APR Filing in Case of ODI under FEMA

APR Filing in Case of ODI under FEMA . In India, Just like Foreign Director Investment (FDI) Reporting under FCGPR/FCTRS etc  under the Foreign Exchange Management Act (FEMA) 1999, The Annual Performance Report (APR) is also a major compliance document mandated for tracking overseas investments (ODI) made by Indian entities or Individuals, having a significant role in maintaining the transparency and adherence to RBI regulations, allowing the Reserve Bank of India (RBI) to monitor outbound investments and maintain financial stability.
The reporting period in the APR should clearly specify the start and end dates (e.g., from April 1 to March 31 or as applicable) and the applicant must declare whether the Indian Entity (IE), Resident Individual (RI), Trust, or Society has “control” over the foreign entity. Control refers to the ability to appoint the majority of directors or influence management decisions.
Purpose of filing APR with AD Bank/RBI
The APR form is designed to provide a detailed overview of the performance of overseas investments or ODI made by Indian Parties (IP) and Resident Individuals (RI) and the key objectives include:
-Monitoring investments in Joint Ventures (JVs) and Wholly Owned Subsidiaries (WOS) to ensure compliance with FEMA regulations.
-Facilitating data accuracy and transparency in international financial transactions.
-Enhancing the stability of India’s financial ecosystem by ensuring regulated capital outflows. 
Applicability of APR Filing under ODI 
Indian Party (IP) or Resident Individual (RI) making Overseas Direct Investment (ODI) is required to file the APR for each foreign entity.
What Qualifies as ODI?
-Acquisition of unlisted equity capital in a foreign entity.
-Investment in 10% or more of the paid-up equity capital of a listed foreign entity.
-Holding less than 10% equity but having control over the management or policies of a listed foreign entity. 
Exemptions: No filing is required if:
-The holding is less than 10% equity without control.
-The foreign entity is under liquidation. 
Filing Requirements under ODI 
1. Deadline: APR must be filed annually by December 31. For entities with their financial year ending December 31, the APR is due by the same date in the following year.
2. Form and Submission: APR is submitted using Form ODI Part-II, available on the RBI website, to the Authorized Dealer (AD) Bank.
3. Documentation:
-Audited financial statements of the foreign JV/WOS.
-Certificates from statutory auditors or self-certifications in specific cases.
-Shareholding details and capital structure.
-Operational and repatriation details.
4. Audited or Unaudited Accounts: If the host country does not mandate audited accounts, unaudited financials may be submitted, subject to certification by statutory auditors. 
Penalties for Non-Compliance for non filing of APR 
Failure to file the APR on time constitutes a violation of FEMA and may lead to:
-Monetary penalties up to 300% of the investment amount in severe cases.
-Legal consequences, including additional scrutiny and restrictions on future investments.
-Reputation risks for businesses and individuals. 
You can download the format of APR Form here
Procedure for Filing APR
Step-1: Preparation:
-Gather financial statements and other supporting documents.
-Ensure audited or certified unaudited accounts are ready. 
Step-2: Filing Process:
-Complete Form ODI Part-II with accurate details of the foreign entity and investment.
-Submit the form to the AD Bank along with all required documents. 
Step-3: Certification: Obtain certifications from statutory auditors or self-certify where permissible.
Step-4: Acknowledgment: Ensure receipt of acknowledgment from the AD Bank for future reference.
Benefits of Timely Filing
-Avoids penalties and demonstrates adherence to FEMA regulations.
-Enhances the credibility of investments through detailed reporting.
-Provides an opportunity to assess the performance of overseas ventures and make informed decisions. 
Challenges in APR Filing
-Collecting financials and ensuring their accuracy can be resource-intensive.
-Managing compliance across multiple jurisdictions and stakeholders.
-Failure to meet deadlines leads to severe penalties, making timely preparation essential. 
Top 10 FAQs on Annual Performance Report (APR) Filing Based on Form APR
Q1. Who needs to file an APR, and when is it due? 
Ans. Any Indian Party (IP) or Resident Individual (RI) who has made an Overseas Direct Investment (ODI) in a foreign entity must file an APR. The due date is December 31 every year. If the foreign entity’s financial year ends on December 31, the APR must be submitted by December 31 of the following year.
Q2. What qualifies as ODI, and are there any exemptions from filing the APR? 
Ans. ODI includes:
-Acquisition of unlisted equity capital.
-Holding 10% or more of paid-up equity capital in a listed foreign entity.
-Holding less than 10% equity but having control over the foreign entity. 
Exemptions:
-Holding less than 10% equity without control.
-When the foreign entity is under liquidation.
Q3. What financial and operational details need to be reported in the APR? 
Ans. The APR must include:
-Capital structure: Details of equity held by Indian and foreign stakeholders.
-Financial performance: Net profits/losses, net worth, and dividends for the last two years.
-Repatriation details: Dividends, royalties, consultancy fees, and other returns, both for the current year and since the entity’s inception.
Q4. What are the requirements for reporting Step-Down Subsidiaries (SDS)? 
Ans. If the foreign entity has SDS, the following details must be provided:
-Name, jurisdiction, and level of the SDS.
-Parent entity information.
-Investment amounts, activity codes, and stake held.
-Details of setup, acquisition, or winding-up during the reporting year.
Q5. Are audited financial statements mandatory for filing the APR? 
Ans. Yes, audited financial statements are generally required. If the host country does not mandate audits and there is no control by the Indian entity, unaudited financials certified by statutory auditors or chartered accountants may be submitted.
Q6. What role does the Authorized Dealer (AD) Bank play in the APR process? 
Ans. The AD Bank:
-Verifies share certificates or equivalent investment documents.
-Confirms the authenticity of the submitted APR.
-Ensures that all prior APRs have been filed before accepting the current one.
Q7. What specific declarations are required from the filer? 
Ans. The filer must confirm:
-Shareholding changes and SDS-related transactions have been reported.
-That all dues receivable from the foreign entity have been repatriated to India.
-That share certificates or equivalent documents have been submitted to the AD Bank within six months of remittance.
Q8. What instructions must be followed when completing the APR? 
Ans. Key instructions include:
-Use DD/MM/YYYY format for dates.
-Report all amounts in the same foreign currency (FCY) using actuals.
-Figures for “Since Commencement of Business” must equal or exceed “Current Year” figures.
-Ensure the form is signed and stamped on every page.
Q9. What happens if multiple Indian residents have invested in the same foreign entity? 
Ans. If multiple residents hold stakes in the same foreign entity, the individual with the highest stake must file the APR. In cases of equal stakes, the APR may be filed jointly, or one investor can be authorized to file on behalf of the others.
Q10. What are the consequences of non-compliance with APR filing? 
Ans. Failure to file the APR or providing incorrect information is treated as a violation under FEMA. Consequences include:
-Penalties up to 300% of the investment amount.
-Restrictions on future investments.
-Legal and reputational risks. 
Therefore, The Annual Performance Report (APR) is indispensable for entities engaged in overseas investments, serving as a most important compliance mechanism under FEMA RBI Compliance. By providing detailed insights into the performance of foreign investments, the APR ensures transparency, accountability, and alignment with regulatory requirements. Indian investors must prioritize timely filing to safeguard their investments, avoid penalties, and strengthen their global financial standing. Connect with the expert team at Compliance Calendar LLP for comprehensive FEMA advisory services, including FDI Reporting, ODI Reporting, Valuation under FEMA, ODI by Individuals under the LRS Scheme, FLA Reporting, and other critical FEMA compliances in India. We ensure seamless transactions with utmost transparency and compliance.

