REPORTING OF FORM FC-GPR TO RBI

REPORTING OF FORM FC-GPR TO RBI

fcgpr www.carajput.com

fcgpr www.carajput.com

RBI Circular No. 40 dated 1st February 2016; RBI has made it mandatory to report any transactions and filing of forms online in respect of issue and transfer of shares from an Indian Entity to outside India.

www.carajput.com; NRI; OCI; NR; FCTRS

www.carajput.com; NRI; OCI; NR; FCTRS

Form FC-GPR comes into use whenever there is a new issue of shares. The onus to submit the form or comply with the laws is on the resident entity.

Any Company or Organization receiving foreign investment must report the transaction to the RBI within a stipulated timeline. Similar to the filing of FC-TRS which is filed online, the Form FC-GPR is also required to be filed online.

What is TimeLine of Form FC-GPR

www.carajput.com;FC-GPR

www.carajput.com; FC-GPR

The timeline is briefly described below:

  1. a) Foreign funds received
  2. b) Within 30 days of receiving the money file ARF (Advance Remittance Form) with the RBI
  3. c) RBI will issue UIN (Unique Identification Number) after submission of ARF
  4. d) Within 180 days from the date of receiving the money, allot the shares
  5. e) File FC-GPR within 30 days from the date of allocation of shares.

    www.carajput.com;FC-GPR(SMF)

    www.carajput.com; FC-GPR(SMF)

Before reporting the transaction, the applicant needs to obtain the following:

  • Unique Identification Number from RBI by reporting of Advanced Foreign Remittance.
  • KYC report for the beneficiary if the beneficiary and remitter are different entities.
  • CS certificate
  • Certificate from SEBI registered Merchant Banker / Chartered Accountant indicating the manner of arriving at the price of the shares issued to the persons resident outside India
  • Disclaimer Certificate
  • Statutory Auditor Certificate
  • Board resolution
  • LRN(Loan Registration Number) allotted
  • Copy of FIPB approval (if required)
  • Details of Transfer of shares if any
  • No objection certificate from the remitter for the shares being allotted to the third party mentioning their relationship
  • Letter from the foreign investor explaining the reason for making subscription to shares by the remitter on his behalf
  • Copy of agreement/Board resolution from the investee company for issue and allotment of shares to the foreign investor, other than the remitter
  • Reason for delay in submission (if required)

Once all the above documents are obtained, the applicant shall duly fill the Form FC-GPR and complete it in all respects without any error, attach the Digital Signature of the applicant and upload the form online at https://www.ebiz.gov.in. In this case also, it is to be noted that merely filing the Form FC-GPR does not discharge an entity of its duties in regard to compliance of the relevant laws, the same shall be considered complete only after it is approved by the RBI.

www.carajput.com;FC-GPR; FDI

www.carajput.com; FC-GPR; FDI

Document required for FCGPR 

The following documents shall be required for FCGPR Filing
1 MOA of the Company
2 Board resolution for allotment of shares  
3 FIRC 
4 KYC form Bank
5 CS Certificate
6 Valuation report

General Instructions

  • The electronic form (Form) can be accessed from service landing page and can be filled offline
  • If you choose “Load prefill data” option while opening the form, then some fields may get prefilled with data you have filled previously while applying for this service. You may change this data if you wish.
  • The saved draft can be accessed later from “My Saved Drafts” section in Menu options. This draft is available for 3 months or until the form is submitted.
  • Field marked with * are mandatory and needs to be filled in before a form can be submitted on e-Biz portal. You may not be able to leave some of the field’s blank in the e-Form. In case you wish not to enter data in a field, please input “NA” if it is a text/description field or a 0, if it is a numeric field.
  • The e-form needs to be digitally signed using a digital signature by the applicant. If applicant wishes to make any modifications to an already signed e-Form, right-clicking on the signature field and choosing “Clear signature” will enable editing of form and any modifications can be made to the form.

Electronic Attachments:

Upload the file using the attached link and if you wish to remove any file, use the remove link.

