In continuation to the blog series on reporting requirements under Foreign Exchange and Management Act, 1999, Part 2 of the series covers prescribed reportings for not-so-common transactions, like, issue of sweat equity shares, Employee Stock Options, ADRs, GDRs, conversion of ECB etc.
Part 1 of the series, wherein forms prescribed for reporting very common transactions, like, inward remittance (ARF), issuance of shares (FC-GPR) and transfer of shares (FC-TRS) have been detailed. It is interesting to note that reporting of only these common transactions have been enabled online and it’s mandatory to do so (through e-biz portal). Physical filing is not an option.
All other forms, as stated below are to be filed physically and online filing is not an option. They are to be filed with the Authorised Persons / Authorised Dealer banks Category – I Banks / Authorised Banks, as the case may be.
Summarised below are the transactions and related forms for the prescribed reporting.
| Purpose | Form Name | To be filed with | Timeline |
| To report actual External Commercial Borrowing (ECB) transactions | Form ECB-2 | AD Category 1 Bank to Department of Statistics and Information Management (DSIM) | Within 7 working days from the close of month to which the transaction relates |
| Purpose | Form Name | Timeline |
| Conversion of ECB into Equity (Full and partial conversion) | Form FC-GPR and
Form ECB-2 |
Within 7 working days from the close of month to which the conversion relates |
Some pointers while filing ECB-2:
| Purpose | Form Name | Timeline |
To report issue of sweat equity shares/ ESOPs/ shares issued against exercise of stock option to persons resident outside India who are:
|
Employees’ Stock Option (ESOP): | Within 30 days from the date of issue of such shares |
Note: All FIRCs and KYC shall be filed as necessary documents along with form ESOP.
| Purpose | Form Name | Details | Timeline |
| On issue / transfer of Convertible Notes | Convertible Notes (CN) | To report:
a) Issue of convertible notes by Indian Startup Company to a person resident outside India
b) Transfer of such convertible notes by a person resident in India to a person resident outside India and vice versa. |
a) Within 30 days of such issue.
b) Within 60 days of such transfer.
|
Note: Consolidated statements w.r.t. the issue and transfer of convertible Notes to be submitted by the Authorised Dealer Bank to the RBI.
| Purpose | Form Name | To be filed with | Timeline |
| To report purchase (except derivative and IDRs)/ transfer of capital instruments by FPIs on the stock exchanges in India. | LEC (FII) | RBI | No timeline specified |
Note: FPI is defined as investment made in capital instruments, by a person resident outside India in the following:
Also, to note that 10% limit shall be applicable to each Foreign Portfolio Investor or Investor group.
| Purpose | Form Name | Timeline |
| To report purchase/ transfer of capital instruments by Non-Resident Indians or Overseas Citizens of India stock exchanges in India. | LEC (NRI) | No timeline specified |
| Purpose | Form Name | To be filed with | Timeline |
| To report downstream investment in another Indian company or LLP which is considered as indirect foreign investment for the investee company in terms of FEMA 20(R) Regulations. | Downstream Investment (DI) | Secretariat for Industrial Assistance, DIPP | Within 30 days of such investment |
| Purpose | Form Name | Timeline |
| To report overseas investment | ODI-Part I | Within 30 days of making such investment |
| Annual Performance Reports | ODI-Part II | By 30th of June every year. |
| To report disinvestment by way of Sale or Transfer of Shares /Closure / Voluntary Liquidation /Winding Up/ Merger /Amalgamation of Joint Venture / Wholly Owned Subsidiary | ODI-Part III | Reporting to be made immediately on receipt of sale proceeds or within 90 days from the date of sale of the shares /securities and documentary evidence to this effect shall be submitted to the Reserve Bank through the designated Authorised Dealer. |
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Dear Sir,
Actually there is an Indian individual who has invested outside Indian company by way of acquiring Shares. So what are the FEMA Compliance that individual have to be done.
Please reply soon