Deepak Gupta | Jul 9, 2018 |
Integrated reporting structure: Foreign Investment Received : This article is in regards to the newly introduced reporting structure (Single Master Form herein referred thereafter SMF ) by Reserve Bank of India (herein referred thereafter RBI) for the reporting of all Foreign Investments so received by Indian Entities
Before moving forwards, lets begin with terminology like Foreign Investments.
| Foreign Investment[1]in India is regulated in terms of clause (b) sub-section 3 of section 6 and section 47 of the Foreign Exchange Management Act, 1999 (FEMA) read with Foreign Exchange Management (Transfer or Issue of a Security by a Person resident Outside India) Regulations, 2017 issued vide Notification No. FEMA 20(R)/2017-RB dated November 7, 2017. Where, investments can be made in shares, mandatorily and fully convertible debentures and mandatorily and fully convertible preference shares of an Indian company by non-residents, subject to the pricing guidelines / valuation norms and reporting requirements amongst other requirements as prescribed under FEMA Regulations. Further any Indian Entity receiving foreign investments were required to report such transactions to RBI which was Regulated by Regulation 13 of the Foreign Exchange Management (Transfer or Issue of Security by Person Resident Outside India) Regulations, 2017presentlyprescribes twelve (12) different types of forms for FDI reporting including Advance Remittance Form, Form FC-GPR, Form FC-TRS, Annual Return on Foreign Labilities and Assets, Form ESOP, Form DRR, Form LLP (I), Form LLP (II), Form Convertible Notes, Downstream Investment Form, Form LEC (FII) and Form LEC (NRI). |
As the present Reporting Structure is not in integrated resulting in different and various forms for different type of foreign investments , RBI has introduced Integrated Reporting Structure in form of Single Master Form vide a RBI Circular[2], notified on the 7 June 2018with the aim of simplifying reporting under the Foreign Exchange and Management Act, 1999 (FEMA). Further On June 27th, 2018, RBI released a User Manual for Entity Master FIRMS (User Manual)[3]which provides detailed instructions and the process for filing the Entity Master Form.
MPLEMANTATION:
For the implementation of the above dated circulars; RBI has announced an ONLINE APPLICATION-FIRMS (Foreign Investment Reporting and Management System) which will available in Two Phases:
| IN THE FIRST PHASE, THE FIRST MODULE ENTITY MASTER FORM | The Entity Master, would be made available online Will be available to the public for data entry between June 28 (at 1:00 pm) and July 12, 2018. seeking identification details of Indian entities, specifically seeks information pertaining to foreign direct investment, foreign portfolio investment and the indirect foreign investments received by the Indian entities till date Any Indian entity which does not comply WILL BE LIABLE FOR PENALTY: COMPLETE PROHIBITION ON RECEIVING ANY FORM OF FOREIGN INVESTMENT IN FUTURE. |
| IN THE SECOND PHASE, THE SECOND MODULE SINGLE MASTER FORM | The Single Master form will made available online will be available to the public for data entry from 01st August, 2018 It has merged eight (8) of the above twelve (12) earlier reporting requirements, along with an additional obligation of reporting in case of investment by person resident outside India in an Investment Vehicle. Four (4) forms that may remain outside the framework of SMF, and may likely continue to be filed in the manner they are currently filed with the RBI, are Advance Remittance Form, Annual Return on Foreign Labilities and Assets, Form LEC (FII) and Form LEC (NRI) |
Note: As the Single Master Form will be available from 01st August, 2018; the FAQs in regards to the form will be articulated in next series
IMPORTANT POINTS: TO BE CONSIDERED; ENTITY MASTER FORM
[AVAILABLE FROM 28TH JUNE TO 12TH JULY, 20118]
[WEBSITE: Uniform Resource Locators (URL) of the application ishttps://firms.rbi.org.in]
Who is entity; under Entity Master Form
Entities will be those, which are eligible for receiving investments in India, which can issue:shares, mandatorily and fully convertible debentures and mandatorily and fully convertible preference shares.
