Why FEMA is Non-Negotiable for Funded Startups
Almost every startup that raises foreign capital triggers Foreign Exchange Management Act obligations. Violations — even inadvertent ones — attract compounding penalties. Timely and correct filings are not optional.
FEMA contraventions can attract penalties up to 3x the sum involved. Delayed FC-GPR filings have resulted in significant penalties for startups that assumed these were routine admin tasks.
Inbound Investment — FDI Compliance
When a foreign investor makes an equity investment in an Indian company, the company must file FC-GPR with the RBI within 30 days of share allotment. We manage this entire process — from investment documentation to RBI filing and FEMA valuation certificate.
Secondary Sales — FC-TRS
When an existing shareholder sells shares to a foreign buyer, or a foreign shareholder transfers shares to a resident, FC-TRS filings are required. These are time-sensitive and require specific documentation.
Overseas Direct Investment (ODI)
Indian companies establishing overseas subsidiaries must comply with ODI regulations — structure approval, annual performance reports, and ongoing reporting obligations.
External Commercial Borrowings (ECB)
Offshore debt raising through ECBs requires automatic route compliance, LRN assignment, and monthly ECB-2 return filings. We advise on ECB eligibility, end-use restrictions, and all-in cost compliance.