As we all know India is the 5th Largest Economy in the world and to increase its GDP. Foreign investments play a pivotal role in the economic growth and development of any country. They aid the country with capital, technology, and expertise, fostering innovation and employment opportunities. India, with its vast market and emerging economy, has been an attractive destination for foreign investments.
For regulating and monitoring these investments, the Reserve Bank of India (RBI) has implemented various regulations, one of which is the Foreign Currency and/or Foreign Security Transfer by a Person Resident in India, commonly known as Form FC-GPR. RBI had introduced Single Master Form (SMF) through its Notification RBI/2017-18/194 A.P (DIR Series) Circular No.30. Dated June 07, 2018, w.e.f. September 1, 2018, along with other 9 forms.
In this article, we will delve into the essentials of Form FCGPR and its significance in the context of foreign investments in India.
What is Form FC-GPR?
Form FC-GPR stands for "Foreign Currency - Gross Provisional Return." It is a document that needs to be submitted by a person or entity in India when they receive foreign currency in exchange of issuance securities to resident outside India".
This form is required to be submitted to the Reserve Bank of India (RBI) or an authorized bank, and it helps the RBI monitor foreign exchange transactions and ensure compliance with foreign exchange regulations in India.
Due Date for Filing?
The transaction for reporting FCGPR should be reported by the investee Company for issuing its security to a non-resident investor within 30 days from the date of allotment.
Form FC-GPR is required to be filed in the following cases
- Foreign Direct Investment (FDI): When a foreign entity or individual invests in an Indian company by way of equity shares, compulsorily convertible preference shares, or compulsorily convertible debentures, Form FC-GPR needs to be filed within 30 days of receipt of investment amount.
- Transfer of Shares/Convertible Debentures: If there's a transfer of shares or convertible debentures by a person resident outside India to a person resident in India or vice versa, Form FC-GPR needs to be filed within 60 days of the transfer.
- Conversion of ECB into Equity: In the case of a conversion of External Commercial Borrowings (ECBs) into equity, Form FC-GPR must be submitted within 30 days from the date of such conversion.
- Reporting of Downstream Investment: If an Indian company makes a downstream investment in another Indian company, where the direct or indirect foreign investment exceeds 50% of the total shareholding, Form FC-GPR is required to be filed.
- Reporting of Portfolio Investment: When a non-resident makes a portfolio investment in India, it must be reported in Form FC-GPR.
- Reporting of Investment in LLP: Investments by foreign individuals/entities in Limited Liability Partnerships (LLPs) in India also require submitting Form FCGPR.
Process for FC-GPR Filing
STEP 1- For the process of Business user registration, the applicant must visit the official website of the FIRMS RBI portal and register as per the below-given procedure
- Click on the business user registration option and fill in the details as required.
- After filling the required details, the applicant is required to submit the form, which will be verified by the Authorized Dealer Bank (AD Bank).
- Authorized Dealer Bank (AD Bank) will send the mail for rejection or approval for the business user registration on the Email ID shared with them.
STEP 2- Single Master Form (SMF) Portal Login
- Log in with the username and password details that are received on the registered email.
- Click on the file return tab on the left corner and select the option Single Master Form (SMF).
- Select Return Type as FC-GPR and then fill in the information as per the following tabs.
STEP 3- Particulars in FC-GPR
- Entity Details such as PAN Number, CIN Number, Company Name, Application Date, etc. are pre-filled and some other details like entry route, and applicable sectoral cap should be filled in separately.
- Issue details such as Issue date, Nature of Issue, and initial FC-GPR reference number in case of subsequent filing.
- If there is any change in the subsequent shareholding pattern as a result of this reported transaction which has already been accounted for in the pre-transaction shareholding pattern.
Details of the Foreign Investors
- General details such as number of investors, Name, Address, Country of residence, and Constitution/nature of the investing entity.
- Remittance details like Name and address of AD Bank, Mode of Payment, Date and Amount of remittance, and FIRC number need to be filled in.
Amount of Issue
The total amount of inflow and amount of which capital instruments were issued will be automatically pre-filled in as per the details filled earlier.
Particulars of the Issue
- Details like Type of Equity Instrument, Number of Instruments, Conversion Ratio, Number of Equity shares on a fully diluted basis, Face value, Premium, Issue price per instrument, and Value of shares allotted shall be provided in the Form.
- Fair Value of the issue as per the Valuation Report of the SEBI registered Merchant Bank/ Chartered Accountant, as the case might be. The Valuation report is to be attached in the Valuation Certificate Tab. And last, there would be a statement from the applicant.
The applicant shall ensure that the details are correctly filled in the form so that the shareholding pattern which is auto-calculated is correct.
- Pre-transaction values are auto-calculated from the Entity Master.
- Post-transaction values are auto-calculated based on the details provided in the form.
Also, post transactions & pre-transaction value of shares + Value of shares reported in the form.
STEP 4- Submitting the Form
After filling in all the details, 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 of Authorized Representative of the Indian Company as per format provided.
- CS Certificate as per format given in RBI User Manual stating all requirements have been met.
- Valuation report by a Chartered Accountant/Merchant Banker indicating the method of arriving at the value of equity instruments issued to a person resident outside India, as the case may be.
- Copy of FIPB approval (if required)
- Board resolution for allotment of securities along with the list of allottees and special resolutions passed in the General meeting.
- Letter of Debit Authorization
- Declaration for conversion of CCPS
- Pricing guidelines declaration
- Reason for any delay in submission, if required.
- Form PAS-3 filed with ROC.
Delay in Filing of FC-GPR
If the Company makes a reporting on Foreign Direct Investment (FDI) after the period of 30 days of allotment of shares /CCPS/CCDS, then the Form will be first checked by the AD Bank and then AD Bank will send the form further to the Respective regional Reserve Bank of India.
Further, the Reserve Bank of India will charge Late Submission Fees (LSF) on the basis of the consideration amount.
The following matrix shall be used henceforth for calculation of LSF, wherever applicable.