DOCUMENTATION FOR FOREIGN DIRECT INVESTMENT (FDI)

REPORTING
What is FDI?
FDI refers to Foreign Direct Investment in `equity share or fully and
mandatorily convertible preference shares or fully and
mandatorily convertible debentures (FDI Instruments) of an
Indian company by non resident entities.
Reporting requirements under FDI scheme as per extant RBI
guidelines
Indian companies are required to report the details of the amount of
consideration received for issuance of FDI instruments. Advance
reporting format along with KYC report on the Non-resident
investor need to be reported through Authorised Dealer Category
I Bank (AD Bank) to RBI within 30 days from the date of receipt
of consideration.
Indian Companies are also required to issue the FDI instruments /
refund the advance consideration to the Non-resident investor
within 180 days from the date of the receipt of consideration. In
case of issue of FDI instrument the same is required to be
reported in form FC-GPR through AD Bank to RBI within 30 days
from date of issue of instruments.
Documentation for reporting of inward remittance received for
issuance of FDI Instruments
Advance reporting form (Annexure II) duly filled & signed by the client
Certified copies of FIRC/s, evidencing receipt of remittance. Purpose
of FIRC should be in line with the transaction.
KYC report on Non-resident investor from the overseas bank remitting
the amount
Note:- In case the inward remittance for FDI instruments has been
received through the AD bank other than The Hongkong and Shanghai
Banking Corporation Limited, India (HSBC), then FIRC and KYC report
need to be issued by the concerned AD bank. Client will be required to
request the concerned AD bank to issue FIRC & KYC report and such
requests need to be routed through HSBC. Documentation for form
FC-GPR - Issuance of FDI instruments
Form FC-GPR (Annexure I) duly filled & signed by Managing
Director/Director/Secretary.
Certificate from company secretary as per guidelines
Certificate from Category I Merchant Banker or Chartered accountant
for valuation of FDI Instrument as per the RBI guidelines
Certified copies of FIRCs
Unique Identification numbers allotted for all the remittances received
as considerations for issuance of shares/debentures. In absence
of the same, RBI acknowledged copy of the advance reporting
submitted earlier is required.
Instructions for filling up Annexure II & Annexure I
Instructions for filling up Annexure II & Annexure I has been stated in
the enclosed attachments.
Common discrepancies in Advance Reporting form (Annexure II)
Annexure II incompletely filled: Annexure II needs to filled correctly
with the relevant details. No field should be left blank.
Missing FIRC/s copies: Please attach the attested copies of FIRC/s
with the Annexure II.
Incorrect purpose in FIRC: Customers should advise the remitter to
correctly state the purpose of remittance as "Application money
for equity shares/preference shares/debentures under
Automatic/Approval Route".
Common discrepancies in form FC-GPR (Annexure I)
Description of main business activity & NIC code: Indian company
(beneficiary) needs to ensure that description of main business
activity mentioned in the form is in line with the activity mentioned
in the memorandum of association. NIC code should be as per
attach list.
Date of reporting of inflows (refer point 4 (d) of form FC-GPR): This is
date of reporting to RBI i.e. date of RBI acknowledgement on the
Annexure II
Valuation method: Discounted Cash Flow (DCF) method needs to be
followed for valuation of shares of unlisted Indian companies.
DCF method needs to be followed even for the newly formed
companies. In case of listed companies price of shares issued
shall be on the basis of SEBI guidelines.
Amount mentioned on FIRCs does not tally with the total amount of FDI
instrument issued: This may be due to issuance of FDI instrument for
partial amount of application money received. Client needs to provide
clarification on status of balance funds.