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FC-GPR and RBI Compliance

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FC-GPR and RBI Compliance

FC-GPR (Foreign Currency – Gross Provisional Return) and RBI Compliance for Foreign Investments

The FC-GPR form is a key regulatory requirement for companies in India that have received foreign direct investment (FDI). Filing this form with the Reserve Bank of India (RBI) helps maintain transparency in foreign investments and ensures compliance with India’s foreign exchange laws.

1. Understanding FC-GPR

The FC-GPR (Foreign Currency-Gross Provisional Return) form is filed with the RBI by an Indian company that has received foreign investment. This reporting allows the RBI to track foreign capital inflow into the country.

2. When is FC-GPR Required?

An FC-GPR filing is necessary when:

  • A company issues shares to a foreign investor.
  • It receives FDI in any form, including equity shares, preference shares, or other convertible instruments.

Filing Deadline:

  • The form must be submitted within 30 days of allotment of shares to the foreign investor.

3. RBI Compliance Requirements for FDI

The RBI mandates several compliance measures to ensure lawful foreign investments. Key requirements include:

A. KYC Compliance

  • KYC verification is crucial when foreign investors remit funds into India. The Indian bank handling the funds performs this verification.

B. Board Resolution & Allotment

  • The company’s Board of Directors must pass a resolution approving the share allotment to foreign investors.

C. Valuation Certificate

  • A valuation certificate, prepared by a Chartered Accountant or a registered valuer, confirms the fair market value of shares issued to foreign investors. This ensures compliance with RBI’s pricing guidelines.

D. Know Your Customer (KYC) Report

  • Required from the foreign investor’s bank, confirming the foreign entity’s identity and remittance of funds.

4. Steps to File the FC-GPR Form

Step 1: Register on FIRMS Portal

  • The FIRMS (Foreign Investment Reporting and Management System) portal is the RBI’s digital platform for FDI reporting. Companies must first create an Entity User account here.

Step 2: Upload KYC and Remittance Details

  • The KYC report and remittance details (usually provided by the receiving bank) should be prepared and uploaded.

Step 3: Prepare FC-GPR Form

  • Complete the FC-GPR form with information about the investor, share allotment, valuation, and KYC documentation.

Step 4: Submit Supporting Documents

  • Upload all relevant documents: the Board Resolution, Valuation Certificate, and Foreign Inward Remittance Certificate (FIRC).

Step 5: Approval by the RBI

  • After submission, the RBI will review the form and provide feedback or approval, based on regulatory compliance.

5. Common Documents Needed for FC-GPR Filing

  • Board Resolution for share allotment.
  • Valuation Certificate from a CA or registered valuer.
  • KYC Documentation from the foreign investor’s bank.
  • Copy of FIRC and details of the foreign remittance.
  • MOA and AOA of the company, if applicable.

6. Penalties for Non-Compliance

Failure to comply with FC-GPR filing and RBI regulations can result in:

  • Penalties: Fines may be imposed based on the severity and duration of non-compliance.
  • Legal Action: In extreme cases, RBI may take legal action or restrict further FDI.

Conclusion

The FC-GPR filing and RBI compliance are essential steps for any company receiving FDI in India. Timely and accurate filings help ensure a smooth compliance process and facilitate future foreign investments. Working with a compliance advisor can be helpful to manage all regulatory requirements effectively.