Short answer: the order is bank account → remittance from the parent → FIRC and the remitting bank's KYC report → valuation (for anything other than subscriber shares) → allotment within 60 days of receipt → PAS-3 with the Registrar within 30 days of allotment → FC-GPR with the RBI within 30 days of allotment. Subscriber shares are issued at face value. Later issues must be priced at no less than fair value certified by a Chartered Accountant, a SEBI-registered merchant banker or a practising cost accountant, on a certificate no more than 90 days old. If shares are not issued within 60 days, the money goes back within 15 days.
Take a remittance that reaches the Indian company's account on 1 October 2026, with the board allotting shares on 20 October 2026:
| Step | Rule | Deadline | Example date |
|---|
| Valuation certificate dated | MD para 8.11: not more than 90 days old on the date of investment | Before the price is fixed | Dated on or after 3 July 2026 |
| Funds received; bank issues FIRC and obtains KYC | Mode of payment: banking channels from abroad or a repatriable account | — | 1 Oct 2026 |
| Allotment by the board | Issue within 60 days of receipt | 60th day | By 30 Nov 2026 |
| Refund, if not allotted | Within 15 days after the 60 days end | — | By 15 Dec 2026 |
| PAS-3 return of allotment to the ROC | Companies Act s.39(4) | 30 days from allotment | By 19 Nov 2026 |
| FC-GPR on FIRMS through the AD bank | FEMA reporting regulations | 30 days from allotment | By 19 Nov 2026 |
| Share certificates, or credit to demat accounts | Companies Act s.56(4) | 2 months from allotment | By 20 Dec 2026 |
Two clocks run from receipt of the money and two from allotment. The allotment date is chosen by the board, so the practical risk sits in the first 60 days.
The company's bank account is opened as part of incorporation, through AGILE-PRO-S. The bank acts as the company's authorised dealer (AD) bank, the bank licensed by the RBI to handle foreign exchange, and every FEMA filing goes through it.
The consideration must come as an inward remittance through banking channels, or from a repatriable foreign currency or rupee account held in India. Three points save rework:
- The remitter should be the subscriber. Money sent by a group treasury company, or by a founder personally, for shares to be issued to the parent creates a mismatch the AD bank will query.
- The payment instruction should say it is for equity shares. Banks classify inward remittances by purpose, and a remittance booked as a service receipt or a loan has to be reclassified before it can support an allotment.
- Ask for the FIRC and the KYC report at once. The bank issues a Foreign Inward Remittance Certificate (FIRC), or an advice serving the same purpose, and obtains a KYC report on the remitter from the overseas bank. Both are attached to FC-GPR, and chasing a KYC report from a foreign bank in week four is how 30-day deadlines are missed.
There is no advance report of the receipt any more. The Advance Reporting Form was discontinued on 1 September 2018, when reporting moved to the Single Master Form on the RBI's FIRMS portal. Before the first FC-GPR, the company registers on FIRMS as an entity user and a business user, and the AD bank approves the registration. Do this during the first week, not the last.
Subscriber shares at incorporation: face value. Where shares are issued to a non-resident as a subscriber to the memorandum, the Master Direction on Foreign Investment says the investment is made at face value, subject to the entry route and sectoral cap. No valuation is needed.
Later issues: not less than fair value. For an unlisted company, the issue price to a non-resident cannot be less than the fair value worked out under any internationally accepted pricing methodology on an arm's length basis. The valuation may be certified by:
- a Chartered Accountant,
- a SEBI-registered merchant banker, or
- a practising cost accountant.
In practice the method is usually discounted cash flow, or net asset value for a company with no operating history. The certificate must be no more than 90 days old on the date of investment, so time it to the remittance.
Rights issues are priced differently. In an unlisted company, shares offered to a non-resident on a rights basis must be priced no lower than the price offered to resident shareholders. A wholly owned subsidiary has no resident shareholders to compare with, so AD banks commonly still ask for a valuation certificate. Plan to have one.
The Companies Act has its own requirements. A preferential allotment under Section 62(1)(c) needs a special resolution and a report from a registered valuer, and follows the private placement procedure. That is a different valuer from the FEMA list. Most wholly owned subsidiaries raise follow-on capital through a rights issue to the parent under Section 62(1)(a) for this reason.
The income-tax premium rule has gone. Section 56(2)(viib) of the 1961 Act, the so-called angel tax, taxed share premium above fair market value as the company's income. It was omitted from assessment year 2025-26 for all investors, so the premium on a fresh issue is no longer taxed in the company's hands. Earlier years remain open to assessment on the old rule.