In India, Just like Foreign Director Investment (FDI) Reporting under FCGPR/FCTRS etc under the Foreign Exchange Management Act (FEMA) 1999, The Annual Performance Report (APR) is also a major compliance document mandated for tracking overseas investments (ODI) made by Indian entities or Individuals, having a significant role in maintaining the transparency and adherence to RBI regulations, allowing the Reserve Bank of India (RBI) to monitor outbound investments and maintain financial stability.

The reporting period in the APR should clearly specify the start and end dates (e.g., from April 1 to March 31 or as applicable) and the applicant must declare whether the Indian Entity (IE), Resident Individual (RI), Trust, or Society has “control” over the foreign entity. Control refers to the ability to appoint the majority of directors or influence management decisions.

Purpose of filing APR with AD Bank/RBI

The APR form is designed to provide a detailed overview of the performance of overseas investments or ODI made by Indian Parties (IP) and Resident Individuals (RI) and the key objectives include:

-Monitoring investments in Joint Ventures (JVs) and Wholly Owned Subsidiaries (WOS) to ensure compliance with FEMA regulations.

-Facilitating data accuracy and transparency in international financial transactions.

-Enhancing the stability of India’s financial ecosystem by ensuring regulated capital outflows.

Applicability of APR Filing under ODI

Indian Party (IP) or Resident Individual (RI) making Overseas Direct Investment (ODI) is required to file the APR for each foreign entity.

What Qualifies as ODI?

-Acquisition of unlisted equity capital in a foreign entity.

-Investment in 10% or more of the paid-up equity capital of a listed foreign entity.

-Holding less than 10% equity but having control over the management or policies of a listed foreign entity.

Exemptions: No filing is required if:

-The holding is less than 10% equity without control.

-The foreign entity is under liquidation.

Filing Requirements under ODI

1. Deadline: APR must be filed annually by December 31. For entities with their financial year ending December 31, the APR is due by the same date in the following year.

2. Form and Submission: APR is submitted using Form ODI Part-II, available on the RBI website, to the Authorized Dealer (AD) Bank.

3. Documentation:

-Audited financial statements of the foreign JV/WOS.

-Certificates from statutory auditors or self-certifications in specific cases.

-Shareholding details and capital structure.

-Operational and repatriation details.

4. Audited or Unaudited Accounts: If the host country does not mandate audited accounts, unaudited financials may be submitted, subject to certification by statutory auditors.

