A S BANKA ADVISORS

Key Takeaways

• If you are resident in India and hold equity in a foreign entity that counts as overseas direct investment (ODI), you must file an Annual Performance Report (APR) for that entity every year.
• The deadline is 31 December. If your foreign entity closes its accounts on 31 December, its APR is due by 31 December of the next year.
• The APR is filed through your authorised dealer (AD) bank on Form FC, built from the foreign entity’s financial statements for the year.
• You are exempt only in narrow cases: a stake below 10% with no control and no funding beyond equity, an entity in liquidation, or a broken part-year at exit.
• Miss it and the return does not just lapse: it is a FEMA contravention that can be compounded, and an unfiled APR blocks your later cross-border filings and repatriations.

You set up a company in the US, or a holding company in Singapore, or a free-zone entity in the UAE. You sent the money the right way, you got your share certificates, and you moved on to building. A year later you try to bring a dividend home, or make the next investment into that entity, and your bank asks a question you were not expecting: has the APR been filed?

For a lot of founders that is the first time they hear the words Annual Performance Report. This guide explains what the APR is, who has to file it, the 31 December deadline, exactly what goes into it, and what happens if you have missed a year.

What is the Annual Performance Report (APR)?

When an Indian resident invests in a foreign entity in a way that counts as overseas direct investment (ODI), that investment does not end at the remittance. The RBI wants an annual account of how the foreign entity is doing and what money has flowed back to India. That annual account is the APR.

It is filed for each foreign entity, every year, for as long as you stay invested. It is submitted through your AD bank (the bank that handled your outbound investment) on Form FC, and it is based on the foreign entity’s financial statements for the year. Think of it as the yearly health report on your overseas company that keeps your investment on the right side of FEMA.

Who has to file an APR for a foreign subsidiary?

You must file if you are a person resident in India (an Indian company, a resident individual, a trust or a society) that holds equity in a foreign entity reckoned as ODI. That covers the common founder cases:

• An Indian startup that has opened a wholly owned subsidiary abroad.
• A founder who personally holds shares in a foreign company as ODI.
• An Indian company that has taken a stake in a foreign entity along with any loan or guarantee to it.

When more than one Indian resident holds ODI in the same foreign entity, the resident with the highest stake files the APR. If stakes are equal, they file jointly, or one is authorised by the others. One APR per foreign entity, every year.

Who is exempt from filing the APR?

The exemptions are narrow. You do not file an APR only where one of these is true:

• You hold less than 10% of the equity capital, you have no control, and you have no financial commitment other than equity (no loan, no guarantee); or
• The foreign entity is under liquidation; or
• It is a broken period (the year is not complete) at the time you exit. In that case the transactions between your last APR and the exit are reported in Form FC instead.

If you have given the foreign entity a loan or a guarantee, the under-10%-no-control exemption does not apply to you, even if your equity is small.

When is the APR due? The 31 December deadline

The APR is due by 31 December every year, per foreign entity.

There is one wrinkle worth getting right. Where the foreign entity’s accounting year itself ends on 31 December (which is the calendar-year default in the US, the UAE and much of Europe), the APR for that year is due by 31 December of the next year. That extra window exists because the audited or finalised financials for a 31 December year-end are not ready on 31 December itself.

Confirm your foreign entity’s accounting-year end before you assume a date. And note a precondition that catches people out: you cannot file this year’s APR while a previous year’s APR is still outstanding. If you have skipped a year, that gap has to be cleared first.

What information goes into the APR?

The APR is built from the foreign entity’s financial statements plus your own records of money that moved between the two countries. At a high level it captures:

Two record-keeping duties sit alongside the APR and are worth checking in the same review, because the APR declaration confirms them:

• You must submit evidence of investment (share certificates or the local equivalent) to your AD bank within six months of sending the money.
• You must realise and repatriate any dues owed to you by the foreign entity within ninety days of them falling due.

Who certifies the APR: audited or unaudited?

There are two paths, and which one applies to you depends on control and on whether the host country requires an audit:

• Audited path: if you control the foreign entity, or the host jurisdiction mandates an audit, the APR rests on the foreign entity’s audited financial statements.
• Certified-unaudited path: if you have no control and the host jurisdiction does not mandate an audit, the APR may rest on unaudited financials, certified as such by the statutory auditor of the Indian entity, or by a CA where a statutory audit does not apply (including for a resident individual).

The certificate is a form field, not a marketing claim. What matters for you is that the numbers are defensible and the person certifying them has actually verified the financials and the repatriation position.

What happens if you miss the APR deadline?

An unfiled or late APR is not a quiet oversight. Three things follow:

• It is a contravention under FEMA. It can be regularised by compounding, but that is a paid, on-the-record process, not a free reset.
• It blocks your next moves. An outstanding APR sits in the way of further overseas remittances, later reporting, and bringing profits home cleanly, which is usually how founders discover the gap in the first place.
• It surfaces in diligence. An investor or acquirer reviewing your group will ask for the APR history of every foreign entity, and a missing year is a red flag on an otherwise clean file.

The good news is that the fix is procedural. Missed years can be brought up to date, and the sooner you start, the smaller the problem.

APR readiness checklist

1. List every foreign entity you hold as ODI, and find the UIN for each.
2. Confirm each entity’s accounting-year end, so you know the exact 31 December that applies.
3. Check whether any prior-year APR is outstanding for that UIN, and clear it first.
4. Get the financial statements ready, and decide the audited or certified-unaudited path from control and the host audit rule.
5. Reconcile the money that moved to and from India during the year against your bank records.
6. Confirm the two side duties: evidence of investment lodged within six months, and dues repatriated within ninety days.
7. File through your AD bank on Form FC, well before 31 December, not on the day.

FAQ

Is the APR the same as FC-GPR?

No. FC-GPR is an inbound filing (reporting foreign investment received into an Indian company). The APR is an outbound filing (your annual report on a foreign entity you invested in from India). Different direction, different form, different trigger.

My foreign company made a loss this year. Do I still file the APR?

Yes. The APR reports the position whether the year was profitable or not. A loss year is still a filing year.

I hold a small stake with no control. Am I off the hook?

Only if all three conditions hold: below 10%, no control, and no financial commitment beyond equity. If you have given any loan or guarantee, you file.

I forgot to file for a previous year. What do I do?

Clear the older year first, because a current APR cannot be certified while a prior one is missing. Depending on the gap, regularising it may involve compounding. Address it before your next raise or repatriation, not after.

Who actually files it, me or my bank?

You prepare and submit the APR; your AD bank receives it and completes its own part of the form. A clean pack means the bank can process it without back-and-forth.

Filing APRs for your foreign entities

A S Banka Advisors Private Limited helps Indian founders and companies prepare and file APRs for their foreign subsidiaries, reviewed by cross-border experts, so the return is accurate, on time, and defensible in diligence. If you own a foreign entity and are not sure whether your APRs are current, book a quick call and we will map what you owe and by when.

Disclaimer: This article is general information for founders, not legal, tax or regulatory advice. FEMA and RBI requirements depend on your specific facts. Verify your position and dates with a qualified professional before acting.