RBI (FC-GPR) Filing

Introduction

The Reserve Bank of India (RBI) requires the Foreign Currency-Gross Provisional Return (FC-GPR) form to report and monitor the inflow of foreign investment into Indian companies, making it a critical document. As per the regulations set by the Foreign Exchange Management Act (FEMA), 1999, and subsequent notifications and circulars issued by the RBI, Indian companies receiving foreign investment must file the FC-GPR form. At ComplyQuick, we offer specialized services to assist companies in filing the FC-GPR form accurately and timely. This comprehensive service description outlines the importance, requirements, and detailed steps involved in the FC-GPR filing process as per the RBI guidelines.

Importance of FC-GPR Filing

The FC-GPR form is essential for several reasons:

1. Regulatory Compliance: Filing the FC-GPR form is mandatory under FEMA, 1999. It ensures that the company complies with Indian foreign exchange regulations.
2. Transparency: The form provides transparency regarding foreign investments, helping the RBI track and monitor such inflows into the country.
3. Record-Keeping: Accurate filing of the FC-GPR form ensures that the company maintains proper records of its foreign investments, which is crucial for audits and future reference.
4. Legal Protection: Compliance with FC-GPR filing requirements protects the company from potential legal penalties and regulatory scrutiny.

Legal Framework and Compliance

The filing of the FC-GPR form is governed by the Foreign Exchange Management Act (FEMA), 1999, and the regulations issued by the RBI. Key regulations and circulars relevant to FC-GPR filing include:

• FEMA 20 (R)/2017-RB: Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2017.
• RBI Circulars: Various circulars issued by the RBI from time to time that provide updates and clarifications on FC-GPR filing requirements.

Scenarios Requiring FC-GPR Filing

Various scenarios require FC-GPR filing, including::

1. Issue of Capital Instruments: When a company issues equity shares, compulsorily convertible preference shares (CCPS), compulsorily convertible debentures (CCD), or share warrants to foreign investors.
2. Conversion of External Commercial Borrowings (ECB) into Equity: When a company converts its ECBs into equity shares.
3. Other Transactions: Any other transactions involving the issue of capital instruments to foreign investors as specified by the RBI.

Process of Filing FC-GPR

The process of filing the FC-GPR form involves several steps, from the receipt of foreign investment to the submission of the form to the RBI. Below is a detailed overview of each step involved in the process:

1. Receipt of Foreign Investment

The first step is the receipt of foreign investment by the company. This investment can come in various forms, such as equity shares, CCPS, CCD, or share warrants. The company must ensure that the investment complies with the sectoral caps and conditions specified under the Foreign Direct Investment (FDI) policy.

2. Allotment of Capital Instruments

Upon receipt of foreign investment, the company must allot the capital instruments (equity shares, CCPS, CCD, or share warrants) to the foreign investor within 60 days. The company must issue a share certificate to the investor and update its records accordingly.

3. Valuation of Capital Instruments

The capital instruments must be valued in accordance with the guidelines specified by the RBI. The valuation should be done by a SEBI-registered Category I Merchant Banker or a Chartered Accountant as per internationally accepted pricing methodology for valuation.

4. Preparation of FC-GPR Form

The next step is to prepare the FC-GPR form. This form includes various details, such as:

• Company identification details, including the CIN (Corporate Identification Number).
• Details of the foreign investor(s).
• Details of the capital instruments issued, including the type, number, and face value.
• Date of receipt of funds and date of allotment of capital instruments.
• Details of the valuation of capital instruments.
• Declaration and certification by the company and the authorized signatory.

5. Digital Signatures

The FC-GPR form must be digitally signed by the authorized signatory of the company. This requires obtaining a Digital Signature Certificate (DSC) for the authorized signatory if they do not already have one. The DSC ensures the authenticity and integrity of the form.

6. Submission to AD Bank

The completed FC-GPR form, along with the necessary supporting documents, must be submitted to the Authorized Dealer (AD) bank. The supporting documents typically include:

• A copy of the FIRC (Foreign Inward Remittance Certificate) or the KYC report of the foreign investor.
• A copy of the board resolution approving the allotment of capital instruments.
• A copy of the valuation certificate.
• A copy of the share certificate issued to the foreign investor.

The AD bank reviews the form and the supporting documents to ensure compliance with RBI regulations.

7. Verification and Submission to RBI

Upon verifying the details, the AD bank forwards the FC-GPR form and the supporting documents to the RBI. The RBI reviews the submission and, if satisfied, acknowledges the receipt and processing of the form. The company receives an acknowledgment from the RBI confirming the successful filing of the FC-GPR form.

Responsibilities of the Company

The company has several responsibilities to ensure compliance with the statutory requirements for FC-GPR filing. These include:

Timely Filing

The company must ensure timely filing of the FC-GPR form within 30 days from the date of issue of capital instruments to avoid penalties and maintain good standing with the RBI. Delays in filing can result in additional fees and legal complications.

Accurate Documentation

Accurate documentation is essential for the successful filing of the FC-GPR form. The company must ensure that all details provided in the forms and attached documents are correct and complete.

Maintaining Records

The company must maintain proper records of its foreign investments and the filing of the FC-GPR form. These records should be readily available for inspection by regulatory authorities and stakeholders.

Consequences of Non-Compliance

Non-compliance with the requirements for FC-GPR filing can have severe consequences, including:

Penalties

• Monetary Penalties: A penalty of up to three times the amount involved in the contravention can be imposed. If the amount is not quantifiable, a penalty of up to ₹2,00,000 can be levied.
• Additional Penalty: If the contravention continues, an additional penalty of up to ₹5,000 per day can be imposed for every day during which the contravention continues.

Regulatory Scrutiny

Non-compliance can lead to increased regulatory scrutiny, which can affect the company’s reputation and business operations. The company may face audits and inspections by regulatory authorities.

Legal Complications

Non-compliance can result in legal complications, including disputes with regulatory authorities and stakeholders. This can damage the company’s reputation and affect its business operations.

Benefits of Professional Assistance

Choosing ComplyQuick for FC-GPR filing offers several benefits, including:

Expertise and Knowledge

ComplyQuick have in-depth knowledge of RBI regulations and filing procedures. Our expertise ensures that all statutory requirements are met accurately and efficiently.

Time and Resource Efficiency

ComplyQuick allows companies to focus on their core business activities while professionals handle the compliance tasks. This saves time and resources and ensures timely and accurate filings.

Risk Mitigation

ComplyQuick helps mitigate the risk of errors and non-compliance. Their thorough understanding of the regulatory landscape and meticulous approach to data verification and form preparation minimize the risk of penalties and legal complications.

ComplyQuick provides comprehensive services to assist companies in fulfilling their FC-GPR filing obligations, ensuring efficient and effective compliance with all regulatory requirements.

Our expertise in navigating the complexities of FEMA, 1999, and RBI regulations, coupled with our commitment to accuracy and transparency, ensures that your company remains compliant and maintains high standards of corporate governance. Contact us today to learn more about our FC-GPR filing services and how we can support your business in achieving compliance and fostering stakeholder trust.