External Commercial Borrowings (ECB) are loans raised by Indian Companies from Foreign Banks or Foreign Body Corporates by Indian Companies, these loans are mainly raised in foreign Currency. Loans Raised by Indian Companies from Foreign Body Corporates or Banks are governed under ECB Framework of Reserve Bank of India and Required Returns are required to be submitted to AD-Bank in India, AD Bank Thereafter send the returns to DSIM
As per the ECB guidelines of the Reserve Bank of India, ECB Returns are required to submit to AD Bank within 7 days of the close of the Monthly.
ECB RETURN
Time Limit for Submission of ECB-2 Return
Within 7 Days of the close of the Month, say ECB-2 return for the Month of June 21 should be Submitted by 7th of July 21
Late Submission of ECB-2 Return
Entities that have not filed the ECB Return to AD Bank may also submit ECB Return after the due date with payment of the Late Submission Fee(LSF)
Late Submission Fee For ECB-2 Return
Sr. No.
Type of Return
Period of Delay
Applicable Late Submission Fee
1.
Form ECB 2
Up to 30 calendar days from the due date of submission
INR 5,000
2.
Form ECB 2
Up to three years from the due date of submission
INR 50,000 per year
3.
Form ECB 2
Beyond three years from the due date of submission
INR 100,000 per year
What is ECB-2 Form
ECB-2 is prescribed form under ECB guidelines under which ECB Return is required to be submitted to RBI
How to Submit ECB Return
ECB Return is required to be submitted Physically to AD Bank Branch designated by AD Bank , you can ask your AD Bank the branch where you need to submit the return and submit accordingly and also you can email the soft copy of return within due date to desigmated officer of AD bank.
Last date for submission of FLA return to RBI extended to 14th August 2020 this was due to technical errors stakeholders are facing for filing and browsing the website flair.rbi.org.in
The original date for filing the FLA return to RBI is 15th July of every year this was further extended to 31st of July 2020
As per the information available on the flair portal of RBI for submission of the foreign asset and liabilities returns for the entities holding foreign investment and liabilities is now been extended to 31st July 2020.
All entities can file a return to the RBI for Foriegn Assets and Liabilities on or before 31st July 2020
Investment in India by Foreign Company will be in accordance with FDI Policy in India, so foreign nationals incorporating a company in India are required to check out the required permission ( how much FDI is allowed in India for particular Sector ) under the Foreign Direct Investment (FDI ) policy If we take an example of Technology Company, FDI policy permits 100% FDI policy under Automatic route.
1. Automatic Route
2. Approval Route
#1. Automatic Route: In this route, prior approval of Government is not required, the only intimation is required to RBI in the Form FC-GPR, FDI Policy provides sectors where FDI is allowed at what percentage of Equity Capital of the Company.
#2. Approval Route: This is route prior approval of government is required, where FDI is allowed under approval route under FDI Policy.
Foreign Nationals Company Incorporation Procedure :
With the Increase ranking of India in ease of doing business, Company Incorporation Process is the main reason due to governments efforts on simplification process in registering or setting up a company in India, Here is a step by step guide on setting up a company by Foreign Companies :
#1. Getting the Documents Notarized and Apostle of Foreign Nationals :
Indian companies Act requires that the Documents for foreign Directors and Foreign Investor or Shareholders should be notarised and Apostle, Documents may also be signed in India if the applicant is in India on Business Visa. Documents of foreign entities like
Certificate of Incorporation
Charter documents like MOA AOA,
Resolution by Board of Directors of Foreign Entities should be all in English Language and certified translated copy in English copy along with Notarised and apostle.
Foreign Nationals Company Incorporation
#2. Indian Resident Director:
Indian companies act requires that every company in India should have at least on resident Director who is resident in India during the financial year, we at Fastlegal provides resident Director appointment services in India, you may avail our services if you do not have your own person.
#3. Registered Office Address for Company :
Every Company in India should have a Registered Office Address situated in India, you need to have one place as a Registered Office address. Fast legal helps in getting the registered Office address.
#4. Name Approval Application
Company name approval application is required to be made for availability of name of the company, the company name should be unique, no other company or LLP or trademark should be already there.
#5. Digital Signatures of Directors and Subscribers ( Foreign Nationals and Indian Resident Director ):
We need to obtain a digital signature in the name of Directors and shareholders from certifying authorities in India, Fastlegal team members help in getting the DSC. DSC is required for signing the incorporation documents that are required to be submitted to the Registrar of companies.
#6. Application for Incorporation of Company :
Once all the required documents of foreign nationals and Indian Resident Director are fine and digital signatures have been obtained than incorporation application is required to be submitted. All applications are verified by the registrar of companies and once he is satisfied with all the particulars of the application, he MCA issues a certificate of incorporation to the company.
#7. Company Bank Account :
The company bank account is now mandatory Opened along with the Incorporation application, Indian Company may open a separate Bank Account also.
#8. Funding of Subscription Money into company bank account :
Now subscription money for equity capital is required to be invested into the company by the subscribers to the company.
