All about Foreign Liabilities & Assets (FLA)

ALL ABOUT FOREIGN LIABILITIES & ASSETS (FLA)

ENTERSLICE E-57, SECTOR-63, NOIDA, UP – 201301 (INDIA)

Foreign Liabilities & Assets (FLA) All liabilities i.e. obligation to pay off to person other than Indian Residents and Assets i.e. right to receive/receivables from person other than Residents India, required to report under direction of Circular A.P. (DIR Series) No. 145 dated 18th June, 2014 issued by Reserve Bank of India by virtue of section 10(4) and 11(1) of FEMA Act, 1999.

FLA return is to be submitted to authority dully filled either in Excel or Word file and send via electronic mail (registered mail in RBI) to fla@rbi.org.in by 15th July of each year irrespective of audited books or not subject to having foreign liabilities and assets in preceding years or current year.

Once you download the excel version of Return, the first is to enable the options and insert the year of reporting like 2017 or 2018, as the case may be.

Under FLA Return, this section required basic details of reporting entity and contact person.

Fill each column accordingly as required or instructed in sheet.

If the reporting entity is Listed, once you choose yes then share price on closing date of reference period to be given. Current Year Face Value of Share as well as Market Value of Share of Last and Current Year to be reported.

Section II (Financial Details)

Need to report on Capital Structure of reporting entity with No. of Shares and Amount (in Rs. Lakhs) for last and current year.

Under this reporting entity required to provide no. of shares and its amount in Lakhs for both previous year and current year for each type of category given in Point No. 1 to 12 as applicable.

Once fill up the details of Non Resident Equity & Participating Preference Share Capital % is Auto-populated as per details fill in.

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Form is clear and as stated, the reporting entity has to report amount in lakhs and during the year transaction at all to be given.

Reserve & Surplus of reporting entity given in Note 3 of Schedule 3-Balance Sheet to be given in this image excluding Profit & Loss Account Balance of Current Year.

Only if reporting Company is Subsidiary Company of Foreign Company, required to fill. The details of Purchase and Sale in Amount in Lakhs as shown in Image.

Section III (Foreign Liabilities) Reporting entity require to furnish here the outstanding investment made under the FDI Scheme in India by Non-Resident Direct investors, who were individually holding 10% or more OR less than 10% ordinary/equity & preference shares of reporting company on the reporting date. However in less than 10% holding, entity does not require to provide Name of the Non-Resident Company/Individual rather county wise consolidated information to be provided.

Other Capital includes all other liabilities and claims at Nominal Value, except equity and participating preference shares (i.e. trade credit, loan, debentures, Nonparticipating share capital, other accounts receivable and payables etc.) of Reporting company with its investor.

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Reporting entity require to furnish here the outstanding investment by non-resident investors , other than those made under Foreign Direct Investment Scheme in India.

Note: To report any investment under Section III, Valuation rule is prescribed by authority.

If reporting entity is listed companies then equity should be valued using share price on closing date of reference period.

In case of Unlisted Companies, Own Fund of Book Value (OFBV) method to be used, explained later.

Section IV (Foreign Assets) Entity is required to report here the total equity of Direct Investment Enterprises (DIE), equity held by reporting company, reserve (excluding P&L Account) and profit & loss account of those DIEs in each of which reporting company hold 10% or more equity shares on the reference date. Exchange rate of reporting foreign currency against Indian Rs should be given as on closing date of reference period.

Direct investment: It is a category of international investment in which a resident entity in one economy i.e. Direct Investor (DI) acquires a lasting interest in an enterprises resident in another economy i.e. Direct Investment Enterprises (DIE). It consists of two components, viz. Equity Capital and Other Capital.

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Reporting entity should furnish the market value of outstanding investments in DIE, made by itself under the ODI Scheme, in each reporting company hold 10% or more OR less than 10% equity shares on the reference date. Where if less than 10% is holding, reporting entity does not require to give name of non-resident direct investment enterprises (DIE).

Other Capital is same as earlier discussed in previous sheet.

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Kindly furnish the market value of outstanding investment in non-resident enterprises, other than those made under ODI scheme.

Note: Country wise consolidated information pertaining to each type of Investment should be reported separately.

Note: To report any investment under Section IV, Valuation rule is prescribed by authority.

If Overseas entity is listed companies then equity should be valued using share price on closing date of reference period.

In case of overseas entity is unlisted Companies, Own Fund of Book Value (OFBV) method to be used, explained later.

Section IV-A Outward Foreign Affiliates Trade Statistics (Outward FATS) It is applicable or activated only if more than 50% equity holding by Indian Reporting Company.

Under this section, reporting company has to report import, export, total sales and total purchase of Direct Investment Enterprises (DIE) abroad.

Name of DIE has to be given from which Import or Export, if any transaction done during the year to be reported and currency of transaction has to be stated.

Reporting include both last year and current year.

Section V (other Assets and Liabilities with Foreign unrelated parties) This is a residual category that includes all financial outstanding liabilities and claim not considered as Direct Investment or Portfolio Investment

Miscellaneous Point to be Noted Valuation of Equity Investment using OFBV method in case of Unlisted Company:

Note:

S.N o

Particulars

Previous March

Latest March

A

Equity Share Capital

B

Participating Preference Share Capital

C

Total

A+B

A+B

D

Reserve & Surplus

E

Net Worth of the Company

C+D

C+D

F

Equity Share Capital held by Non-Resident Direct Investor (NRDI)

G

Participating Preference Share Capital held by NRDI

H

Total

F+G

F+G

I

Equity & Participating Preference Share holding H/C Percentage

H/C

J

FDI at Market Value

E*I

E*I

a. Share issued to non-resident on Non-Repatriable basis should not be reported in Annual. b. Trade Debt Securities should be valued at market price, while all other types of debt viz., loan, trade credit, deposits, and other accounts payable/receivable should be valued at Nominal Value.

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Non-Participating Preference Share do not have following rights:a. To receive dividend, out of surplus profit after paying the dividend to equity shareholders; b. To have share in surplus assets remaining after the entire capital is paid in case of winding up of the company.

Special Purpose Vehicle (SPV): It is a legal entity (usually a limited company of some type or, sometimes, a limited partnership) created to fulfill narrow, specific or temporary objectives. SPV have little or no employment, or operations, or physical presence in the jurisdiction in which they are created by their parent enterprises, which are typically located in other economies jurisdictions. They are often used as devices to raise capital or to hold assets and liabilities and usually do not undertake significant productions.

Public Private Partnership (PPP): It describes a government service or private business venture which is funded and operated through a partnership of government and one or more private sector companies. PPP involves a contract between a public sector authority and a private party, in which the private party provides a public service or project and assumes substantial financial, technical and operational risk in the project.

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