FEMA

An Overview of Annual Performance Report under FEMA 1999

Annual Performance Report is important annual compliance provided under the Foreign Exchange Management Act 1999. Not filing this report before the due date shall be treated as a violation as FEMA, and penalty clause will also be invoked on violation of FEMA. In this article, we shall discuss regarding the APR and also discuss its filing process.

Requirement of filing Annual Performance Report

An Indian Party/Resident Individual who has made an Overseas Direct Investment should submit an APR in Form ODI Part II to the Authorized Dealer bank within the specified time period in respect of each Joint Venture/Wholly Owned Subsidiary outside India. The report is physically submitted by the Indian Party to the authorized bank.

Due date of filing APR

An Indian Party should submit the APR based on Audited Financial Statements of the overseas Joint Venture/Wholly Owned Subsidiary by June 30 every year.

In case where the law of the host country doesn’t require mandatorily auditing of the books of accounts of Joint Venture/Wholly Owned Subsidiary, the APR shall be submitted by the Indian Party based upon the unaudited annual accounts of the Joint Venture/Wholly Owned Subsidiary provided that:

• The Statutory auditors of Indian party certify that the law of the host country doesn’t require mandatorily auditing of the books of accounts of Joint Venture/Wholly Owned Subsidiary and the figures in the APR are according to the unaudited accounts of the overseas Joint Venture/Wholly Owned Subsidiary.
• That the unaudited annual accounts of the Joint Venture/Wholly Owned Subsidiary is adopted and ratified by the board of the Indian party.

APR form

The form needed for APR is called the Form ODI Part II. You may download it from the website of the Reserve bank^[1], or you may ask your Authorized Dealer bank to provide it.

Certificates with Annual Performance Report

It is worth mention here that with APR, there is a requirement of two certificates with the Authorized dealer bank that includes the Certificate from the Indian Party/Resident Individual and also the certificate of the Statutory Auditor. These certificates are mandatory and are part of the Form ODI Part II.

The Certificate from the Indian Party/Resident Individual should be printed on the Indian Parties Letterhead and must be signed and stamped by director of such company.

The Certificate of the statutory auditor should be printed on the Statutory Auditor’s Letterhead and should be signed as well as stamped by the statutory auditor of such company.

Annual Performance Report- Signing, Stamping, and Printing

 The APR must be signed by the Director and Statutory Auditor of such Indian Company. Each page of such APR should be stamped and signed by the Company’s director. The last page must be signed and stamped by the Director and Statutory Auditor of the company.  APR is printed on the A4-sized sheet, and it doesn’t require to be printed on the letterhead.

APR- Documents required  

The following documents should be submitted along with the APR:

• Latest audited financials of the Joint Venture/Wholly Owned Subsidiary;
• Latest audited financials of the holding company;
• Duly filled and signed APR form;
• Certificate of the Indian Party;
• Statutory Auditor Certificate;
• The copy of the share certificate for previous equity remittances done to the subsidiary; and
• Covering letter for APR.

How to submit the Annual Performance Report?

This report should be submitted physically along with the supporting documents to the authorized bank of such company. At the time of submitting the documents, don’t forget the acknowledgement copy for it from the bank for your record.

Never submit the APR on the last days and always make a habit of submitting the same before the deadline. In case you submit it on the last day, and if any observation is raised by the bank then you won’t be left with enough time to get it rectified and therefore submit it before the deadline.

Format of APR

The form ODI Part II for APR is divided into 6 main points. These points are as follows:

• Point I- APR Period;
• Point II- Unique Identification Number;
• Point III- Capital Structure of Joint Venture/Wholly Owned Subsidiary;
• Point IV- Operational Details of Joint Venture/Wholly Owned Subsidiary;
• Point V- Repatriation from the Joint Venture/Wholly Owned Subsidiary; and
• Point VI- Investment in either wholly-owned or a joint venture Step Down Subsidiary.

Conclusion

Always keep in mind the due date for filing the Annual Performance Report so as to submit the report before deadline occurs. All other submission requirements should be complied with in order to submit it with ease. All details regarding APR filing has been tried to be covered in this article. In case you seek better understanding of this topic, you may take the assistance of a professional.

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