Foreign investment in India – Reporting in Single Master Form - Series -356
Reporting in Single
Master Form
SHORT SUMMARY:
The Reserve Bank of India (RBI) has introduced new directions
under the provisions of the Foreign Exchange Management Act, 1999 vide A.P.
(DIR Series) Circular No. 30 notified on the 7 June 2018 (hereinafter referred
to as 'RBI Circular') laying down the roadmap for implementation of the
reporting of foreign investments.
As per Reserve Bank of India, There are various ways of investment
in India by foreigners and there are different forms for each type of
investment like: Capital contribution in Company, LLP or investment in other
investment vehicles.
To make it convenient, ease of doing business RBI will
introduce a “Single Master Form (SMF) subsuming all the existing reports. The
focus of RBI is on integrating the foreign direct investment reporting system
and RBI has introduced TWO FORMS for
this.
ENTITY
MASTER FORM:
EMF is part of first Module of
FIRMS (Foreign Investment Reporting and Management System). This forms is available on RBI
website from (28,
June 2018 to 12, July, 2018).
It would provide an interface for Indian
entities to input their existing foreign investment (including indirect foreign
investment) data. Entities shall provide data with respect to all foreign
investments received, irrespective of the fact that the regulatory reporting to
the Reserve Bank for the same has been made or not and whether the same has
been acknowledged or not
Features of Form:
·
First Phase: RBI has provided a reporting interface called as
EMF to Indian companies and LLPs that have existing foreign investment
including indirect foreign investments, to provide data input on total foreign
investment received till date by them.
·
There are various details required to be filled in EMF, like
identification number, detail of entry user, authorization letter in favour of
entry user, etc.
Some FAQ’s from RBI Circular:
A. Who is an Entity?
•
A company within the meaning of 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 Department of Industrial Policy and Promotion,
Ministry of Commerce and Industry, Government of India
Important Notes for Entity Master
§
All
details must be provided in one go.
§
Only
when all the mandatory fields have been filled, the submit button is enabled.
§
The
RESET button will reset the complete form.
§
Once
the details have been submitted the Entity user can modify the details.
§
The
onus of the integrity of the data entered is on the Entity user.
NOTE:
Complete detail that how to fill
the form “EMF” has been given by RBI in the form of FAQ’s.
MOST IMPORTANT
Indian entities not
complying with these instructions will Not Be Able To Receive Foreign Investment (including indirect foreign investment) and will be treated as
non-compliant with Foreign Exchange Management Act, 1999 (FEMA) and regulations
made thereunder and liable for action as laid in FEMA or the regulations made
thereunder.
SINGLE
MASTER FORM:
SMF is part of second Module of
FIRMS (Foreign Investment Reporting and Management System):
§
This form would be made
available with effect from August 01, 2018.
§
This form would contain 9
reports.
The SMF will be an integrated
reporting form which will be an event-based. SMF would provide a facility for
reporting total foreign investment in an Indian entity viz. company, LLP and
other investment vehicles (Real Estate Investment Trusts (REITs)/Infrastructure
Investment Trusts (InvIts)/Alternative Investment Funds (AIFs).
SMF will subsume the existing
forms such as:
§
FC-GPR and FC-TRS for Issue and
transfer of shares.
§
Form LLP-I & II for foreign
direct investment in LLP and disinvestment/transfer of capital contribution.
§
Form ESOP for issue of employee
stock option plan.
§
Form CN for issue or transfer of
convertible notes.
§
Form DR for issue or transfer of
depository receipts.
SMF will also be compulsory
while:
§
Reporting the downstream
investment (indirect foreign investment) in a company or LLP via Form DI –
reporting of downstream investment (indirect foreign investment) in a company
or LLP.
§
Reporting of investment in an
investment vehicle, including REITs, InvIts and AIFs via Form InVi – reporting
of investment by a person resident outside India in an investment vehicle.
(Author
– CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in Practice
from Delhi and can be contacted at csdiveshgoyal@gmail.com)
Disclaimer:
The
entire contents of this document have been prepared on the basis of relevant
provisions and as per the information existing at the time of the preparation.
Although care has been taken to ensure the accuracy, completeness and
reliability of the information provided, I assume no responsibility therefore.
Users of this information are expected to refer to the relevant existing
provisions of applicable Laws. The user of the information agrees that the
information is not a professional advice and is subject to change without
notice. I assume no responsibility for the consequences of use of such
information. IN NO EVENT SHALL I SHALL BE LIABLE FOR ANY DIRECT, INDIRECT,
SPECIAL OR INCIDENTAL DAMAGE RESULTING FROM, ARISING OUT OF OR IN CONNECTION WITH
THE USE OF THE INFORMATION.
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