Earlier, foreign direct investment in Indian company was reported with Reserve Bank of India in two stages. First, at the time of inward remittance by way of filing form ARF and at the time of allotment of shares (capital instruments) by way of form FC-GPR. This can be done through online eBiz portal. There were separate forms for reporting foreign direct investment into LLP, transfer of shares between residents and non-residents and issues/transfer of convertible notes. W.e.f 1st September, 2018, all these have been blended into Single master e-form (SMF). The Indian Government has taken this step to integrate reporting of foreign direct investment through a single form as a part of ‘Ease of doing Business’ vision. A new filing platform FIRMS has come into place replacing eBiz platform.
To start this new filing system SMF, RBI came out with a circular in June 2018 and as per circular requiring Indian companies to provide data input on total outstanding foreign investment as on date in form EMF
The new e-filing portal FIRMS at the moment facilitates filing of as following transactions:
- Reporting of FDI into companies
- Reporting of FDI into LLP
- Transfer of share / capital in companies / LLP between resident and non-resident
- Issue / transfer of convertible notes.
Essential features of SMF reporting:
· At present 5 forms viz., FC-GPR, FC-TRS, LLP-I, LLP-II and CN are being made available on SMF.
· Earlier, reporting of foreign remittance was done on ebiz portal in two steps: ARF and FC-GPR but under new reporting regime, ARF and FC-GPR have been merged into single FC-GPR form which is now filed in SMF.
· SMF login ID for business user is to be created only for furnishing forms and returns (as EMF is for furnishing Information).
· Approval of reporting is subject to verification of business user by AD bank. All business users must be eKYC verified by the respective AD banks.
· FDI reporting in Form FC-GPR under SMF has to be done within 30 days after the allotment.
· Reporting under FC-TRS under SMF has to be done within 60 days of transfer of capital instruments or receipt / remittance of funds whichever is earlier.
· Form LLP-I & LLP-II is filed for reporting FDI & transfer of capital contribution or profit share in LLPs, respectively.
· Reporting in respect of issue or transfer of Convertible Notes (CN) is done in Form CN within 60 days of such transfer.
FC-TRS: Filing by Individual:
Declaration in FC-TRS can be done by the transferor / transferee company resident of India. In case of transfer between individuals, reporting can be done by resident individual after registering as business user and in this case the authority letter must be in the name of the person who is reporting.
Has ARF been abolished?
As per the user manual of FIRMS RBI, separate filing of form ARF has been abolished with and the same is now integrate in form FC-GPR. But practically, form ARF should not be ignored wholly. There is no constant practice being followed by the banks. A few banks are still insisting for a clarification letter wherein main details of Form ARF shall be mentioned is to be signed by the authorized director and filed as an addition along with form FC-GPR / FC-TRS.
FIRMS has reduced the many steps through which any reporting goes by limiting its reply to: Pending for approval & Approval or Rejection unlike e Biz, where there were many steps with the option of re submission. Hence it is noted that under FIRMS, now there is no option of re submission, re sending or attaching any clarification once the reporting is submitted. The Authorized Dealer bank has to take due precaution while approving or rejecting the form and it cannot take more than 5 working days for doing the same.