Introduction: Annual Performance Reports (APR) are essential documents for residents of India who have made investments outside the country. In this comprehensive guide, we’ll break down the 21 frequently asked questions about APR for overseas investments to help you navigate the process with ease.
1. Meaning for filling of APR for outside India (overseas) investments by Resident
(i) Filling for APR required (mandatory) for investments made outside India by resident individuals + resident non individuals (both) in Joint venture (JV) + Wholly owned subsidy (WOS) both located outside India commonly known Indian Party (IP).
(ii) Separate APR be filed for each JV + each WOS (both) under FEMA, 1999.
2. Meaning for penalty for non filing APR for ODIs by IP or RI (any)
(i) Non filling for APR (up to December 31st) be treated violation under FEMA, 1999.
(ii) Maximum penalty @ 300% be levied (exceptionally) on investments made in JV + WOS (both)
(iii) Maximum penalty be levied (generally) through computed amount referred under Foreign Exchange (Compounding Proceedings) Rules, 2000.
3. Meaning for maximum limit for ODIs by Indian Parties (IPs)
(i) IPs permitted for Overseas Direct Investments (ODI) in JV + WOS outside India
(ii) Maximum ODI permitted up to 400% of effective IP’s Net worth through JV + WOS (both) located + incorporated (both) Outside India
4. Meaning for maximum limit for ODIs by Resident Individuals (RIs)
(i) RIs permitted for ODI in JV +WOS (both) located + incorporated (both) Outside India
But
(ii) RI permitted for ODI through Liberalized Remittance Scheme (LRS) only.
(iii) Maximum RI permitted for ODIs up to USD 2.5 Lac per financial year + also per person through LRS (only).
5. Meaning for Audited financial statements for ODIs for JV + WOS (both)
- IPs or RIs (mandatory) required to file APR (up to December 31st) based on (audited) financial statements for JV + WOS (both) located outside India.
6. Meaning for Unaudited financial statements for ODIs for JV + WOS (both)
(i) IPs or RIs (any) permitted to file APR (up to December 31st) based on (unaudited) financial statements of JV + WOS (both) when audit not (mandatory) required in host country (outside India)
+ (plus)
(ii) Also Statutory auditors for IP (in India) required to certify that host country’s law not (mandatory) required auditing of financial statements for JV + WOS (both) + also to satisfy figures for APR filled based on (unaudited) financial statements of JV + WOS (both)
+ (plus)
(iii) Also Board of Directors (BoDs) for IPs required to certify that (unaudited) financial statements already adopted + ratified (both)
+ (plus)
(iv) Also RI required to self certify for (unaudited) financial statements when RI (in India) not (mandatory) required auditing his financial statements.
7. Meaning for filling of APR for ODIs with Authorized Dealer (AD) Bank (in India)
- IPs or RIs (any) required to file APR (up to December 31st) in physical mode based on audited financial statements or unaudited financial statements (as case may be).
8. Meaning for form for filling of APR for ODIs with AD Bank (in India)
- APR be filled in Form ODI Part-II available on RBI’s website for each JV + WOS (both) separately
9. Meaning for period for filling of APR for ODIs in Form ODI Part-II by IP or RI
- APR be filled from April 01st, 2022 to March 31st, 2023 for financial year ending on March 31st, 2023.
10. Meaning for Unique Identification Number (UIN) for ODIs in Form ODI Part-II
(i) (a) UIN Number already allotted by RBI be filled.
(b) UIN number be 13 digit alphanumerical already allotted by RBI
(ii) Name for JV + WOS (both) be filled.
11. Meaning for Capital Structures for ODIs for JV + WOS in Form ODI Part-II
(i) Details for capital structure be filled (as on last day for accounting year)
(ii) Share capital’s amount + percentage (both) for investments be filled.
(iii) Capital structure be consisting (separately) for investments by Indian IP or RI + also for investments by foreign IP or RI (any) separately.
12. Meaning for Operational details for ODIs for JV + WOS in Form ODI Part-II
(i) Operational details for last 2 year be filled.
(ii) Operational details includes:-
(a) Net profit or net loss (both)
(b) Dividend declared + also paid or not paid (both)
(c) Net worth for last 2 year
(iii) 1 year (only) operational detail may be filled when 1st year’s operational details available due to 1st year’s operations (only) for JV + WOS (both).
