Published Fri, 02 Jun 2023 FEMA
Understanding FC-GPR in its entirety
The Reserve Bank launched the FIRMS (Foreign Investment Reporting and Management System) web application. It allows reporting for the FC-GPR form. Foreign Currency- Gross Provisional Return is referred to as FC-GPR. Let's examine the filing process, the fundamental clauses, the FC-GPR checklist, and the FC-GPR related FAQs to comprehend and learn more about this form.
What is FC-GPR?
An entity that receives / accepts Foreign Direct Investment (‘FDI’) as capital investment issues shares/convertible debentures/convertible preference shares to the investor. Such transaction needs to be reported with the Reserve Bank of India, and it should be done in FC-GPR Form available on the FIRMS Portal. The reporting of the instrument issued against such investment accepted/ received must be done within 30 days in accordance with the RBI's FDI compliance requirements.
What does an Entity mean?
- A company as defined under section 1(4) of the Companies Act, 2013
- A Limited Liability Partnership (LLP) registered under the Limited Liability Partnership Act, 2008
- A startup which complies with the conditions laid down in Notification No. G.S.R 180(E) dated February 17, 2016 issued by the Department of Industrial Policy & Promotion, Ministry of Commerce & Industry, Government of India
FDI Entry Routes
Foreign Direct Investments in India are permitted in various Sectors, either automatically or through the government approval route. Under the automatic method, there’s no need for obtaining any prior approval for making the foreign direct investment.
On the other side, the sectors wherein the entry is restricted / requires prior permission, an application for approval from the respective ministry/department of the government is mandatory. The relevant Administrative Ministry/Department evaluates investment applications made through the government route.
FDI in India is governed by a Consolidated FDI policy that covers the sectoral caps, pricing, rules and regulations for each sector. Further, the Companies Act, The Foreign Exchange Management Act, SEBI regulations, and other relevant laws and regulations that fall under its purview are all adhered to while issuing securities.
Prohibited FDI Sectors
The following sectors are off-limits to FDI under current policy:
- Lottery Business including Government/ Private lottery, online lotteries etc.
- Chit Funds
- Trading in Transferable Development Rights (TDR)
- Manufacturing of Cigars, cheroots, cigarillos, and cigarettes (tobacco or tobacco substitutes)
- Gambling and betting including casinos (Including 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)
- Nidhi Company
- Real Estate Business (Not including the development of town shops, construction of residential/ commercial premises, roads or bridges and Real Estate Investment Trusts (REITs) registered and regulated under the SEBI (REITs) Regulations, 2014) or Construction of Farm Houses
- Sectors not open to private sector investments – atomic energy, railway operations (other than permitted activities mentioned under the consolidated FDI Policy)
When do we need to file Form FC-GPR?
Within 30 days of allotment of shares or debt instruments, the entity must submit Form FC-GPR to the Regional Office of the Reserve Bank in whose jurisdiction the company's Registered Office is located via FIRMS Portal of RBI.
What are the steps for filing FC-GPR Form?
The government has introduced a new, simplified Single Master Form ("SMF") to streamline the reporting. Nine forms have been combined under SMF, and the person may file the appropriate form by logging into the FIRMS portal (https://firms.rbi.org.in/firms/faces/pages/login.xhtml).
The following steps are required to be followed for filing FC-GPR form:
- Creation of Business User Account: The applicant who wants to report FDI must register for a business user account on the FIRMS Portal. The applicant must enter basic information of the authorised person who will file the form on the company's behalf, together with the authority letter that has been properly signed and completed, in order to create an account. The registration will be reviewed by the relevant AD Bank Branch. The business user will receive email notification of the approval or rejection.
- Log in into FIRMS Portal: Following the creation of the business user ID, the applicant will get login information on the registered email address with an option to change the default password. The applicant must log in again after changing the password.
- Filling up and submitting the form: the applicant will be directed to the workspace after logging into the SMF portal wherein the form FC-GPR will be selected. The applicant must fill out all transaction-related information along with the necessary attachments as mentioned below in this article. Thereafter, the applicant must save and submit the form.
- Form Approval or Rejection: After submission, the form is forwarded to the entity's AD Bank, who will review it. The application can either be accepted or rejected. The applicant has no choice except to submit their application again if the same gets rejected due to discrepancies. Also, if the form submission is delayed beyond the prescribed period of 30 days, it will be directed to the Reserve Bank of India who shall compute the LSF amount and the applicant will be notified about the same via the registered email address.
Note: AD Bank will have only 5 working days for approving or rejecting the form or sending it to Reserve Bank of India.
What are the attachments required for Form FC-GPR?
If you are up for FC-GPR Form filing with RBI, then the following are the list of documents that you will need to submit along with the form:
- Copy of KYC
- Copy of FIRC Certificate
- Declaration by the verified representative of the Indian Company
- CS certificate according to the format specified by the RBI user manual
- Pricing guidelines declaration
- Declaration for conversion of CCPS, if applicable
- Copy of FIPB approval, if any
- Valuation Report by Chartered Accountant / Merchant Banker that indicates the manner of the arriving at the price of the capital instruments, in case of preferential allotment/private placement
- Board Resolution for the allotment of securities in addition to the list of allottees.
- Press Note 3 Declaration regarding Beneficial Ownership in the foreign entity.
- MOA in case of foreign inward remittance of share subscription amount
Penalty for failure to submit Form FC-GPR
If the resident company fails to submit the Form FC-GPR in accordance with the aforementioned requirements, the RBI will impose a severe penalty known as "compounding" in order to punish them.
The receiving company must submit Form FC-GPR to complete the FDI Reporting in India within 30 days of the deadline indicated above; failure to do so will result in the following penalties:
For the first six months of delay, the penalty is INR 5000 or 1% of the total investment amount, up to a maximum of INR 5 lakh or a portion thereof; beyond that, the penalty will be charged at a rate which will be 2 times. This amount to be transferred into an RBI’s designated bank account.
You can easily file Form FC-GPR with RBI by adhering to the guidelines indicated above. Make sure to submit the form by the deadline. If you are looking for expert assistance in complying with the FCGPR reporting requirements, don't hesitate to contact us at [email protected]