Foreign Liabilities and Assets [FLA] filing

All companies that received FDI and/or made overseas investments in any of the previous year(s), including the current year (July 15 every year), are required to submit an annual return on foreign liabilities and assets (FLA).

As more companies engage in foreign investments, the Foreign Exchange Management Act (FEMA) regulations and their compliance become an important part of the companies’ operations. FLA annual returns are one of the compliances that companies that engage in FDI (Foreign Direct Investments) or companies that invest in foreign companies through joint ventures or wholly owned subsidiaries, also known as Overseas Direct Investment (ODI) must meet. FLA annual returns must cover all foreign investments made by and/or to the company and must be submitted directly to the Reserve Bank of India.

Who needs to file FLA Annual Return?

The regulation under FEMA, 1999 requires any company who has either made ODI or received FDI, to file the FLA annual return. The companies have to report the current financial year’s FLA as well as the previous year(s) assets and liabilities. In the case where a company does not have any foreign assets or liabilities for the current year but has outstanding FDI or ODI from the previous year(s), it must file the FLA annual return indicating their outstanding assets or liabilities.

The FEMA regulations also require partnership firms to file FLA annual returns if they have received FDI or made ODI. In the case of partnership firms, the RBI will issue a dummy CIN upon its request which will be used only for the filing of FLA annual returns. In case a dummy CIN has already been issued, the partnership firm will use the same for the filing of the FLA return.

Filing of FLA return

The prescribed method of filing of FLA annual return is via an Excel sheet. It is required to be filed by all the companies falling under the criteria already mentioned. The filing of the FLA annual return has to be done before the 15 of July of the respective year and must include data of FDI or ODI received or made by the company respectively for any previous year(s) and the current year.

The form is to be mailed by any authorized member of the company from their email ID to the official email ID of the RBI i.e. The members of the company authorized to file the FLA return are Company Secretary, Chief Financial Officer, and Directors. The details filed must comprise of the financial details as well as other required details in accordance with the company’s audited accounts.

In case the company does not have their accounts audited before 15 July, the company is to file the FLA return according to the unaudited accounts and have their accounts audited thereafter. After the audit, if there are any changes regarding the details filed, the company has to file another form with the updated details before the last day of September of the same year. After the filing of the FLA return, an acknowledgment mail will be sent by the RBI to the email ID of the authorized person.

Important points to be kept in mind for filing an FLA return

  • In case the company does not file the FLA return within the given time, the company will be liable to pay a penalty of thrice the sum involved in the contravention. In case it is not quantifiable, then a penalty of Rs 2,00,000 will have to be paid by the company. If the contravention is continuing, a penalty of Rs 5,000 per day will have to be paid by the company.
  • The Due date for the filing of FLA return is on 15 of July of that year. In case the FLA return filed is based on unaudited accounts, a revised form has to be filed based on audited accounts before the end of September of the same year.
  • The regional offices of RBI have the power to compound contraventions without any limit. This, however, does not apply to the regional offices of Kochi and Panaji.

Companies exempted from filing FLA return

  • Companies that have only issued shares on a non-repatriable basis to the non-residents of India are exempt from filing FLA return.
  • Companies who do not have any outstanding balance of FDI or ODI by the end of the financial year are exempt from filing FLA return.
  • Companies that have only received share application money and have not received any FDI or not made any ODI, are exempt from filing FLA return.

Foreign Liabilities and Assets (FLA) filing is an essential regulatory compliance exercise that contributes to the monitoring and analysis of India’s foreign exchange transactions and positions. By complying with this requirement, eligible entities play an integral role in providing vital data for informed policy-making, fostering transparency, and promoting the growth and stability of the Indian economy in the global arena. It is crucial for eligible entities to recognize the significance of FLA filing and fulfill their obligations in a timely and accurate manner to support a robust and well-informed financial system.

G Akshay Associates