The Reserve Bank has recently introduced an online application i.e., FIRMS (Foreign Investment Reporting and Management System), which provides the reporting of 9 forms for foreign investment including FC-GPR, FC-TRS, LLP-I, LLP-II, CN, DRR, ESOP, DI and InVi in single form i.e., SMF (Single Master Form). The same can be accessed on FIRMS website i.e. https://firms.rbi.org.in).

In this article, we shall study about the basic provisions, filing procedure and frequently asked questions (FAQs) relating to FC-GPR.

FC-GPR (FOREIGN CURRENCY- GROSS PROVISIONAL RETURN)

1. PURPOSE OF FILING -FORM FC-GPR

In Form FC-GPR, the transaction being reported is for issue of capital instruments by an Indian Company to a person resident outside India i.e., allotment of Equity shares/Compulsorily Convertible Preference Shares/Compulsorily Convertible Debentures, whether at the time of incorporation or post incorporation of the Company.

2. APPLICABLE PROVISIONS

  • The Foreign Investment is subject to Consolidated FDI Policy (relating to sectoral caps and whether entry is through automatic or approval route, pricing guidelines etc.) and;
  • The securities issued are in accordance with the provisions of Foreign Exchange Management Act, 1999, Companies Act, 2013 and SEBI Regulations and other applicable laws and rules made thereunder.

3. FDI PROCESS AND DOCUMENTS

Transmission of Money

  • By inward remittance through normal banking channels; or
  • By debit to NRE/FCNR account of the person concerned maintained with an authorized dealer.

Preliminary documents required with FDI transactions: –

  • FIRC copies and KYC report issued by the Authorized dealer bank of the non-resident investor.
  • In case, if amount is received from NRE account, then instead of FIRC, the Bank shall issue NRE Letter.

4. DUE DATE FOR FILING

The transaction should be reported by the Investee Company issuing its securities to the non-resident investor within 30 days from the date of allotment.

5. PROCESS OF FC- GPR FILING: –

The applicant reporting for the transaction has Registered for Entity User and for Business User in Single Master Form on FIRMS Portal. Now, the process of registration is mentioned below:

STEP 1: – Registration for Business User

To register as the new business user, the applicant has to visit the official website of FIRMS and register in accordance with the following mentioned procedure:

  • Click on the registration for new business user and fill up the details in the form.
  • After filling the details, the business user needs to submit the registration form, the concerned authorised dealer bank branch will verify the same.
  • The rejection or approval of the same would be intimated through email to the business user on the email provided for registration.
  • Form FC-GPR is issued by the Reserve Bank of India (RBI) when the Company receives the foreign investment, and against such investment the Company will allot shares to a foreign investor, then it is mandatory for the Company to file details of such allotment of shares using the form FC-GPR.

STEP 2: – Log in to the Single Master Form (SMF)

  • To login to the firms, the applicant needs to log in through user-name and password received via email.
  • The applicant shall select the Return Type as FC-GPR and then information in accordance with the following tabs needs to be filled in.

 STEP 3: – Details in FC-GPR

  • Entity Details:

The Investee Company details like CIN, Company Name, PAN details are pre-filled while some other details like entry route, applicable sectoral cap/statutory ceiling will have to be reported separately.

  • Issue Details:

1. Date of Issue, Nature of Issue and Initial FC-GPR Reference No. in case of subsequent filing.

2. Whether the change in the shareholding pattern due to this transaction being reported has already been accounted in the pre-transaction shareholding pattern, select yes or no.

  • Details of the Foreign Investors:

1. General details such as number of investors, Name, Address, Country of residence, and Constitution/nature of the investing entity.

2. Remittance details like Name & Address of AD Bank, Mode of Payment, Date and Amount of remittance, FIRC Number needs to be filled.

  • The Amount of Issue:

Total Amount of Inflow and the amount for which capital instruments have been issued shall be automatically filled in as per the details filled earlier.

  • Particulars of the Issue:

1. Details like Type of Capital Instruments, Number of Instruments, Conversion Ratio, Number of Equity shares on fully diluted basis, Face Value, Premium, Issue price per instrument, Value of shares allotted shall be provided in the Form.

2. Fair Value of the issue as per the Valuation Report of the SEBI registered Merchant Banker/Chartered Accountant, as the case may be. The Valuation Report to be attached in the Valuation Certificate Tab.

And lastly, there would be declaration by the applicant.

  • Shareholding Pattern:

The applicant shall ensure that the details are correctly filled in the form, so that the shareholding pattern which is auto-calculated is correct.