Penalties for Non-Compliance for non filing of APR

Failure to file the APR on time constitutes a violation of FEMA and may lead to:

-Monetary penalties up to 300% of the investment amount in severe cases.

-Legal consequences, including additional scrutiny and restrictions on future investments.

-Reputation risks for businesses and individuals.

You can download the format of APR Form here

Procedure for Filing APR

Step-1: Preparation:

-Gather financial statements and other supporting documents.

-Ensure audited or certified unaudited accounts are ready.

Step-2: Filing Process:

-Complete Form ODI Part-II with accurate details of the foreign entity and investment.

-Submit the form to the AD Bank along with all required documents.

Step-3: Certification: Obtain certifications from statutory auditors or self-certify where permissible.

Step-4: Acknowledgment: Ensure receipt of acknowledgment from the AD Bank for future reference.

Benefits of Timely Filing

-Avoids penalties and demonstrates adherence to FEMA regulations.

-Enhances the credibility of investments through detailed reporting.

-Provides an opportunity to assess the performance of overseas ventures and make informed decisions.

Challenges in APR Filing

-Collecting financials and ensuring their accuracy can be resource-intensive.

-Managing compliance across multiple jurisdictions and stakeholders.

-Failure to meet deadlines leads to severe penalties, making timely preparation essential.

Top 10 FAQs on Annual Performance Report (APR) Filing Based on Form APR

Q1. Who needs to file an APR, and when is it due?

Ans. Any Indian Party (IP) or Resident Individual (RI) who has made an Overseas Direct Investment (ODI) in a foreign entity must file an APR. The due date is December 31 every year. If the foreign entity’s financial year ends on December 31, the APR must be submitted by December 31 of the following year.

Q2. What qualifies as ODI, and are there any exemptions from filing the APR?

Ans. ODI includes:

-Acquisition of unlisted equity capital.

-Holding 10% or more of paid-up equity capital in a listed foreign entity.

-Holding less than 10% equity but having control over the foreign entity.

Exemptions:

-Holding less than 10% equity without control.

-When the foreign entity is under liquidation.

Q3. What financial and operational details need to be reported in the APR?

Ans. The APR must include:

-Capital structure: Details of equity held by Indian and foreign stakeholders.

-Financial performance: Net profits/losses, net worth, and dividends for the last two years.

-Repatriation details: Dividends, royalties, consultancy fees, and other returns, both for the current year and since the entity’s inception.

Q4. What are the requirements for reporting Step-Down Subsidiaries (SDS)?

Ans. If the foreign entity has SDS, the following details must be provided:

-Name, jurisdiction, and level of the SDS.

-Parent entity information.

-Investment amounts, activity codes, and stake held.

-Details of setup, acquisition, or winding-up during the reporting year.

Q5. Are audited financial statements mandatory for filing the APR?

Ans. Yes, audited financial statements are generally required. If the host country does not mandate audits and there is no control by the Indian entity, unaudited financials certified by statutory auditors or chartered accountants may be submitted.

Q6. What role does the Authorized Dealer (AD) Bank play in the APR process?

Ans. The AD Bank:

-Verifies share certificates or equivalent investment documents.

-Confirms the authenticity of the submitted APR.

-Ensures that all prior APRs have been filed before accepting the current one.

Q7. What specific declarations are required from the filer?

Ans. The filer must confirm:

-Shareholding changes and SDS-related transactions have been reported.

-That all dues receivable from the foreign entity have been repatriated to India.

-That share certificates or equivalent documents have been submitted to the AD Bank within six months of remittance.

Q8. What instructions must be followed when completing the APR?

Ans. Key instructions include:

-Use DD/MM/YYYY format for dates.

-Report all amounts in the same foreign currency (FCY) using actuals.

-Figures for “Since Commencement of Business” must equal or exceed “Current Year” figures.

-Ensure the form is signed and stamped on every page.

Q9. What happens if multiple Indian residents have invested in the same foreign entity?

Ans. If multiple residents hold stakes in the same foreign entity, the individual with the highest stake must file the APR. In cases of equal stakes, the APR may be filed jointly, or one investor can be authorized to file on behalf of the others.

Q10. What are the consequences of non-compliance with APR filing?

Ans. Failure to file the APR or providing incorrect information is treated as a violation under FEMA. Consequences include:

-Penalties up to 300% of the investment amount.

-Restrictions on future investments.

-Legal and reputational risks.

Therefore, The Annual Performance Report (APR) is indispensable for entities engaged in overseas investments, serving as a most important compliance mechanism under FEMA RBI Compliance. By providing detailed insights into the performance of foreign investments, the APR ensures transparency, accountability, and alignment with regulatory requirements. Indian investors must prioritize timely filing to safeguard their investments, avoid penalties, and strengthen their global financial standing. Connect with the expert team at Compliance Calendar LLP for comprehensive FEMA advisory services, including FDI Reporting, ODI Reporting, Valuation under FEMA, ODI by Individuals under the LRS Scheme, FLA Reporting, and other critical FEMA compliances in India. We ensure seamless transactions with utmost transparency and compliance.