FEMA filings for a foreign-owned Indian subsidiary

Which FEMA filings does a foreign-owned subsidiary make?

FEMA is the Foreign Exchange Management Act, 1999. It governs how money and shares move between your parent and the Indian company. After incorporation, FEMA reporting is the responsibility of the Indian subsidiary, not the foreign parent: your parent remits the funds and supplies documents and KYC.

PAS-3 is a Companies Act filing rather than a FEMA one. It applies to a fresh allotment of shares, such as a later capital infusion, and not to the subscriber shares issued at incorporation.

What is the sequence for the first capital injection?

1. Your parent remits funds to the company’s Indian bank account, and the bank issues a foreign inward remittance certificate (FIRC).
2. For this first capital injection, the 60-day share allotment rule that applies to a later, fresh issue of shares does not apply, because this is subscription money already committed in the Memorandum of Association at incorporation. Instead, the company issues share certificates for the subscriber shares at the first board meeting, held within 30 days of incorporation.
3. The company files Form FC-GPR on FIRMS within 30 days of allotment.
4. Within 180 days of incorporation, the company files the commencement of business declaration (Form INC-20A), which includes a declaration that the subscription money has been received, supported by a bank statement.

For a later fresh allotment of shares, the board allots shares within 60 days of receiving the money, and the company also files PAS-3 with MCA within 15 days of that allotment.

Our guide on opening a bank account and remitting capital covers the banking side.

What is the valuation certificate and when does it apply?

Shares issued to a non-resident by an unlisted company after incorporation must be priced at or above fair value under an internationally accepted pricing methodology. A Chartered Accountant, a SEBI-registered merchant banker or a cost accountant certifies the value. The RBI Master Direction, updated up to 15 June 2026, says the certificate must not be more than 90 days old at the date of investment.

That 90-day limit matters for timing: a certificate obtained too early can lapse before the money arrives. A valuation certificate is not required for the subscriber shares issued at incorporation.

Which documents go with FC-GPR?

The filing normally draws on these documents:

• board resolution approving the allotment
• FIRC for the remittance
• KYC of the remitter
• valuation certificate
• Company Secretary certificate
• auditor certificate

The subsidiary should keep them together from the day the money arrives, and your parent should ask the bank to confirm the remittance purpose code and the remitter details on the FIRC before you allot shares. A mismatch between the FIRC and the board resolution is a common reason for queries on the filing, and it is far easier to fix before allotment than after. Most delays come from a missing FIRC detail or a valuation certificate that has aged out, not from the form itself.

What is the annual FLA return?

The Foreign Liabilities and Assets return is due on 15 July each year for the preceding financial year. The subsidiary files it on RBI’s FLAIR portal. Every Indian company or LLP that has received foreign investment files it, including in a year with no transactions. Put the date in your compliance calendar; see the annual compliance calendar.

What happens if you miss a deadline?

RBI applies a late submission fee, which depends on the amount involved and the length of the delay.

Filings of this kind are handled with ProLead’s Chartered Accountants and Company Secretaries; see our accounting, tax and compliance service or book a free consultation.

Note: Rules and forms change often. This page is general information, not legal or tax advice. Check the current position with a practising Chartered Accountant or Company Secretary before you act.

General information only, not legal or tax advice. Rules and forms change, so confirm the current position with a practising Chartered Accountant or Company Secretary before you act. See our disclaimer.