FEMA COMPLIANCES

The Foreign Exchange Management Act (FEMA) acts as the guiding law to regulate the flow of funds flowing from foreign countries to India and vice versa. The act came into existence in 1999, and apart from regulation of funds, it also mentions FEMA compliances that a corporate body should follow.

The importance of FEMA filing becomes more relevant due to globalization and the fast pace growth of international trade investments. Moreover, to keep a check on sectoral caps, investment caps and avoid penalties in FEMA’s non-compliances.

The following forms can be now filled under a single umbrella form of SMF;

FC-GPR

The form used for the issue of capital instruments by an Indian Company to a person resident outside India. Reporting of FDI under this form must be done within 30 days of fund allotment.

FC-TRS

The form is used to transfer capital instruments from a foreign resident to a person in India.

Submission of FC-TRS under the SMF must be made within 60 days of transferring capital instruments or the remittance of funds, whichever is earlier.

LLP-I

The form is used for Foreign Direct Investment, which is required by an LLP.

LLP-II

The form which is used for Divestment or transfer of capital contribution in an LLP.

CN

The form which is used for the issue or to transfer convertible notes. Reporting of Convertible notes must be done within 60 days of such transfer.

DRR

The form which is used for the issue of transfer of depository receipts.

ESOP

The form which is used for issuing employee stock options or sweat equity shares.

DI

The form used for reporting downstream investment or some form of foreign indirect investment in a business.

Advance Reporting Form

Within 30 days of the date of issue of offers, an Indian organization that benefits from foreign investment for the issue of shares or other qualified securities under the FDI Scheme must report the details of the amount of consideration to the Reserve Bank’s concerned Regional Office via its AD Category I bank.

Form FC-GPR

This form is issued by the RBI under the Foreign Exchange Management Act of 1999. When the organisation receives foreign investment, it distributes its shares to outside investors in exchange for such investment.

It is the organization’s responsibility to register details of such a share allotment with the RBI within 30 days and to do so. The organization must use the form FC-GPR (Foreign Currency-Gross Provisional Return).

Form FC-TRS

Form FC-TRS stands for Foreign Currency Transfer. This form must be submitted when an Indian company’s shares or convertible debentures are transferred from a resident to a non-resident/non-resident Indian or vice versa for sale.

Form ODI

Form ODI must be filled out by any Indian resident or Indian entity interested in investing in the international market. In addition, they should deliver the share certificate or proof of investment against investment in a joint venture or wholly owned subsidy to the designated AD within 30 days.