Authorized Dealer (AD) bank, date of receiving the amount and the amount received.  
• Verify Shareholding Pattern: Examine whether the pre-filled information in shareholding pattern tab is correct.
• Save and Submit: You need to click on save and submit at the top right corner of the form once you have entered all the important information.

Penalties for Late Filing LSF Amount (INR): 7500 + (0.025% × A × n) Notes: a) The duration of delay in submission rounded-upwards to the nearest month is represented by “n” number of years. and expressed up to 2 decimal points. b) The amount involved in the delayed reporting is represented by “A”.

Filing Form FLA Return

FLA Return means Foreign Liabilities and Asset Return.

The Foreign Liabilities and Asset (FLA) Return is a mandatory annual report for the Indian Entity that have received foreign direct Investment or have invested in FDI Overseas.

Applicability of FLA Return

The FLA Return filled by following entities:

• Companies were integrated under the Companies Act, 2013 or 1956.
• Limited Liability Partnerships (LLPs) were incorporated under the Limited Liability Partnership Act 2008.
• Various other organizations, such as SEBI-registered Alternative Investment Funds (AIFs), Partnership Firms, and Public-Private Partnerships (PPPs), are engaged in foreign direct investment activities within India or abroad.

Non-Applicability of FLA Return

FLA Return is not applicable to entities in the situations mentioned below

• If the entity did not get any Foreign Direct Investment (FDI) or made any international investments in the current or past years.
• If the entity's foreign investment is confined to only providing application funds without any remaining FDI or overseas direct investment by the conclusion of March in the reporting year,
• If the non-resident shareholders have moved their shares to the residents during reporting period while the entity has completely distributed the shares to non-residents. In that case, the capital that has been spent cannot be exchanged for foreign currency and removed from the country.

Due Date for Filing FLA Return

The due date of filing the FLA Return is 15th July of every year. If the accounts are not audited by this date, entities should file the FLA Return using unaudited or provisional figures. If the accounts are audited later, then the revised FLA Return must be submitted till September 30th of the same year.

Registration and Filing Process

• Registration on the RBI Portal: To file the FLA Return the entities must register themselves on the RBI Portal at https://flair.rbi.org.in. If you are a first-time user, you need to create an account by submitting “FLA User Registration Form”. To complete the registration process, upload a scanned and duly signed Authority letter.
• Filling the FLA Return: After successful registration, entities can log in to the portal with their username, password and a One-Time Password (OTP) which is sent to the registered email address. After entering the portal, click on "FLA Online Form" and "Start Filing FLA Form" to start filling in the FLA return.

Information Required for Filing FLA Return

The Reserve Bank of India (RBI) has classified the FLA Return into five distinct sections for a detailed capture of foreign liabilities and assets by Indian entities:

Section I: Identification Particulars

• This part offers the entity's, PAN, CIN, contact person, email ID, identification information, including name, mobile number, business type, and listing status.

Section II: Financial Details

• This part needs information on the financial aspects of the entity, like total paid-up capital, profit and loss, reserves and surplus, and sales and purchases made in the financial year.
• The part requires information on the financial aspects of the entity, like total paid-up capital, reserves and surplus, profit and loss and sales and purchases made in the financial year.

Section III: Foreign Liabilities

• This part needs information about the investment made in India (FDI) and other international obligations, including non-resident equity and participating preference share capital holding percentages.
• This part requires information about investments which are made in India (FDI). It also asks for other international obligations which include non-resident equity and participating preference share capital holding percentages.

Section IV: Foreign Assets

• This part needs information on foreign assets like shares and bonds as part of portfolio investments and foreign direct investment abroad (ODI).

Section V: Variation Report

• This part will be filled up automatically by using the information provided in the previous four parts. Organizations should double-check the data for correctness prior to filing the report.

Penalty For Late Filing of FLA Return

In case of late submission of the FLA Return or failure to submit it can lead to fines under the Foreign Exchange Management Act (FEMA).

Late Submission Fee (LSF): If an entity fails to file FLA Return by the July 15th deadline, they have to pay a Late Submission Fee of INR 7,500. This charge is applicable if the return is submitted after the deadline but before any enforcement measures are implemented.

Penalties for Violations: If an entity fails to file the FLA Return or files any false information then penalties under FEMA can be severe, including:

Monetary Penalty: If the amount of violation cannot be measured, a minimum of Rs. 2 Lakh or up to 300% of the amount related to the violation will be charged.

Continued Non-compliance: If the violation persists beyond the initial detection, a daily fine of Rs. 5,000 may be imposed for each day the violation persists after the first day.