NRI-founded startups tend to get the Companies Act filings right and the FEMA ones wrong, because the FEMA obligations are less visible and nobody sends a reminder. The nine that get missed most often: registering the Entity Master on FIRMS, filing FC-GPR on every issue of shares to a non-resident, filing FC-TRS on secondary transfers, the annual FLA return, complying with FEMA pricing guidelines, reporting the conversion of CCPS or CCDs, filing downstream investment intimation, ODI reporting with the annual performance report, and checking the sector caps before taking foreign money at all.
1. Entity Master registration on FIRMS
Before a company can report any foreign investment, it has to register its Entity Master on the RBI FIRMS portal. This is a one-time setup, and skipping it means you cannot file FC-GPR when the deadline arrives. Do it early, not the week the filing is due.
2. FC-GPR on every issue to a non-resident
FC-GPR reports a fresh issue of shares to a person resident outside India, and it is due within 30 days of allotment. NRI founders miss it at the very start, because they do not think of their own subscription to founder shares as “foreign investment”. If an NRI founder is allotted shares, that allotment is reportable. See our FC-GPR filing guide.
3. FC-TRS on secondary transfers
When shares move between a resident and a non-resident, that transfer is reported on FC-TRS, not FC-GPR. A founder buying out an early angel, or an NRI founder selling some holding, both trigger it. The resident party files it, within 60 days. Our guide on FC-GPR vs FC-TRS sets out which applies.
4. The annual FLA return
Any company that has foreign investment on its books must file the Foreign Liabilities and Assets return with the RBI every year, by 15 July. It is annual, it is easy to forget, and the first one after a foreign-funded round is the one most often missed.
5. FEMA pricing guidelines
Shares issued to or transferred with a non-resident must respect FEMA pricing rules. A non-resident cannot be issued shares below fair value, and cannot exit below it in a way that disadvantages the resident side. Founders sometimes issue cheap shares to an overseas friend or advisor without realising a valuation floor applies.
6. Reporting the conversion of CCPS or CCDs
If your foreign investor came in through compulsorily convertible preference shares or debentures, the conversion into equity is itself an event that has to be reported. Founders file the original FC-GPR and then forget that the conversion, sometimes years later, also needs to be captured.
7. Downstream investment intimation
If your Indian company has foreign investment and then invests in another Indian company, that second investment is treated as indirect foreign investment, and it has its own intimation requirement. This catches startups that set up a second entity for a new product line.
8. ODI and the annual performance report
NRI founders often want a US or Singapore holding company, or an overseas subsidiary. When the Indian company invests abroad, that is an overseas direct investment, with its own reporting, and an annual performance report is due for the overseas entity each year. This is one of the heaviest areas to get wrong.
9. Sector caps and prohibited activities
Not every business can take foreign money freely. Some sectors have caps, some need government approval, and a few are off limits. The time to check the FDI position for your activity is before the wire lands, not after. A round closed into a restricted sector is expensive to unwind.
Why these slip
None of these are obscure. They slip because FEMA compliance runs on a different track from the MCA filings a startup is used to, and the responsibility is easy to assume someone else, the bank or the investor, is handling. In the companies we work with, the cleanest approach is to treat FEMA as a named line item in the closing checklist of every round, with an owner and a date.
Frequently asked questions
What FEMA compliances apply to an NRI-founded startup in India?
The core ones are Entity Master registration on FIRMS, FC-GPR on every issue of shares to a non-resident, FC-TRS on secondary transfers, the annual FLA return, FEMA pricing compliance, reporting conversion of convertible instruments, downstream investment intimation, ODI reporting with annual performance reports, and confirming the sector is open to FDI.
Does an NRI founder’s own shareholding need FC-GPR?
Yes. If an NRI founder, who is a person resident outside India, is allotted shares, that allotment is foreign investment and must be reported on FC-GPR within 30 days of allotment.
When is the FLA return due?
The annual FLA return to the RBI is due by 15 July each year, for every company that has foreign investment on its books.
What happens if FEMA filings are missed?
Missed filings attract a Late Submission Fee and leave the foreign investment unreported, which becomes a compliance flag during due diligence for the next funding round.
Reviewed by CS Sapna Malpani, a practising Company Secretary in Bangalore who handles FEMA reporting for NRI-founded and foreign-funded startups. This is general information, not legal advice. About Sapna Malpani.
Last reviewed: May 2026.