1. Pre transaction values are auto calculated from the Entity Master.

2. Post transaction values are auto calculated based upon the details provided in the form.

Also, Post transaction= Pre transaction value of shares + Value of shares reported in the form.

STEP-4: – Submitting the Form:

After all the details are filled in, save and submit the Form with the following attachments-

  • Copy of FIRC (Foreign Inward Remittance Certificate)
  • Copy of KYC (Know Your Customer) report of the remitter.
  • Declaration by authorized representative of the Indian Company as per format provided in.
  • CS Certificate as per format given in the RBI user manual stating that all requirements have been complied with.
  • Valuation Report by Chartered Accountant/Merchant Banker indicating the manner of arriving at the price of the capital instruments issued to the person resident outside India, as the case may be.
  • Copy of FIPB approval (if required)
  • Board Resolution for the allotment of securities along with the List of Allottees.
  • Letter of Debit Authorization.
  • Declaration for conversion of CCPS
  • Pricing guidelines declaration
  • Reason for any delay in submission, if required.

6. DELAY IN FILING OF FC-GPR

There are mainly two procedures regarding regularise the instances of delay in reporting:-

1. Late Submission Fees (LSF)

  • Now, the RBI, has laid down a simple procedure for payment of late fees to regularise the instances of delay in reporting. These sanctions such as will provide an incentive for the prompt filing of returns and is in the interests of good and efficient administration.
  • The Late Submission Fee may be paid by way of a demand draft drawn in favour of “Reserve Bank of India” and payable at the Regional Office concerned.
  • In case of non-payment of LSF within 15 days of the date of this letter/mail, the delay shall be construed as a continuing violation and liable for action under Chapter lV of the Foreign Exchange Management Act, 1999.

2. Compounding of offence with RBI

The procedures would be as follows:

  • Make good the offence done i.e., file the Form FC-GPR with Authorised dealer (AD).
  • After confirmation from AD of successful filing of form FC-GPR, prepare the Compounding Application and file the same with the jurisdictional office of the RBI.
  • The RBI will provide the opportunity of being heard thereafter.
  • The penalty will be levied by RBI depending upon the delay period and quantum of offence.

7. POST FC-GPR REQUIREMENT: –

It is very important that the securities are allotted within in 60 days from the date of receipt of application money. Further, post filing of FC GPR, share certificates shall be issued and Register of Members is updated.

FREQUENTLY ASKED QUESTIONS(FAQ’s): –

1. Why you cannot see option for filing Single Master Form (SMF) after registered as an Entity user?

Answer: For filing in SMF, one has to register as a Business User, which is separate from Entity User.

2. What are the documents to be attached at the time of Entity User and Business User registration?

Answer: At the time of Entity User:

The authorisation letter as per the Entity Master User Manual. (https://firms.rbi.org.in/firms/) and PAN Card of the Entity User.

At the time of Business User:

The authorisation letter as per the Firms User Manual (https://firms.rbi.org.in/firms/) and PAN Card of the Business User.

3. What is the process for rectifying/modifying the Entity Master details?

Answer: To modify the existing details on Entity Master, a request must be made by sending an e-mail to [email protected] and [email protected] by attaching a scan copy of the request letter from an authorised representative of the Company.

4. What are sectors prohibited for receiving FDI?

Answer: Investment by a person resident outside India is prohibited in the following sectors:

  • Lottery Business including Government/ private lottery, online lotteries.
  • Gambling and betting including casinos and Chit funds (except for investment made by NRIs and OCIs on a non-repatriation basis).
  • Nidhi company.
  • Trading in Transferable Development Rights (TDRs).
  • Real Estate Business or Construction of Farm Houses.
  • Manufacturing of Cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes including wholesale cash and carry, retail trading etc. will be governed by the sectoral restrictions laid down in Regulation 16 of FEMA.
  • Sectors do not open to private sector investment i.e., atomic energy and Railway operations.
  • Foreign technology collaboration in any form including licensing for franchise, trademark, brand name, management contract is also prohibited for Lottery Business and Gambling and Betting activities.

{The author i.e., Kajal Goyal is a Company Secretary in Practice at Kajal Goyal and Associates and founder of Alliance Professionals and can be reached at (M) +91-9999952595 and (E) [email protected]}

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Qualification: CS
Company: Kajal Goyal and Associates
Location: Delhi, Delhi, India
Member Since: 11 Jun 2018 | Total Posts: 86
KAJAL GOYAL AND ASSOCIATES, is a Company Secretary proprietorship firm, offering its expertise and one stop solutions for all Corporate compliance requirements to the clients with a strong emphasis on ethics and ‘being on toes’. Capable delivering services related to Companies Act, FEMA, Re View Full Profile

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