Entity here will be any of the following:
Who will fill the form
All the entities aforesaid, being the artificial person,
Creation of Entity Master Form[5]:
| STEP I | Click on Registration form for New Entity User& Filed Description & generate LOGIN id |
| STEP II | Logging on to Entity Master incorporate following Details:
|
| STEP III | Declaration |
| STEP IV | Submissions |
Points to be noted; while incorporating details: In Foreign Investment in Company / LLP Tab.
| STRUCTURE | TYPES OF INSTRUEMENTS |
| In case of Company | Paid-up Capital of the company on a [fully diluted basis][6] |
| In case of LLP | Total Capital contribution in LLP (in INR) |
| In case of start-ups | convertible notes |
The Indian companies who have made downstream investment in another Indian company for which it is considered as indirect foreign investment in terms of Regulation 14 of Foreign Exchange Management (Transfer or issue of security by a person resident outside India) Regulations, 2017 dated November 7, 2017 and as amended from time to time, shall inform the same to the Indian investee company for the purpose of providing details of indirect foreign investment in Entity Master.
Details of each Issue / transfer (and not investor wise) have to be filled in this page, one after the other.After entering the details of one issue user; add the details of the next issue / transfer.
Number of Instruments / Percentage of capital contribution
Disclaimer: Appreciate your support and so happy to have you as reader.
This article is only knowledge sharing initiative and is not intended to be a part of any advertising. The information contained therein is of general nature and the entire contents of this document have been developed based on relevant information and are purely the views of the authors. Though the authors have made utmost efforts to provide authentic information however, the authors expressly disclaim all or any liability to any person who has read this document, or otherwise, in respect of anything, and of consequences of anything done, or omitted to be done by any such person in reliance upon the contents of this document .READER SHOULD SEEK APPROPRIATE COUNSEL FOR YOUR OWN SITUATION. AUTHOR SHALL NOT BE HELD LIABLE FOR ANY OF THE CONSEQUENCES DIRECTLY OR INDIRECTLY
GORSIA & ASSOCIATES
ANJALI J. GORSIA Mobile: 8408964411
PRACTICING COMPANY SECRETARY Email id: [email protected]
Mumbai Off:
Build No 21, Flat No 14,
Ekta Co-Op Housing Society
Sector 17, Near Abhudaya bank, Airoli,
Dist: Thane, Navi Mumbai, 400708
Nagpur off:
D 15/16, Ground Floor, Ramkrishna Appt,
Shastri Nagar, Near Shastri Nagar School,
Nagpur, Maharashtra-440008
[1] Foreign Investment means any investment made by a person resident outside India on a repatriable basis in capital instruments of an Indian company or to the capital of an LLP;
Explanation: If a declaration is made by persons as per the provisions of the Companies Act, 2013 about a beneficial interest being held by a person resident outside India, then even though the investment may be made by a resident Indian citizen, the same shall be counted as foreign investment.
Note: A person resident outside India may hold foreign investment either as Foreign Direct Investment or as Foreign Portfolio Investment in any particular Indian company.
[2]https://rbi.org.in/Scripts/NotificationUser.aspxId=11297&Mode=0
[3]https://rbi.org.in/Scripts/femaview.aspxfemaid=64
[4] Format:https://rbidocs.rbi.org.in/rdocs/content/pdfs/UMEM27062018_AN1.pdf
[5]Important Notes for Entity Master
[6] Fully diluted basis means the total number of shares that would be outstanding if all possible sources of conversion are exercised. It includes:
In case of any Doubt regarding Membership you can mail us at [email protected]
Join Studycafe's WhatsApp Group or Telegram Channel for Latest Updates on Government Job, Sarkari Naukri, Private Jobs, Income Tax, GST, Companies Act, Judgements and CA, CS, ICWA, and MUCH MORE!"
