FEMA Compliance Services: Advisory, Consultancy & RBI Compliance

When you receive foreign investment, make international investments, sell/give shares to and get shares from foreign investors, etc., you should be compliant with foreign exchange regulations, so the FEMA compliance services can help perform all the calculations and complete all required reporting and filing of necessary documentation.

RBI is responsible for controlling several aspects of the foreign investment framework under FEMA and the Foreign Exchange Management (Non-Debt Instruments), etc., and thus every transaction should be analysed before its execution to ensure that your foreign exchange transactions and corporate papers and filings with RBI are correct.

Regulatory FEMA compliance entails adhering to the foreign exchange norms that govern your operations when carrying out transactions involving investors located outside India. Depending upon the transaction carried out, you may have to comply with regulations regarding foreign investments, cross-border investments, remittances, share deals, reporting, pricing, sectoral limitations, and documentation.

Your specific compliance responsibilities would depend on the kind of transaction and the parties involved. For instance, if an Indian entity is receiving Foreign Direct Investment, it will need to satisfy all reporting obligations through the RBI’s FIRMS system while an Indian resident who is making an overseas investment will have a different set of reporting obligations through the concerned Authorised Dealer bank.

FEMA advisory services play a key role in ensuring that the regulatory requirements are ascertained before completing a foreign exchange transaction. We assess the transaction and understand the reporting needs of the same, investigate the investment route, and help you collect and assemble the necessary documents before submission, thus avoiding any inconsistencies between banking records, company documents, investor details, and valuation documents.

It is useful to remain compliant to the regulations when you are dealing with multiple foreign investors and overseas subsidiaries; it can also help you legally when you want to transfer shares.

There are several kinds of transactions that may need FEMA-related assistance. Given below are some of the examples:

• Foreign investment in any Indian entity.

• Transfer of shares to and from residents and non-residents.

• Foreign investments made by Indian entities.

• Transfer of funds involving foreign entities.

• Issuance or transfer of eligible securities.

• Downstream investments.

• Foreign loans or borrowings.

• Submission of overseas subsidiaries.

• Repatriation.

• Cross-border mergers and restructuring.

The precise reporting format and timeline depend on the type of transaction taking place. For example, the reporting framework by the Reserve Bank of India includes forms like FC-GPR, FC-TRS, Limited Liability Partnership (LLP) forms, etc.

The FEMA consultancy ensures that your transaction takes place as per the applicable foreign exchange law. Our service ensures that you have access to various aspects of the transaction including the reporting requirements, timelines, documents, and regulatory issues of the transaction.

We might even assess the transaction and perform document reviews as well as reporting to the Reserve bank of India as needed, along with offering FEMA-related advice and compliance examinations.

Depending on your transaction, you may have to review these:

Foreign Investment

You need to ascertain the applicable entry route, sectoral cap, investment instrument, eligibility of investor, pricing requirements, and obligations of reporting before receiving foreign investment.

RBI Reporting

Some transactions are obligated to be reported through RBI prescribed online mediums. For example, an Indian company issuing equity instruments to non-residents shall report such issuance in the Form FC-GPR within the prescribed time applicable for the issue to be considered as FDI.

Annual Reporting

If you have made FDI or received investment made abroad, you may also have annual reporting obligations that must be fulfilled. The RBI states that for submission of an Annual Return on Foreign Liabilities and Assets (FLA), applicable Indian entities must declare the amount of FDI received and/or made investment abroad.

FEMA consulting firms support the process by first helping you understand the transaction and identifying which fall under the FEMA provisions. After reviewing, the process of documentation, filings, and approval.

Step 1: Transaction Review

Identify the specific type of foreign exchange transaction, the participating entities, the total sum of money, the structure of the investment and the activities that occur.

Step 2: Regulatory Assessment

Then examine the relevant FEMA rules, the path for investment, the limits allowed for specific industries, the rules for determining price and the duties for reporting.

Step 3: Document Preparation

Next you have to gather the necessary contracts, data regarding investors, Know Your Customer documents, reports on asset value, records from the bank, approvals from the board of directors plus additional evidence.

