Business
India — Business: Company Formation
Foreign investment into an Indian company is reported to the Reserve Bank of India under FEMA. An Indian company that issues equity instruments to a person resident outside India, counted as foreign direct investment, must report the issue in Form FC-GPR within thirty days of the date of issue, now filed through the RBI's Single Master Form on its portal. An Indian company or LLP that has received foreign investment must file the Foreign Liabilities and Assets (FLA) return with the RBI by 15 July each year, through the FLAIR portal; failing to file is treated as a FEMA violation. A company with foreign investment in a sector where 100% foreign investment is allowed under the automatic route, with no FDI-linked performance conditions, can convert into an LLP under the automatic route, and an LLP with foreign investment must also comply with the LLP Act 2008. Company-law requirements such as the number of directors are set by the Companies Act and the Ministry of Corporate Affairs.
Key facts
- Form FC-GPR must be filed within 30 days of issuing equity instruments to a non-resident (counted as FDI), via the RBI's Single Master Form.
- The annual FLA return is due to the RBI by 15 July from Indian companies and LLPs that have received foreign investment; file it on the FLAIR portal.
- Not filing the FLA return before the due date is treated as a FEMA violation and a penalty can be invoked.
- A company with foreign investment in a 100% automatic-route sector without performance conditions can convert to an LLP under the automatic route; an LLP must also comply with the LLP Act 2008.
Steps
- Obtain DIN and DSC — Director Identification Number and Digital Signature Certificate required for all directors.
- Secure a registered office address in India — Required for incorporation filings.
- Incorporate via MCA portal — File incorporation documents with the Ministry of Corporate Affairs, appointing at least one Indian resident director.
- File FC-GPR post-investment — Within 30 days of allotting shares to the foreign shareholder.
- File annual FLA Return — Due by 15 July each year with the RBI.
Timelines
- Form FC-GPR after share issue: Within 30 days
- Annual FLA return: By 15 July each year
Common mistakes
- Missing the 30-day FC-GPR reporting window after allotting shares to a foreign investor.
- Skipping the annual FLA return — non-filing is treated as a FEMA violation.