  • Reason for delay in submission: this attachment is required if the form is submitted after 30 days from the date of receipt of funds
  • CS Certificate
  • Certificate from SEBI registered Merchant Banker / Chartered Accountant indicating the manner of arriving at the price of the shares issued to the person resident outside India.
  • Disclaimer certificate
  • Statutory Auditor Certificate
  • Board resolution
  • LRN(Loan Registration Number) allotted
  • Copy of FIPB approval (if required)
  • Transfer of shares details, if applicable
  • If the investor and remitter are separate entities, please provide the following documents:
  • No objection certificate from the remitter for the shares being allotted to the third party mentioning their relationship
  • Letter from the foreign investor explaining the reason for making subscription to shares by the remitter on his behalf
  •  Copy of agreement/Board resolution from the investee company for issue and allotment of shares to the foreign investor, other than the remitter
  •  KYC report for the beneficiary
  • Any other attachments: Add any other document if required.
Enter the following details in this section:
  • Name of the Person
  • Name of the Place.
  • Date of signing the electronic form
  • Designation.
  • Digital Signature of Authorized signatory of the investee company.

After the New Process of RBI :

FC-GPR; www.carajput.com; Timeline

FC-GPR; www.carajput.com; Timeline

FIRMS has decreased the number of phases via which any reporting is carried out by constraining its response to: pending approval & approval or refusal as opposed to eBiz, where there have been multiple phases with the possibility of resubmission. It should therefore be noted that under FIRMS, there is no possibility of resubmitting, resending, or affixing any clarification as soon as the report is generated. The Authorized Dealer Bank must take due to precaution whilst also approving or dismissing the form and therefore can not take more than 5 – 7 business days doing the same.

Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

CHANGES IN FDI POLICY

Significant Changes Introduced In Foreign Director Investment Policy 

31The consolidated FDI policy document is a single reference point for investors and regulators. The first such consolidation was released in March, 2010 after which it has been updated every six months. This’ Circular 2 of 2011’-is the fourth edition of the consolidated policy document.

The significant changes introduced in FDI Policy edition of the Circular are:

Exemption of construction-development activities in the education sector and in old-age homes, from the general conditionality’s in the construction-development sector:

FDI into construction development activities in the education sector and in respect of old-age homes has been exempted from the conditionality imposed on FDI in the construction development sector in general i.e. minimum area and built-up area requirement; minimum capitalization requirement; and lock-in period. This conditionality’s perhaps posed a constraint to FDI coming into these areas since educational institutions like schools, colleges, universities etc. as well as old-age homes have their own special requirements which do not necessarily fit these conditionality’s. This step should augment the educational infrastructure in the country and bring it up to global standards. Similarly, with growing urbanization, there is an increasing demand for old-age homes to cater to the needs of senior citizens. The physical infrastructure in this area also is short of the requirements. Hence, it has also been decided to exempt old-age homes also from the general conditionality’s applicable to the construction development sector.

Inclusion of ‘apiculture’, under controlled conditions, under the agricultural activities permitted for FDI:

FDI has been allowed up to 100% under the automatic route in apiculture under controlled conditions. Apiculture is an important agro-based industry and has the potential of bringing in high economic returns with comparatively low levels of investment. Being a decentralized activity, it does not bring pressure on land and can flourish as a household activity in villages. The activity has the potential of large scale income generation with some infusion of capital and technology. This liberalization would not only provide the desired thrust to the sector but would also bring in international best practices to upgrade the product and the methods of production.

Inclusion of ‘basic and applied R&D on bio-technology pharmaceutical sciences/life sciences’, as an ‘industrial activity’, under industrial parks:

FDI up to 100%, under the automatic route, is permitted in existing and new industrial parks. Under the existing regime, industrial parks cover specified sectors. The coverage has been expanded to specifically include research and development in bio-technology, pharmaceutical and life sciences, given the urgent need to augment research and development infrastructure in these areas as also expand the production facilities.

Notification of the revised limit of 26% for foreign investment in Terrestrial Broadcasting/ FM radio:

The Foreign Investment limit for FM radio has been enhanced to 26% from the earlier 20%. This change ensures conformity of the foreign investment limit in this sector with other similar activities in the Information & Broadcasting sector.

