A seed-stage fintech startup received ₹18 lakh from a US-based angel investor in exchange for equity. The allotment was made, the shares were issued, and the FIRC (Foreign Inward Remittance Certificate) was obtained from the bank. What did not happen: the FC-GPR was not filed on the FIRMS portal within 30 days of the allotment. By the time the founders became aware of the filing requirement, 47 days had passed. The 30-day window had closed.
Under Regulation 4 of the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019, a company that allots shares to a non-resident must file Form FC-GPR on the RBI's FIRMS portal within 30 days of the allotment. Failure to file is a contravention of FEMA — regardless of intent.
What FC-GPR Is and Why It Is Missed
FC-GPR (Foreign Currency — Gross Provisional Return) is the reporting mechanism by which Indian companies notify the Reserve Bank of India of foreign equity investment. When a non-resident investor puts money into an Indian company and receives shares, the company must file the FC-GPR with the details: the investor's identity, the remittance amount, the number of shares allotted, the price per share, and a valuation certificate confirming the price is not less than the fair market value.
The filing is missed for one consistent reason: founders are not told about it. Their bank processes the inward remittance and issues the FIRC. The investor receives the share certificate. Nothing in the banking process prompts the FC-GPR filing. The founders assume that receiving the money and issuing the shares is the end of the process. It is not — it is the trigger for a separate regulatory obligation.
The Compounding Process
A late FC-GPR is a FEMA contravention. The prescribed remedy is compounding — a process by which the company applies to the RBI's Compounding Authority (CEFA — Cell for Effective implementation of FEMA) to compound the contravention for a fee. Compounding extinguishes the contravention upon payment and removes any ongoing enforcement risk.
Step 1 — Late FC-GPR Filing on FIRMS
The first action was to file the FC-GPR on the FIRMS portal even though the 30-day window had elapsed. The portal accepts late filings. The filing was completed with all required documents: board resolution for allotment, FIRC, valuation certificate, and investor KYC documents. The system flags the late filing automatically.
Step 2 — Valuation Certificate
The allotment price must be at or above the FMV determined by a DCF valuation or net asset value method. A SEBI-registered merchant banker's valuation certificate was required for a private company in the fintech space. We coordinated the valuation report, backdated to the allotment date.
Step 3 — Compounding Application to RBI
A compounding application was filed with CEFA. The application disclosed the facts of the contravention, the amount of foreign investment, the date of allotment, the date of filing, and the period of default (17 days beyond the 30-day window). The application included all supporting documents and a covering letter explaining the circumstances.
Step 4 — Compounding Order and Payment
CEFA issued a compounding order calculating the penalty amount based on the investment amount and period of default. The penalty was paid by demand draft within the prescribed period. The compounding order was received, confirming that the contravention was compounded and closed.
The Outcome
Result
- FC-GPR filed on FIRMS portal — allotment formally reported to RBI
- Compounding application accepted by CEFA within 3 weeks of submission
- Penalty paid — compounding order received confirming contravention closed
- No enforcement action, no ongoing RBI proceeding
- Foreign investment formally on record — company clear for next funding round
Key Points for Any Company Receiving Foreign Investment
- 01
FC-GPR is triggered by allotment, not by remittance.
The 30-day clock starts from the date of allotment of shares — not from the date money arrives in the bank account. If the allotment is made on Day 1, the FC-GPR must be filed by Day 30, even if the FIRC arrives later.
- 02
A valuation certificate is mandatory.
Shares cannot be allotted to a foreign investor at a price below the FMV determined by a prescribed method. For a private limited company, this requires either a DCF valuation or a net asset value computation, documented in a certificate signed by a SEBI-registered merchant banker or Chartered Accountant.
- 03
Late filing can be remediated through compounding.
A missed deadline does not create a permanent violation. The compounding process resolves the contravention for a calculable penalty. The sooner compounding is initiated, the lower the penalty — delay compounds the penalty, not just the violation.
- 04
Every subsequent round needs its own FC-GPR.
FC-GPR is required for each allotment to a non-resident investor. Multi-tranche rounds require separate filings at each tranche. FLA (Foreign Liabilities and Assets) return must also be filed annually by 15 July.