The Master Direction is direct about it. If equity instruments are not issued within 60 days of receiving the consideration, the amount must be refunded to the remitter within 15 days after those 60 days, by outward remittance or credit to an eligible repatriable account. For partly paid shares, the 60 days runs from each call payment. The AD bank must be satisfied about the refund, including that the money came in by a permitted route. Any interest follows the Companies Act.
The 60 days is not a filing deadline that a fee can fix. Keeping money beyond it without allotting or refunding is a contravention of FEMA, and regularising it goes beyond a Late Submission Fee. If the remittance is expected to arrive in stages, hold the board meeting after the last tranche lands, but inside 60 days of the first.
If the company raises capital by private placement, Section 42 of the Companies Act separately requires allotment within 60 days of receipt and repayment within 15 days after that, with interest at 12% a year if repayment is late.
Under Section 39(4) of the Companies Act, a company that allots securities files a return of allotment in PAS-3 with the ROC within 30 days. It carries the list of allottees and the board resolution. If the issue needs a higher authorised capital, that increase is approved and filed with the ROC in SH-7 before the allotment, not after.
PAS-3 is not filed for subscriber shares, because those are treated as allotted on incorporation.
Form FC-GPR reports an issue of equity instruments to a non-resident. It is filed on the FIRMS portal through the AD bank within 30 days of the date of issue. The usual attachments are:
- the board resolution for the allotment;
- the FIRC and the remitter's KYC report;
- the valuation certificate, where one is required;
- a declaration by the company and a company secretary's certificate in the format of the RBI's user manual. A company without a full-time company secretary gets it from a practising company secretary.
The AD bank checks the filing and may send it back for correction. Filing on day 29 leaves no time to answer a query.
Shares taken by the subscribers to the memorandum are reportable in FC-GPR like any other issue to a non-resident, and the rules do not quite fit together here:
- Under the Companies Act, subscribers are treated as members from incorporation, and the company has 180 days to confirm in INC-20A that they have paid.
- Under FEMA, shares are issued to a non-resident only against consideration already received.
So which date is the 'date of issue' for the 30-day FC-GPR clock? Taken literally, incorporation starts the clock before any money can arrive, because the company's bank account does not exist until the company does. AD banks have rejected FC-GPR filings that used the incorporation date for money that arrived later. In practice companies report an issue date on or after the remittance, which sits awkwardly with the Companies Act.
There is no RBI clarification that settles it. The practical answer is to shorten the gap. Have the parent remit the subscription money in the first days after incorporation, pass a board resolution confirming the subscriber shares against the receipt, agree the date with the AD bank before filing, and file FC-GPR within 30 days of that date. Leaving the subscription money until month five, to line up with INC-20A, is how this becomes a problem.
Pre-incorporation expenses. A wholly owned subsidiary in an automatic-route sector with no FDI-linked conditions may issue shares to the parent against expenses the parent paid before incorporation. The limit is 5% of authorised capital or USD 500,000, whichever is less. FC-GPR must be filed within 30 days of the issue and not later than one year from incorporation, with the statutory auditor's certificate that the money was used for that purpose.
A late FC-GPR can be regularised with a Late Submission Fee (LSF). Under the formula the RBI adopted in A.P. (DIR Series) Circular No. 16 of 30 September 2022, the fee is ₹7,500 + (0.025% × amount × years of delay), with the delay rounded up to the month and the total capped at the amount involved. The LSF route is open for three years from the due date. After that, the matter goes to compounding.
In June 2026 the RBI withdrew several hundred older FEMA circulars as spent and updated its Master Direction on reporting. We have not been able to confirm whether the 2022 circular is on the withdrawn list; the formula is understood to be carried in the Master Direction. Confirm the current computation with your AD bank before paying. The wider FEMA calendar, including the annual FLA return that follows every year, is in the FEMA filings foreign-funded companies miss.
This sequence begins once the company exists. The documents that come before it are in incorporating with foreign directors, and the rest of the first-quarter list is in the first 90 days. If any beneficial owner of the parent is connected to a land-border country, work through Press Note 3 after the 2026 amendment before the money is sent. If the parent is funding the company by debt rather than equity, a different set of rules applies: see loans from a foreign parent.
This note sets out the general FEMA and Companies Act sequence for issuing shares to a non-resident, as the RBI's Master Direction stood in June 2026. It is not advice on a particular issue. Pricing, mode of payment and reporting depend on the instrument, the sector and the route. The Late Submission Fee framework and the FC-GPR attachment list are set by RBI directions that are revised from time to time, so confirm them with your AD bank and against the current Master Directions before the money is sent and before anything is filed.