13. Meaning for Repatriations for ODIs from JV + WOS in Form ODI Part-II
- Repatriation’s details (from JV + WOS) be filled in 11 points for current’s year + also since incorporation (both):
|
|
Current Year (March 31st, 2023) | Since incorporation of business |
| (a) Dividend | ||
| (b) Repayment of Loan | ||
| (c) Non-Equity Export Realized (in INR) | ||
| (d) Royalties | ||
| (e) Technical Know-how Fees | ||
| (f) Consultancy Fees | ||
| (g) Others (Please specify) | ||
| (h) Profit | ||
| (i) Retained Earnings | ||
| (j) FDI by JV/ WOS/ SDS into India | ||
| (k) Refund of excess share application money and Transaction No, if any |
14. Meaning for investments in Wholly Owned Step Down Subsidiary (SDS) for ODIs
- Details for investments in SDS of JV +WOS (both) be filled in following table:
|
(a) |
Name, Level and Country name of SDS | ||||||
| (b) | Name, Level and Country name of parent of SDS | ||||||
| (c) | Investment Amount in FCY and Date of investment (if any) | Currency: Amount: | Date: | ||||
| (d) | Investment type | WO SDS | JV SDS | ||||
| (e) | Type of Step Down Subsidiary | SPV/Holding company | Operating | Operating Cum SPV | |||
| (f) | Activity code as per 1987 | ||||||
| (g) | % stake held in SDS | ||||||
| (h) | Is the activity of SDS into financial services (tick) | Yes | No | ||||
15. Meaning for certificates for ODIs to be enclosed with Form ODI Part-II
(i) Certificate from IP or RI (any)
-
- Certificate for fulfillment of legal compliances under FEMA, 1999 be printed on IP or RI (any) letterhead + be signed + be stamped (all) by authorized person for IP or by RI (himself).
+ (plus)
(ii) Certificate from Statutory Auditors
-
- Certificate for fulfillment of legal compliances under FEMA, 1999 be printed on letterhead + be signed + be stamped (all) by Statutory Auditors of IP or RI (himself) when RI don’t have Statutory Auditor.
16. Meaning for signing + Stamping + Printing (all) by IP in Form ODI Part-II
(i) APR be signed by authorized person + by Statutory Auditors (both) for IP.
(ii) Each page for APR be signed + be stamped (both) by authorized person for IP
(iii) Last page for APR be signed + be stamped (both) by authorized person for IP + by Statutory Auditors (both) for IP.
(iv) APR be printed on normal A4 sheet by IP + RI (both) therefore not be printed on letterhead.
17. Meaning for signing + Stamping + Printing (all) by RI in Form ODI Part-II
(i) APR be signed by RI (himself) when RI doesn’t have Statutory Auditor.
+ (plus)
(ii) Also APR be printed on normal A4 sheet by IP + RI (both) therefore not be printed on letterhead.
18. Meaning for documents to be submitted for ODIs by IP or RI in Form ODI Part-II
(i) Latest Audited Financial statements for JV + WOS (both).
(ii) Latest Audited Financial statements for Holding Company.
(iii) APR form duly filled + also be signed (both)
(iv) Certificate issued by IP or RI (any)
(v) Certificate issued by Statutory Auditors for IP or RI (himself) when RI don’t have Statutory Auditor.
(vi) Copies for Share Certificates for latest share’s investments (remittance) made to JV + WOS (both).
(vii) Covering letter for APR
19. Meaning for mode of Submission for ODIs by IP or RI in Form ODI Part-II
(i) APR (with supporting documents) be submitted physically in 2 set 1st for Regional Office of Exchange Control Department of RBI + 2nd for Ministry of Commerce, EP (OI) Section, Government of India Udyog Bhavan, New Delhi – 110011 + to AD bank + to get acknowledgement for future reference + also for future correspondence (all)
+ (plus)
(ii) Also AD bank required to send APR to RBI when specifically asked by RBI therefore AD bank not (mandatory) required to send APR to RBI when not specifically asked by RBI.
20. Format of APR – Annual Performance Report (APR) on the functioning of Indian Joint Venture (JV)/Wholly Owned
https://www.rbi.org.in/upload/ECM/pdfs/apr.pdf
21. Meaning for form ODI Part-II to be submitted with AD bank by IP or RI
ANNEXURE
INSTRUCTIONS FOR FILLING OF THE APR
(This portion should be detached and retained by the Indian promoter company submitting the APR)
A (i) This form, duly filled in, should be submitted within 30 days of the expiry of the statutory period for the finalisation of the audited annual accounts applicable in the host country of the JV/WOS. A certificate indicating the statutory period from an independent Chartered Accountant / Public Accountant of the host country should be attached.
(ii) In case, there is no such statutory period, this form should be submitted within 6 months from the close of relevant accounting period.
(iii) In case there are more than one Indian promoter company, the principal promoter company has to submit the APR on behalf ) of all other promoter companies.
B. The Indian promoter company of the JV/WOS should submit this form in duplicate to the concerned Regional Office of Exchange Control Department of Reserve Bank of India and another copy to Ministry of Commerce, EP(OI) Section, Government of India, Udyog Bhavan, New Delhi – 110 011.
C (i) All amounts of Foreign Currency (FC) and Indian Rupee (INR) should be rounded off to the nearest thousand and the same should be indicated after omitting ‘000, e.g. 10,499 and 10,500 should be shown as 10 and 11 respectively.
(ii) Capital letters should be used for filling up this form.
D. Additional sheets may be attached if the space available against a particular item is not sufficient.
E. Equivalent INR in respect of FC should be given as on the date of actual conversion.
F. Wherever boxes are provided in items requiring date, the first two boxes are meant for the date, next two for the month and next four for the year.
G. In respect of any item [excepting items 1,3(a) and 4(a)] if the contents have not undergone any change vis-à-vis the last APR, then indicate “NO CHANGE” in the relative boxes/against the particular item.
