Regulatory Alert: Reporting in Single Master Form & Entity Master Reporting

Vide a circular dated June 07, 2018, RBI has unified the extant disintegrated reporting structure by introducing an online form - ‘Single Master Form’ (SMF) for reporting foreign investment in India. In addition to this, the RBI has also introduced a one-time reporting to be complied with by all Indian companies / limited liability partnerships / start-ups having foreign investment (‘Entity Master Reporting’).

Entity Master Reporting:

• While we wait for the SMF to be released by the RBI, all Indian companies / limited liability partnerships / start-ups (having foreign investment) have to complete the Entity Master Reporting inter alia stating the current total foreign investment in their entities on an interface (which will be available on official website of RBI) w.e.f. June 28, 2018 up to July 12, 2018 (both days inclusive).
• It is pertinent to note that the failure in providing the requisite data on the interface by the above-mentioned entities would be considered as a contravention of the Foreign Exchange Management Act, 1999 & regulations made thereunder. Further, such Indian entities would not be allowed to receive any direct / indirect foreign investment.

SMF Reporting:

• SMF reporting is applicable to all the Indian entities including Indian Companies, Limited Liability Partnerships (LLP), Real Estate Investment Trusts (REITs), Infrastructure Investment Trusts (InvIts) and Alternate Investment Funds (AIFs).
• The term foreign investment includes investment through the Foreign Direct Investment (FDI) mode as well as the Foreign Portfolio Investment (FPI) mode.
• While the final form shall be hosted on the official website of RBI in due course as a part of Master Direction - Reporting under FEMA, 1999, the RBI has provided a format of the SMF.

BDO comments

Mandatory Entity Master Reporting ensures that RBI has knowledge of the amount of reported foreign investment in the economy in a digitized format.

SMF subsumes various forms which are required to be filed for reporting foreign investment (offline / online submission) and may help the RBI improve the back-end compilation of certain statistics.

While format of the SMF has been provided, the platform where the SMF has to be filed & signatories to the SMF are yet awaited is yet to be updated on the official website of RBI.