Annual FLA with RBI

Overview of Foreign Liabilities And Assets

In order to grab the ocean of opportunities in the global economy, the industries have expanded themselves enough on the global platform. This expansion has exposed the companies under these industries to the multiple compliances of the Foreign Exchange and, Management Act, 1999. One such Compliance is Foreign Liabilities and Assets (FLA) with the Reserve Bank of India (RBI).

It is an annual form that needs to be submitted by all the companies who have received any Foreign Direct Investment (FDI) or have made any Overseas Direct Investment (ODI) in the previous financial year.

Eligibility Criteria For Foreign Liabilities And Assets

Every Indian Company, who have received any Foreign Direct Investment (FDI) from abroad and/or have made any Overseas Direct Investment (ODI) in the previous year is required to submit the annual return on Foreign Liabilities and Assets (FLA).

In case of Registered Partnership Firms (Registered under Partnership Registration Act) or branches or trustees, who have any Outward Foreign Direct Investment (FDI) outstanding as on the end- March of the said previous year, is required to file the excel based FLA Return.

However, the procedure for filing of the FLA is different for the Partnership Firms. In case of Partnership Firms or branches or trustees, they are required to send a request mail, in order to get a dummy CIN Number in order to enable such firms to file the excel based FLA Return with the RBI. Once allotted with dummy CIN Number the same can be used to file the excel based FLA Return in the prospective years. 

It is to be noted that the CIN so provided by the RBI, can exclusively be used for the purpose of filing the Excel-based FLA Return only. 

The Reserve Bank of India (RBI) on 30th Dec 2015 vide Notification No. FEMA.351/2015 RB, made it compulsory for all the Limited Liability Partnerships (LLPs) in India, that have received FDI and/or made FDI abroad (i.e., overseas investment) in the previous year(s) as well as in the current year, shall submit the FLA return to the Reserve Bank of India by July 15 every year.   

As the LLPs do not have CIN, they must enter ‘A99999AA9999LLP999999’ against CIN in the FLA Return.

Scenarios For Non-Filing of FLA Return

Following are the cases in which there is no need to file the FLA Return:

• If the Indian Company does not have any Outstanding Investment in respect of Inward or Outward Foreign Direct Investment as on the end of the March of the reporting year.
• If the company have received only share application money and does not have any foreign direct investment or overseas direct investment as on the end of the March of the reporting year.
• If all non-resident shareholders of a company have transferred their shares to the residents during the reporting period and the company does not have any outstanding investment in respect of inward and outward FDI as on end-March of reporting year.
• Shares issued by reporting company to non-resident on non-Repatriable basis should not be considered as foreign investment; therefore, companies which have issued the shares to non-resident only on non-Repatriable basis, is not required to submit the FLA Return.

Due Date If Filing of FLA Return

The due date of filing of FLA Return if 15th of July every year.

NOTE: If in case the Books of Accounts of the Company has not been audited by the date of submission of FLA Return, the same could be submitted by filing it on provisional basis and can subsequently be revised once the books of accounts get audited, by the end of the September.

Non-filing of the return before the due date will be treated as a violation of FEMA and a penalty clause may be invoked for violation of the same.

Procedure for Submission of the FLA Return

Earlier the FLA Return was submitted in the form of an excel via email id of any authorized person for instance CFO, Director, Company Secretary, etc. Any other related attachments were mailed along with it.

However, the Reserve Bank of India (RBI) on 28th June 2019 vide RBI/2018-19/226 A.P. (DIR Series) Circular No. 37, replaced the email-based system with the web-based system online reporting portal, the same to be known as Foreign Liabilities and Assets Information Reporting (FLAIR) System.

Following are the main features of the revised Foreign Liabilities and Assets Information Reporting (FLAIR) System:

• Reserve Bank would provide a web-portal interface https://flair.rbi.org.in to the reporting entities for submitting the “User Registration Form” (containing entity identification and business user details, where LLPs and AIFs will no longer require to use dummy CIN). The successful registration on web portal will enable users to generate RBI-provided login name and password for using FLA submission gateway and would include system-driven validation checks on submitted data.
• The form will seek investor-wise direct investment and other financial details on fiscal year basis as hitherto, where all reporting entities are required to provide information on FATS-related variables (it was mandatory only for subsidiary companies earlier). In addition, the revised form seeks information on the first year of receipt of FDI/ODI and disinvestment.
• Reporting entities will get a system-generated acknowledgment receipt upon successful submission of the form.
• They can revise the data if required, and view/download the information submitted
• Entities can submit FLA information for earlier year/s after receiving RBI confirmation on their request email.
• The existing mechanism of email-based submission of FLA forms will be discontinued.