H. In item 9(b) if separate break up of overdue amount as principal and interest is not available then the total figure may only be indicated under “Total” column.
I. In respect of all repatriations [c.f. hems 10 and 12(a)] supporting bank certificates (in form BCI) should be enclosed. If such certificates have already been submitting along with the Annual Return of Foreign Currency Shares or otherwise the reference thereof should be cited.
J. The total of year-wise break-up of outstanding entitlements given under Item 12(b) should tally with total outstandings as indicated under hem 12(a).
K. The note as per Item 15 of the APR should include the following –
(i) In case of non-satisfactory performance of the JV/WOS, the reasons cited at hem 14 should be briefly explained along with the necessary corrective steps taken/proposed to be taken to bring about a turnaround.
(ii) The reasons for outstanding entitlements, if any, and the steps being taken to realise the same should be indicated.
(iii) The reasons for not meeting the target of non-equity exports, if any, and non-realisation of proceeds of such exports beyond 6 months, if any, should be explained.
(iv) The reasons for the overdue outstanding’s in term/working capital loan accounts, if any, and steps taken to square up the same should be furnished. The circumstances leading to invocation of guarantees and non-payment of claim, if any, should also be explained.
(v) In respect of JV/WOS set up abroad for attracting foreign investment into India, information on the amount of foreign investment brought into India vis-a-vis the projections made in the application in Form ODI should be highlighted & reasons for shortfall should be explained.
(vi) Any special feature which is of importance to the functioning of the JV/WOS including information/developments relating to disinvestment (partial or full), liquidation, etc. and does not figure elsewhere in this APR should also be highlighted.
Conclusion: Annual Performance Reports for overseas investments are a crucial part of regulatory compliance under FEMA, 1999. By understanding the ins and outs of APR filing, investors can ensure they meet their legal obligations while making profitable investments outside India. Be sure to follow the instructions provided by regulatory authorities to avoid penalties and violations.
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Disclaimer : The contents of this presentation are solely for in Formational purpose. Neither this presentation nor the in Formation contained herein constitutes a contract or will Form the basis of a contract. The material contained in this presentation does not constitute/substitute professional advice that may be required before acting on any matter. While every care has been taken in the preparation of this presentation to ensure its accuracy at the time of publication, Satish Agarwal assumes no responsibility for any errors which despite all precautions, may be found herein. In no event shall we be liable for direct or indirect or consequential damages, if any, arising out of or in any way connected with the use of this presentation or the in Formation contained herein.
(Author can be reached at email address [email protected] or on Mobile No. 9811081957)
(Republished with Amendments)
Author Bio
What if the accounting period of JV/WOS is different , then what is the due date for filing APR for such JV/WOS?
Hi is there any change in the format of APR for the this FY?
If a RI (who has invested in the company abroad), moves out of India and becomes NRI (for both FEMA and Income Tax purposes), still needs to file APR?
I am also stuck on the audit point, I have WOS in Singapore and India and audit is not applicable in host countries. I have written to RBI but they ask to connect through AD bank and AD bank don’t have any solution on this. If you guys have any solution, please let me know.
Its USA not India.
Have you get solution for the audit related query of WOS.
In case of a strike off subsidiary, do we need to fill APR for the same.
The entity was struck off in March 2022.
In the new updated APR form from Aug 2022, there is a clause:
““1) The APR shall be based on the audited financial statements of the foreign entity. Where the person resident in India does not have ‘control’ in the foreign entity and the laws of the host jurisdiction does not provide for mandatory auditing of the books of accounts, the APR may be submitted based on unaudited financial statements certified as such by the statutory auditor of the Indian entity or by a chartered accountant where the statutory audit is not applicable including in case of resident individuals.
“
As per this clause the IR does not have control and AUDIT is not required in host country, then unaudited accounts will work
Could you please clarify on it as I’m really stuck here because I’ve a Singapore WOS and AUDIT is not required in Singapore but now if this clause means AUDIT is required, then its’ a big problem as AUDIT is very very expensive in Singapore, moreover I’ve already filed tax returns in Singapore so it will be a big mess.
Could you please clarify on it ?
Thanks
Did you find any clarification around this
I have the same problem.
Have you gotten a solution for the audit-related query of WOS?
The Company has been formed in Foreign as as wholly owned Subsidiary of Indian company . The
foreign company has recevied an remitence as share application money which was not yet till 31st march .Capital structure as on the last day of the accounting year of the foreign entity- company has not any shares as on 31st March 2023. Whether APR is applicable or not ?.
In case of wholly owned subsidiary of Indian Holding Company, whether Statutory Auditor of Indian Holding Company can audit the foreign subsidiary accounts?
I think the provision is very clear. In case the JV/WOS abroad is not subject to audit in the host country the IP can submit the APR on the basis of the certification by the Statutory Auditor of the IP or by any CA in case the APR is filed by RI. I suggest you go ahead and file APR on unaudited financials of WOS, but get the APR certified by SA of IP.
Respected Sir, may I know how to connect with you?