FC-GPR and FC-TRS
FOREIGN DIRECT INVESTMENT
Foreign Direct Investment is a word we often hear almost daily in our lives. The concept is also known as foreign funding in local terms. Foreign Direct Investment means an investment made by an entity which is based in a foreign country who is keen to make returns by their investments in countries which are outside in form of controlling stakes. Foreign entities buyout controlling stakes in form of Shares which give them a right to participate in the business.
WHAT RBI SAYS!
Reserve Bank of India (Department of Foreign Exchange) in its Notification No. FEMA 20(R)/2017-RB dated 7th November 2017 amended the previous notifications and rules by prescribing certain rules, regulation and forms to regulate the investments being made by persons who are resident outside India.
FC-GPR
FC-GPR stands for Form Foreign Currency – Gross Provisional Return. An Indian company which sought to issue capital raising instruments to Person who is resident outside India and where such capital raising activity falls under the purview of Foreign Direct Investment shall file a Return in Form FC-GPR to the regional office of RBI where the company’s registered office operates within 30 days from the date of issue of instrument.
INSTANCES WHICH REQUIRE AN INDIAN COMPANY TO FILE FORM FC-GPR FOR ISSUE OF SHARES TO PERSON RESIDENT OUTSIDE INDIA ARE AS FOLLOWS:
- Issue of Bonus Shares to person resident outside India.
- Issue of Right Shares to person resident outside India.
- Amalgamation/Merger of person resident outside India with Indian Company.
- Cross Border Merger Transactions.
- Shares issued against any funds payable to person resident outside India by Indian Company.
- Sweat Equity Shares and shares issued for Employee Stock Option Plan (ESOP).
- Issue of Shares on conversion of convertible debentures or convertible preference shares or any other instruments.
Form FC-GPR exempts shares allotment in case of Initial Public Offer (IPO) or Qualified Institutional Placement (QIP).
INDIAN COMPANY MAY ALSO ISSUE SHARES TO PERSON RESIDENT OUTSIDE INDIA OTHER THAN THE PERSON RESIDENT OUTSIDE INDIA WHO HAVE REMITTED THE FUNDS BY FILING FORM FC-GPR WITH SOME EXTRA DOCUMENTS WHICH ARE AS FOLLOWS:
- KYC documents of beneficial owner and remitter.
- A No Objection Certificate which shall be issued by remitter of funds in favour of Beneficial Owner and in which relationship between the two will be mentioned.
- A letter from Beneficial Owner stating the reasons as to why remitter remitted the funds on its behalf.
- A copy of Board Resolution for this purpose.
FC-TRS
FC-TRS stands for Foreign Currency – Transfer of Shares. Form FC-TRS is required to be filed when transfer of Shares/ Capital Instruments takes place between a person resident outside India who is holding shares / capital instruments in an Indian company on a repatriable basis and person resident outside India holding shares/ capital instruments on a non-repatriable basis , and, a person resident outside India who is holding shares/ capital instruments of an Indian company on a repatriable basis and a person who is resident in India.
One who holds shares is required to file Form FC-TRS. The form shall be filed within 60 Days from transfer of such shares or remittance of funds whichever is earlier.
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