Step 4: RBI Filing

In situations where the law requires it, you have to prepare and deliver the necessary forms through the specific reporting tools of the Reserve Bank of India.

Step 5: Post Filing Compliance

To ensure legal conformity, the advisors keep the receipts for the filings and the evidence for the data while they determine if there are more reporting tasks or steps to fix errors.

The timing involved depends on the complexity of the transaction. For instance, a simple and straightforward compliance review can be completed rather quickly if you have all your documents in order; however, transactions using valuation, approvals, and many investors and foreign entities may require more time.

It should be noted that different FEMA transactions can have different timelines. For example, an investor will have to report the FC-GPR form to the RBI within thirty days from the issue date of the equity instruments, while the FLA return will need to be reported at a different time.

The cost of FEMA compliance depends on the nature of your transaction, number of filings required and regulatory complexities.

Note: Apart from the professional charges you may have to pay government or RBI charges. As well as valuation and certification charges. For latest fees you can contact companyregister.co.in .

Failure to comply might lead to regulatory consequences under FEMA. Depending on the nature of the violation, delayed or incorrect reporting may also require corrective action or payment of Late Submission Fee where necessary.

The RBI framework mentions Late Submission Fee for failures in certain reporting requirements, and it has provisions for compounding in relation to those violations. The consequences depend on the type of non-compliance.

There isn’t a single universal certificate that proves compliance with all countries under its jurisdiction. Instead, an organization would need to maintain records of forms of compliance such as RBI filing acknowledgements, confirmations from banks, valuation reports, certificates from professionals, approvals, transaction documents and other relevant documentation to show compliance.

These documents ought to be stored properly as one may need them for future transactions, audits or Due Diligence . A compliant set of records can also help identify future reporting requirements before undertaking any more international transactions.

FEMA compliance is not typically a one-off registration which lasts forever. Your responsibilities will however, arise when you conduct any new transaction covered by the foreign exchange legislation. For instance, receiving new foreign investment, transferring shares, making a foreign investment, transferring ownership, or conducting some types of cross-border restructuring will create further compliance obligations on your part. This means that you have to look at each transaction separately rather than relying on the previous submission.

You can make the necessary modifications if you found that an error, omission, late filing, or discrepancy exists in your submission. When correcting the error, the procedure depends on the type of error, the status of the submission, and the nature of the transaction and applicable RBI legislation.

Before correcting, you should check that the information about the transaction corresponds with the banking and corporate documents you have. This will ensure that the amended information will be documented correctly and there won’t be discrepancies.

There is not a general annual renewal of FEMA since FEMA compliance comes from particular situations. Some reporting requirements are periodic, such as the yearly filing of FLA.

The RBI advises that any entity that has received FDI or made foreign investments submit an FLA return through their reporting mechanism. The RBI's official website has mentioned that the FLA is in fact mandatory for the concerned entities and filed through RBI's online system.

We work with companies in Delhi, Maharashtra, Karnataka, Gujarat, Tamil Nadu, Telangana, Uttar Pradesh, Haryana, West Bengal, Rajasthan, etc. with their foreign exchange compliance requirements.

The services we offer are transaction review, documentation, RBI reporting and investor compliance. FEMA is a central legislation so what is important for you are the inherent FEMA requirements with which you have to comply even though there may be different requirements for your transactions depending on your venture's other documents and professional needs.

We offer our services to varied industries which comprise:

• Information Technology

• Manufacturing

• E-commerce

• Healthcare and pharmaceuticals

• Education

• Consulting

• Infrastructure

• Trading

• Financial services

• Startups

• Export businesses

If you repeatedly engage with foreign investors, offshore organizations, or international payments, we can set up a compliance process for you so you won’t have to deal with every single transaction separately.

Companyregister.co.in offers end-to-end services for foreign investment and cross-border operations compliance. We help you with going through transactions, understanding requirements, preparing documents, and reporting to the Reserve Bank of India.

Professionals at companyregister.co.in assists you with complete Compliance Report transaction specific advice, reports new requirements, reviews documents, and also continues to support post registration. We help you to maintain the records of the foreign exchange transaction so that you remain aligned with corporate regulatory measures.