Background The Reserve Bank’s Co-ordinate Direct Investment Survey (CDIS) and Co-ordinate Portfolio Investment Survey (CPIS) are conducted under the auspices of the International Monetary Fund (IMF), wherein information is collected from Indian Resident Companies on their Foreign Financial Liabilities and Assets position as at end-March of the previous financial year and end-March of the latest financial year. This information is used in the compilation of India’s Balance of Payments (Bop) International Investment Position (IIP), Coordinated Direct Investment and Coordinated Portfolio Investment. The complete return should be sent by July 15, every year. The filled-in return in excel format should be sent an e-mail id: email@example.com, however, queries related to filling of return should be sent to firstname.lastname@example.org. Brief Under Circular A.P. (DIR Series) No. 145 dated 18th June 2014 has called for attention to Authorized Dealer Category I Bank wherein, it was, inter-alia, stipulated that the annual return on Foreign Liabilities and Assets (FLA) is required to be submitted directly by all the Indian Companies which have received Foreign Direct Investment (FDI) and/or made FDI abroad (i.e. overseas investment) in the previous year’s including current year, by July 15 of every year to the Department of Statistics and Information Management, Reserve Bank of India, Mumbai. Indian companies that hold Foreign Assets and Liabilities on its Balance Sheet (Financial Statements) required submitting a return by 15th July of each year irrespective of books of account audited or not. The Governing Act for submission of FLA return to RBI is the Foreign Exchange Management Act, 1999 and notification/circular/regulation issued under section 10(4) and 11(1) of the stated Act, 1999. Structural Schema of Form FLA return is to be submitted to authority dully filled either in Excel or Word file and send via electronic mail (registered mail in RBI) to email@example.com by 15th July of each year irrespective of audited books or not subject to having foreign liabilities and assets in preceding years or current year. The form for Annual Return on Foreign Liabilities and Assets is basically segmented into 6 different sections calling for different sorts of information by Regulatory Authority. Section I is basically Identification particulars of Indian Company submitting information on Foreign Liabilities and Assets. After selecting the year of return, the form will be activated where the identification details like Name, address PAN, CIN of company and Details of Contact Person like Name, Designation, email and phone number to be provided in Form. Further in this section information like Book Closing Date, Nature of Business, Change in Company Name, if any then Effective Date of Change to be mention, State either Company is listed or not, if listed then Face Value of Equity Share and Market Value of Same Share for year-end and preceding year-end to be filled. Further, the reporting entity has to mention either entity is Asset Management Company, technical Foreign Collaboration or not. Last but not least the entity required to provide identification in terms of inward FDI like Foreign Subsidiary, Foreign Associates, and Public-Private Partnership (PPP), Special Purpose Vehicle or others. Section prescribes the submission of Financial Details of Reporting Company. This section is further bifurcated into the Balance Sheet and Profit and Loss section specifying more focused only on data to be reported. In Balance Sheet item under this Section II of Form Capital of Indian Company (equity/preference) and holding by Non-Residents on such capital is reported. Moving ahead in terms of reporting on an item of Profit and Loss Account, the form is very specific with reporting of Reserve & Surplus and Sale & Purchase made during the financial year. The point to be noted in this section is wherever the word reporting is written; it includes reporting of the current and previous year as well. Also, Read: Annual Return on Foreign Liabilities and Assets. Section III requires reporting of Foreign Liabilities, obligation to pay off persons other than India residents. It prescribes reporting structure for outstanding investments made under Foreign Direct Investment (FDI) Scheme in India by Non-Residents who were individually holding 10% or more ordinary/equity & preference shares of reporting company on the reporting date in the first section and on next section, the holding less than 10% is reported. The reporting includes the current and previous year amount. There are two types of Capital i.e. Equity Capital and Other Capital. Other Capital includes all other liabilities and claims at Nominal value, except equity and participating preference shares i.e. trade credit, loan, debentures, non-participating share capital, other accounts receivables and payable, etc. In the last part of this section, the reporting company is required to furnish outstanding investment by non-residents investors other than those made under the Foreign Direct Investment Scheme in India. Such investment either be in Equity Securities (to be reported at Market Value) or Debt Securities (Money Market Instruments, bonds etc. with maturity more than 1 year). The point to be noted under this section while reporting the amount is equity should be valued using share price on the closing date of reference period in case of the listed company whereas own fund of book value (OFBV) method to be used for valuation of