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The Reserve Bank of India (RBI) has reduced the burden for reporting foreign investments by introducing one form i.e. the Single Master Form (SMF) in place of different forms such as FC-GPR, FC-TRS, LLP (I) Form, LLP (II) Form, CN Form, DRR Form, ESOP Form, DI Form, and INVI Form. SMF was introduced vide A.P. (DIR Series) Circular No. 30 dated 7 July 2018 (FDI Circular. Now foreign investment reporting can be done without the digital signature certificates of the authorized signatories. By introducing the SMF, RBI dispensed the requirement of filing advance reporting forms by the Indian companies. The RBI also introduced an interface “Entity Master Form” (EMF) vide FDI Circular for the Indian entities to input details of the total foreign investment received by them as of the date of creation of an EMF account.
Pursuant to the introduction of the FDI Circular regarding reporting requirements, Indian entities are required to create an EMF account and SMF account on the Foreign Investment Reporting and Management System (FIRMS) Portal. The creation of an EMF account is the first step toward reporting foreign investments. EMF account is an entity-specific account i.e. an Indian entity can create only one EMF account on the FIRMS portal. After creating an EMF account, the Indian entity has to create an SMF account on FIRMS Portal. This account is an Authorized Dealer Bank-specific account. When different FDI transactions are carried out through different AD Banks, the Indian entity can create multiple SMF accounts to report the FDI transactions. The AD Bank has to accept or reject the application filed before it within 5 working days or forward it to SEBI in exceptional cases. With the introduction of EMF and SMF, the provision for clarification and re-submission of the application form has been done away with. The Indian entity will receive the approval or rejection of the application on its registered e-mail id. In cases where the application is rejected, the reasons for rejecting the application should be communicated through e-mail. This can be subsequently discussed and ratified by the Indian entity with its AD Bank before the submission of a fresh application for its timely closure.
Table of Contents
Following are the foreign investment reporting that the Indian entities are required to complete on FIRMS Portal:
Any delay in reporting the above forms will attract Late Submission Fees (LSF) in a manner prescribed by the RBI from time to time. Only on payment of LSF will the application be considered approved.
The timeline for filing various reports regarding foreign investment is prescribed in a tabular form below for easy understanding:
The new reporting framework for reporting in a consolidated form and within a given time frame has eased the reporting of FDI transactions. However, there is one practical hindrance linked with the filing of SMF which is that only one application can be processed at a time across all SMF account(s) of an Indian entity. Till the time the application is under process i.e. neither approved nor rejected, the Indian entity cannot file another application on any of the SMF account(s).
Read our Article: Downstream Investments and its Reporting to DPIIT
Ankita is an Advocate and has joined Enterslice as a Legal Researcher. Her work focuses on General Civil and Commercial laws, Corporate Taxation Laws, Labour and Employment Laws and Dispute Resolution. She is a law graduate from School of Law, University of Petroleum and Energy Studies. Prior to joining Enterslice, Ankita has the experience of practicing law in Delhi and Odisha.
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