Liberalizations of conversion of imported capital goods/machinery and pre-operative/pre-incorporation expenses to equity instruments:

Conversion of imported capital goods/machinery and pre-operative/pre-incorporation expenses to equity instruments had been permitted in the last Circular on FDI Policy, effective 1 April, 2011. It was stipulated that such conversions must be made within a period of 180 days of the date of shipment of capital goods/machinery or retention of advance against equity and that payments made through third parties would not be allowed. This conveyed the sense that the onus of conversion is on the investor with no allowance for the FIPB process involved. This has been clarified through the present amendment, under which the time limit for making applications for such conversions will be 180 days. Further, payments for pre-operative/incorporation expenses can now be made directly by the foreign investor to the company or through a bank account, opened by the Foreign Investors, as provided under the FEMA.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific

circumstances; Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 95555554890

Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

ADVANTAGE OF FOREIGN INWARD REMITTANCE CERTIFICATION (FIRC)

ADVANTAGE OF FOREIGN INWARD REMITTANCE CERTIFICATION (FIRC)

www.carajput.com;Business setup outside India

www.carajput.com;Business setup outside India

FOREIGN INWARD REMITTANCE CERTIFICATE (FIRC)

1. Introduction

 Foreign Inward Remittance Certificate (FIRC) is a document that provides proof of inward remittance to India. Such remittance could be either on account of Foreign Direct Investment (FDI) or towards export receivables or towards sale of securities by resident to a non resident. It is treated as documentary evidence by most of the statutory authorities for confirming the validity of the convertible foreign exchange received by the beneficiary.

2. Purpose

When a beneficiary receives fund from outside India, it will be credited to his account only through an Authorized Dealer (normally a Bank). (Authorized dealer means an authorized person by the Reserve Bank of India to deal in foreign exchange or in foreign securities under the Foreign Exchange Management Act). If the bank, in which the beneficiary has an account, is not an Authorized Dealer, then the remittance needs to be received by the beneficiary through an Authorized Dealer. Based on the information provided by the beneficiary upon receipt of foreign remittance, the banker issues FIRC stating the purpose of receipt i.e. towards equity investment, advance against export of services / goods, capital expenditure etc.

3. Relevance

 A few cases where FIRC assumes importance

  1. In case of Issue of Shares to a Foreign Entity/person, FIRC is a proof for receipt of share application money.
  2. Similarly it is also proof that share purchase consideration has been received by a resident seller, in case of transfer of shares by a resident Indian to a non-resident buyer.
  3. In case of export of services there is no Service tax to be paid, subject to Export of Services Rules. Here again FIRC becomes a documentary proof for exports made and remittances received thereof in freely convertible foreign exchange.
  4. In case of export promotion schemes like Advance Licensed, EPCG (Export Promotion Capital Goods) etc., FIRC is one of the important documents to be submitted to DGFT as a proof of export made.   

4. Contents and issue procedure 

FIRC normally contains the following details:

  • Name of the beneficiary
  • Whether the amount is paid by cash or by crediting the beneficiary’s a/c
  • Name and address of the remitted
  • Name and address of the remitting bank
  • DD/TT No/Cheque No
  • Foreign Direct Investment amount in Foreign currency
  • Equivalent rupee amount (in figures as well as words)
  • In favour of whom the amount has come
  • Exchange rate applied
  • Purpose of the remittance as stated by beneficiary

It is signed by the Authorized signatory of the AD bank and countersigned by one more person.  As a procedure, this Certificate is issued to the address of the account holder, normally within a period of 15 days from the date of credit of funds to beneficiary’s account. FIRC must be kept in safe custody since issue of duplicate involves certain complicated procedure which is time consuming.

Generally there is confusion about which bank should issue FIRC in case the inward remittance has come into the beneficiary’s account through more than one bank.  In our practical experience and as per clarifications received from RBI as well as provisions under FEMA, the first bank that receives the inward remittance in convertible foreign exchange must issue the FIRC since it would have the details of the overseas remitting bank.

5. Conclusion

As explained above, FIRC assumes great importance in respect of remittances received from outside India.  Therefore, it is critical that beneficiaries follow up with the banks and obtain the FIRC immediately after credit of inward remittance.  Particular attention needs to be paid to “purpose of Foreign Direct Investment” because any wrong mention of this has serious implications in terms of remittance, usage and accounting of the same.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 9555555480

Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)