Investment in unlisted companies. Section IV states reporting formalities and structure for Foreign Assets, the right to receive from a person other than India Residents. Under this section, reporting company has to report total equity of Direct Investment Enterprises (DIE), equity held by reporting company, reserve (excluding Profit & Loss Account) and Profit & Loss Account of those DIE in each of which reporting company holds 10% or more equity shares on the reference date. The exchange rate of reporting foreign currency against Indian Rs should be given as on the closing date of the reference period. Moving ahead the entity has to furnish the market value of an outstanding investment in DIE made by reporting company under the ODI Scheme, in each of which reporting company holds 10% or more OR less than 10% equity shares on the reference date. Similarly, if the reporting entity has any Portfolio Investment Abroad requires reporting at the market value of outstanding investment in the non-resident enterprise, other than those made under the ODI Scheme. In case if the overseas company is listed, the equity should be valued using share price on the closing date of reference period whereas if the overseas company is unlisted, own fund of book value (OFBV) method should be used for the valuation of equity investment. Section IV-A permits reporting of outward foreign affiliates trade statistics (Outward FATS) to be reported on Foreign Currency (in actual). In this section, the imports, exports, total sales and total purchase of Direct Investment Enterprises (DIE) abroad if equity holding of DIE by Indian Reporting Company is more than 50%. The reporting should be in a previous year as well as the current year. Section V is the last section under which other assets and liabilities with foreign unrelated parties to be reported having a comparison of the last and current year of the reference period. It is a residual category that includes all financial outstanding liabilities and claims not considered as direct investment or Portfolio Investment like trade credit, loans, currency and deposits, other receivables and payable account. Concept to Note Valuation of Equity Investment using OFBV method in case of Unlisted Company S.NoParticularsPrevious MarchLatest MarchAnEquity Share Capital BParticipating Preference Share Capital CTotalA + BA + BDReserve & Surplus ENet Worth of the CompanyC + DC + DFEquity Share Capital held by Non-Resident Direct Investor (NRDI) GParticipating Preference Share Capital held by NRDI HTotalF + GF + GIEquity & Participating Preference Shareholding PercentageH/CH/CJFDI at Market ValueE*IE*I Note Share issued to non-resident on Non-Reparable basis should not be reported in Annual.Trade Debt Securities should be valued at market price, while all other types of debt viz., loan, trade credit, deposits, and other accounts payable/receivable should be valued at Nominal Value.Direct Investment: It is a category of international investment in which a resident entity in one economy i.e. Direct Investor (DI) acquires a lasting interest in an enterprise resident in another economy i.e. Direct Investment Enterprises (DIE). It consists of two components, viz. Equity Capital and Other Capital.Foreign Subsidiary: An Indian Company is called a Foreign Subsidiary if a non-resident investor owns more than 50% of the voting power/equity capital OR where a non-resident investor and its subsidiaries combined owned more than 50% of the voting power/equity capital of Indian enterprises.Foreign Associate: if a non-resident investor owns at least 10% and no more than 50% of the voting power/equity capital OR where non-resident investor and its subsidiaries combined own at least 10% but no more than 50% of the voting power/equity capital of Indian enterprises.Special Purpose Vehicle (SPV): It is a legal entity (usually a limited company of some type or, sometimes, a limited partnership) created to fulfill narrow, specific or temporary objectives. SPV have little or no employment, or operations, or physical presence in the jurisdiction in which they are created by their parent enterprises, which are typically located in other economies jurisdictions. They are often used as devices to raise capital or to hold assets and liabilities and usually do not undertake significant productions.Public-Private Partnership (PPP): It describes a government service or private business venture which is funded and operated through a Partnership Firm of government and one or more private sector companies. PPP involves a contract between a public sector authority and a private party, in which the private party provides a public service or project and assumes substantial financial, technical and operational risk in the project.Non-Participating Preference Share do not have following rights:-To receive dividend, out of surplus profit after paying the dividend to equity shareholders;To have shared in surplus assets remaining after the entire capital is paid in case of Winding up of the Company. As the nation is having FDI in a number of ways, the reporting segment is developing on a further extensive note. Hence challenge professional and person associated with the need to update regarding a number of Financial Reporting ways and transactions to be included or excluded. Therefore it’s an attempt from our end to update reporting structure and requirement on Foreign Liabilities and Assets (FLA) of any Indian Entity having FDI and doing ODI. Also, Read: FEMA Compliance which Must be Followed.