Annual Performance Report under FEMA

Introduction

The Annual Performance Report (APR) is a statutory regulatory document under the FEMA (Foreign Exchange Management) Act, 1999. Every Indian party, Joint Ventures and Wholly Owned Subsidiaries who received FDI (Foreign Direct Investment) with more than 10% of equity capital, mandatory this report to the authority. This report filing aids to track the transactions includings the use and foreign capital performance, and also monitor if the foreign exchanges are done under the regulations or not.

However, filing Annual performance reports should be duly signed and submitted on the offline mode where all the relevant documents must be completed. It can be a complex procedure therefore having a better understanding over the APR filing is essential. In this article we will get a thorough knowledge including its requirements, exemptions, instructions to file, due date, process and sample of the format that make the filing procedure more simpler.

What is the Annual Performance Report?

The Annual Performance Report (APR) is a vital document according to the FEMA guidelines for every Indian entity who holds FDI (Foreign Direct Investment) or have oversea JVs (Joint Ventures) or WOS (Wholly Owned Subsidiaries). This report helps to monitor the performance and the financial status of the foreign entities that ensure the oversea investments are properly supervised and monitored with theIndian Regulatory framework.

APRs are required in accordance with Regulation 15 of the FEMA (Transfer or Issue of any Foreign Securities) Regulations, 2004, for every Indian entity with an Overseas Direct Investment (ODI).

Who Required to File APR?

According to the FEMA Act following entities are mandatory to file Annual Performance Report (APR):

• When an individual resident in India acquires equity capital in a foreign entity that is counted as ODI, the individual shall submit an APR for each foreign entity every year during the period during which the individual is invested in that foreign entity.
• Joint Ventures (JVs) and Wholly Owned Subsidiaries (WOS) that are owned or operated by Indian companies or LLPs outside must submit an Annual Performance Report (APR) detailing their financial performance.

Exemptions for Filing Annual Performance Report (APR)

Here is the exemptions for filing Annual Performance Report is mentioned below:

1. Any Indian resident person who holds less than 10% of the equity capital without control in the foreign entity and there are no any financial commitments other than by way of equity capital no need to file APR.
2. In the case that the foreign entity is undergoing liquidation, starting from the date the process was commenced.
3. In the case of a broken period (i.e. a full year that wasn't completed) at the time of disinvestment. If any transactions were undertaken between the date of submission of the last APR and the date of disinvestment/initiation of liquidation process, they must be reported on Form FC.

Instruction to Filing Annual Performance Report

• A certificate indicating the statutory period from an independent Chartered Accountant / Public Accountant of the host country.
• The Indian promoter must submit the APR in duplicate to the RBI and the Ministry of Commerce, New Delhi.
• Additional sheets may be attached if the space available against a particular item is not sufficient.
• Use Capital letters during filing the APR.
• Provide comparable INR for FC based on the actual conversion date.
• If a separate breakdown of overdue amounts (principal and interest) is not available, provide the total only.
• Describe the reasons for non-satisfactory performance and corrective actions taken, outstanding entitlements and steps to realize them, not meeting non-equity export targets and non-realization of proceeds, overdue loans and actions to point them (including guarantee invocation circumstances), foreign investment projections versus actual amounts brought into India and explanations for shortfall, and any particular features of the JV/WOS that are essential, which includes disinvestment or liquidation developments.
• According to the NIC 1987 and NIC 2008, the activity code should be furnished.
• The date may be mentioned in format DD/MM/YYYY format.
• The name of the foreign currency (FCY) should be mentioned as per SWIFT code.
• Each page of the Form FC should be duly signed and stamped with date by the person resident in India submitting the same.
• All amounts of foreign currency (FCY) and Indian Rupees (INR) must be in actuals only.

Due Date to File Annual Performance Report (APR)?

Foreign entities are required to file the Annual Performance Report (APR) before December 31st of every financial year, and where the accounting year ends on December 31st, the report must be filed by December 31st the next year. If there is any delay or non-filing of the Annual Performance Report (APR) before the timeline is treated as a violation of FEMA and may cause high penalties.

How to file Annual Performance Report (APR)?

The Annual Performance Report (APR) under the FEMA Act is mainly submitted in physical mode. This procedure involves filing an APR form in duplicate to the relevant Regional Office of the RBI (Reserve Bank of India) or Authorized bank with all the relevant documents. A duplicate copy of this report was also submitted to the Ministry of Commerce, Indian Government.

The RBI's FIRMS (Foreign Investment Reporting and Management System) portal, an online platform managed by the RBI, can be used to submit some FEMA-related filings electronically, such as Form ODI (Overseas Direct Investment), due to the increasing digitization of compliance processes.

Sample format of Annual Performance Report (APR) under FEMA

Please refer to the official RBI guidelines or contact Bizfoc for a detailed sample format of the APR.

Why Bizfoc?

Bizfoc provides a comprehensive professional guidance over APR filing that guarantees compliance with FEMA guidelines. Our service includes:

• Expert Guidance: Our professional team will provide expert and detailed advice over APR form filing accurately that covers each required information.
• Document Preparation: Our expert team helps you to collect and prepare all the necessary documents that make your procedure more fluent.
• Form Submission: We have a number of experienced team members who ensure timely and accurate filing that also avoids hefty penalties.

Connect with us and make your Annual performance report filing procedure easier and penalty free.

Conclusion

The APR (Annual Performance Report) filing is a crucial component to monitor foreign investment as per the FEMA Act. It is mandatory to file via every Indian company who engages with foreign investment. Therefore having a better understanding of the requirements, due date and procedure that involves in APR filing is essential to ensure smooth operations. Companies can navigate the complexities of foreign investments with confidence if they follow the guidelines and seek expert assistance when necessary.

Frequently Asked Questions