Overseas direct investment reporting: Form FC (formerly ODI Part I) and the Annual Performance Report

How ODI reporting changed in 2022

The Foreign Exchange Management (Overseas Investment) Rules and Regulations, 2022 replaced the older framework. The familiar Form ODI Part I for reporting a new investment has been replaced by Form FC (financial commitment), Part II is now the APR, and disinvestment and restructuring have their own reporting.

Every overseas investment is routed through a single designated AD bank, which allots a Unique Identification Number for each foreign entity. All subsequent reporting for that entity goes through the same bank.

Form FC: reporting the investment

Form FC is filed through the AD bank at the time of making the outward remittance or the financial commitment, whichever is earlier. A financial commitment includes equity investment, debt, and guarantees or other non-fund commitments given for the foreign entity.

Changes to the commitment, such as further equity infusion or a new loan, are also reported through Form FC. Disinvestment must be reported within 30 days of receiving the proceeds, and restructuring of the foreign entity within 30 days of the restructuring date.

The Annual Performance Report

The APR is due by 31 December each year for each foreign entity in which the Indian resident holds ODI, based on the foreign entity's latest financial statements. Where several Indian residents hold ODI in the same entity, the one with the highest stake files, or they may file jointly if stakes are equal.

The APR is certified by the Indian entity's statutory auditor, or a chartered accountant where no statutory audit applies. Where the Indian investor has control, audited foreign accounts are generally expected; in other cases unaudited accounts may be used subject to certification as RBI permits.

Documents typically needed

Keep these ready for Form FC and the APR. The AD bank may ask for more depending on the structure, the host country and whether the investment is a fresh acquisition, a capital infusion or a loan to the foreign entity.

• Board resolution approving the investment or commitment
• Valuation report for acquisitions of existing foreign entities
• Audited or certified financial statements of the foreign entity, for the APR
• Statutory auditor's certificate on the APR
• Details of the foreign entity's shareholding, step-down subsidiaries and business
• Proof of the financial commitment, such as loan agreements or guarantees

Late filing and its effect

Delays can be regularised by paying a Late Submission Fee under RBI's September 2022 circular. The APR is a non-flow return with a flat ₹7,500 LSF, while Form FC and disinvestment forms are flow returns attracting ₹7,500 plus 0.025% of the amount involved for each year of delay.

Importantly, until a reporting delay is regularised, the Indian resident cannot make any further financial commitment to that foreign entity or transfer the investment. This can block planned funding of an overseas subsidiary.

Common mistakes

Common errors include remitting money before Form FC is processed, treating a loan or guarantee to a foreign subsidiary as outside reporting, missing the APR because the foreign entity is dormant or loss-making, and forgetting the FLA return, which is separate. Individuals and unlisted companies should also check the restrictions on ODI into entities with step-down structures and in financial services.

Step by step

1. 1Choose a designated AD bank

   All ODI for a foreign entity must go through one AD bank.

2. 2Check eligibility

   Confirm the investment fits the automatic route and financial commitment limits.

3. 3File Form FC

   Submit Form FC with board resolution and valuation, before or with the remittance.

4. 4Obtain UIN

   The AD bank reports and obtains a Unique Identification Number.

5. 5File APR yearly

   Submit the auditor-certified APR by 31 December for each foreign entity.

6. 6Report changes

   Report further commitments, disinvestment or restructuring within the set timelines.