#09. Filing of Form FC-GPR to RBI
#10. Application for GST Registration
#11. Filing of Business Commencement Application to ROC
Once the Subscription money is entered in Companies Bank Account, the company is required to file business commencement application to Registrar of Companies online
Documents Required for Incorporation of Company by Foreign Nationals :
Apostle and Notarized Signed Documents are required for foreign Shareholders and Directors.
For companies it will be :
Certificate of Incorporation,
Memorandum of Association,
Articles of Association,
Board Resolution duly passed for entering and forming Company in India and
for Foreign Directors :
Passport Copy,
Driving Licence and
Current Address proof in the form of a Bank Statement is required.
Please email us at mail@fastlegal.in or place your request below for your company formation requirements in India
In view of the recent change in reporting platform for submission of FLA return, the last date for filing the FLA return for 2018-19 has been extended to July 31, 2019 for convenience of reporting this year.
Foreign Companies Setting up Branch Office(BO), Project Office (PO) and Liaison Office (LO) in India is required to make application to AD category Banks through which it wishes to peruse Banking Operations
Eligibility Criteria for Setting up Branch Office / Project Office or Liaison Office in India
The Applicant Company Should be Body Corporate Incorporated Outside India
For Branch Office — a profit making track record during the immediately preceding five financial years in the home country and net worth of not less than USD 100,000 or its equivalent.
For Liaison Office — a profit making track record during the immediately preceding three financial years in the home country and net worth of not less than USD 50,000 or its equivalent.
Note: An applicant that is not financially sound and is a subsidiary of another company may submit a Letter of Comfort (LOC) (Annex A) from its parent/ group company, subject to the condition that the parent/ group company satisfies the prescribed criteria for net worth and profit.
Net worth :
Net Worth [total of paid-up capital and free reserves, less intangible assets as per the latest Audited Balance Sheet or Account Statement certified by a Certified Public Accountant or any Registered Accounts Practitioner by whatever name called].
Cases in Which RBI Approval is required for Setting up Branch Office(BO), Project Office (PO) and Liaison Office (LO) in India
The applicant is a citizen of or is registered/incorporated in Pakistan;
The applicant is a citizen of or is registered/incorporated in Bangladesh, Sri Lanka, Afghanistan, Iran, China, Hong Kong or Macau and the application is for opening a BO/LO/PO in Jammu and Kashmir, North East region and Andaman and Nicobar Islands;
The principal business of the applicant falls in the four sectors namely Defence, Telecom, Private Security and Information and Broadcasting.
The applicant is a Non-Government Organisation (NGO), Non-Profit Organisation, Body/ Agency/ Department of a foreign government.
Procedure for making Application to AD-Category Bank for Setting up Branch Office(BO), Project Office (PO) and Liaison Office (LO) in India
If the Applicant Company fulfills the above mentioned eligibility Criteria , the Application can be made to AD category Bank through which applicant company wishes to peruse Banking Relations
The Application shall be made in Form Form FNC to a designated AD Category – I bank along with Following Documents :
Copy of the Certificate of Incorporation / Registration; Memorandum of Association and Articles of Association attested by the Notary Public in the country of registration.
[If the original Certificate is in a language other than in English, the same may be translated into English and notarized as above and cross verified/attested by the Indian Embassy/ Consulate in the home country].
Audited Balance sheet of the applicant company for the last three/ five years in case of branch office/liaison office respectively.
[If the applicants’ home country laws/regulations do not insist on auditing of accounts, an Account Statement certified by a Certified Public Accountant (CPA) or any Registered Accounts Practitioner by any name, clearly showing the net worth may be submitted]
Bankers’ Report from the applicant’s banker in the host country / country of registration showing the number of years the applicant has had banking relations with that bank.
Power of Attorney in favor of signatory of Form FNC in case the Head of the overseas entity is not signing the Form FNC.
The AD Category-I bank shall after exercising due diligence in respect of the applicant’s background, and satisfying itself as regards adherence to the eligibility criteria for establishing BO/LO/PO, antecedents of the promoter, nature and location of activity of the applicant, sources of funds, etc., and compliance with the extant KYC norms grant approval to the foreign entity for establishing BO/LO/PO in India. The AD Category-I banks may frame appropriate policy for dealing with these applications in conformity with the FEMA Regulations and Directions, However RBI will issue LIN to every BO/LO.
The validity period of an LO is generally for three years, except in the case of Non-Banking Finance Companies (NBFCs) and those entities engaged in construction and development sectors, for whom the validity period is two years only. The validity period of the project office is for the tenure of the project.
Once applicant that has received a permission for setting up of a BO/LO/PO shall inform the designated AD Category I bank as to the date on which the BO/LO/PO has been set up. The AD Category I bank in turn shall inform Reserve Bank accordingly. In case an approval granted by the AD bank has either been surrendered by the applicant or has expired without any BO/LO/PO being set up, the AD Category I bank shall inform RBI accordingly.
Fastllegal provides Business setup Services for foreign Entities in India , companies may contact at mail@fastlegal.in or Place a request athttps://fastlegal.in/place-your-request.html
