Foreign Investment Reporting Compliance in India

July 11, 2018 Posted by India Briefing Written by Dezan Shira & Associates Reading Time: 2 minutes

India’s central bank, the Reserve Bank of India (RBI), requires all Indian entities receiving foreign investments of any kind – to report the same by July 12.

The deadline was announced last month through the A.P. (DIR Series) Circular No. 30, dated June 7, 2018.

To secure this information, the RBI has introduced a new system of compliance.

New reporting compliance for foreign invested entities

Firms in India should note that the new application – the Foreign Investment Reporting and Management System (FIRMS) – subsumes all other forms of reporting compliance, and will be implemented in two phases.

Due Diligence

In the first phase, a dedicated online module called the Entity Master was made accessible for public data entry on the RBI’s website from June 28 till July 12.

The registration deadline on the FIRMS interface has now been extended to July 20, but firms should ensure reporting compliance ahead of time to avoid regulatory risks.

In the second phase, a second module containing nine reports will be released on August 1, 2018.

Single reporting format

Under the online FIRMS interface, the RBI provides a single reporting format called – the Single Master Form (SMF) – through which details of the total foreign investments made in an entity will be recorded.

The SMF must be filed irrespective of the mode or structure of foreign investment into the entities.

Any entity found to be non-compliant may not be able to receive further foreign investments, including foreign direct investment (FDI), as regulated by the provisions of the Foreign Exchange Management Act of 1999.

Which entities must comply with the new reporting requirements?

The new reporting compliance is meant for the following types of entities:

A company as per section 1(4) of the Companies Act, 2013;
A Limited Liability Partnership (LLP) registered under the Limited Liability Partnership Act, 2008; and,
A startup, which complies with the conditions laid down in Notification No. G.S.R 180(E) dated February 17, 2016 issued by Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of India.

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