FEMA, ODI and LRS compliance, run end to end.
Money out of India and money in both leave a filing trail with the Reserve Bank. We classify what you hold, file what is due, take the misses down the route that fits, and keep the file clean for the next raise, flip or exit.
Infinilex is a FEMA compliance consultant for startups and their founders. ODI compliance is one question in three parts: what the money bought, which filings that character triggers, and which route fixes the ones that were missed. Under the Overseas Investment Rules 2022 the character decides everything, the authorised dealer bank is the channel, and the default sits on the investor’s name. We run all three parts and coordinate the chartered accountant, company secretary or counsel who signs.
The scope runs both directions: overseas investment out, funded within the Liberalised Remittance Scheme ceiling where the investor is an individual, with exceptions such as inheritance and gift, and foreign investment in, reported on the FIRMS portal.
Schedule A: which route fixes which FEMA miss
| Situation | What the rules require | Route | Who decides |
|---|---|---|---|
| Form FC, evidence of investment, APR or disinvestment reporting filed late, within three years of the due date | The filing, plus the late submission fee for that return | Through the designated AD bank, under regulation 11 of the OI Regulations | The AD bank; an LSF advice unpaid for 30 days is void |
| The same reporting miss, more than three years after the due date | Administrative action and the filing first, then the application | Compounding application to the RBI; the late submission fee facility has closed | The RBI, which may also decide a matter belongs with the Directorate of Enforcement |
| A non-reporting contravention: pricing away from arm’s length, an ODI the individual’s lane does not permit, allotment or refund delays | Administrative action first: approvals, unwinding, repatriation, valuation, then reporting | Compounding, only once that action is complete | The RBI; nothing is processed while administrative action is outstanding |
| Evidence of the ODI not submitted to the AD bank within six months | Repatriation of the funds remitted, within that six-month period; a late submission fee regularises the reporting delay but does not preserve the investment where the funds fell due for repatriation | Through the AD bank | The OI Directions set the consequence |
| A similar contravention was compounded less than three years ago | Outside compounding; after three years it is treated as a first contravention | Not available | Rule 4(2), Compounding Proceedings Rules 2024 |
| Any overseas investment delay left unregularised | Nothing further moves until it is fixed | Regularise first, then transact | The AD bank, which must not facilitate further outward remittance |
Routes from the FEM (Overseas Investment) Directions 2022, RBI’s late submission fee circular of 30 September 2022, the Compounding Proceedings Rules 2024 and the Master Directions on Compounding of 22 April 2025, updated 24 April 2025. Sequence: the ODI regularisation checklist.
What FEMA, ODI and LRS compliance covers
Situation one: money leaving India
- Classification before anything is remitted. Unlisted foreign equity, or 10% or more of a listed foreign entity, or any stake with control, is ODI; the rest is broadly OPI, which does not extend to unlisted debt instruments. Once ODI, it stays ODI even if the holding later falls below 10% or control is lost, under the Explanation to rule 2(1)(q) of the FEM (Overseas Investment) Rules 2022. Long form: LRS vs ODI for Indian founders.
- The resident individual’s lane, tested against your facts. Schedule III permits ODI in an operating foreign entity not engaged in financial services activity and, where the individual has control, with no subsidiary or step-down subsidiary. An entity counts as financial services if the activity would require registration with or regulation by an Indian financial sector regulator. ODI in a recognised start-up comes from the individual’s own funds. Inheritance, sweat equity, qualification shares and employer schemes have their own provisos.
- The prohibitions and the structural tests. No ODI into real estate activity, gambling, or financial products linked to the Indian rupee without RBI approval, and no financial commitment leaving more than two layers of subsidiaries where the foreign entity invests back into India. An investor with an NPA account, classified as a wilful defaulter or under investigation by a financial sector regulator, the CBI, the ED or the SFIO needs a No Objection Certificate first.
- The filing trail, built and kept. Form FC with its documents for allotment of the UIN on or before the initial ODI, with the bank facilitating the remittance only once the UIN is allotted, and the allotment is not RBI approval of the investment. Evidence of investment within six months. The APR for each foreign entity, certified by a chartered accountant where statutory audit does not apply. Disinvestment in Section G of Form FC within 30 days. For an Indian entity holding ODI the AD bank is advised to confirm the FLA return due has been filed before any further remittance.
- Pricing and exit discipline. Issue or transfer of equity capital of a foreign entity involving a person resident in India is priced on an arm’s length basis, checked by the AD bank against an internationally accepted valuation methodology. Full disinvestment other than on liquidation needs no dues outstanding, and one year invested from the date of the ODI.
Situation two: money coming into India
- The inbound side of the same structure. FC-GPR through the Single Master Form on FIRMS within 30 days of issuing equity instruments, FC-TRS within 60 days of the transfer or of the funds moving, whichever is earlier, and the annual FLA return by 15 July. Route and Press Note 3 land-border exposure are settled before the money arrives: automatic route vs approval route and the FEMA FDI checklist.
Situation three: filings already missed
- Every miss sorted into a route, then run. Each holding and each inbound tranche is classified, the filings that fell due are listed, and each miss is sorted as Schedule A sets it out: through the AD bank with a late submission fee inside the three-year window, or a compounding application to the RBI where the window has closed or the breach is not a reporting breach. The sequence, and the late submission fee arithmetic, sit in the ODI regularisation checklist.
What a missed filing stops, from Delaware to Dubai
Rarely a notice. As the LRS vs ODI analysis sets out, the friction arrives first: the AD bank declines the next outward remittance, and a flip or a sale stalls on documents the data room does not have. Hence the overlap with the Delaware flip.
Compounding deserves a straight description. It is a voluntary application in which the contravention is admitted. Under the Master Directions on Compounding of 22 April 2025, updated 24 April 2025, and as at 12 September 2026, the application carries a fee of INR 10,000 plus GST, which the Master Directions state is 18% at present, and it may be filed physically or through RBI’s PRAVAAH portal. The order is passed not later than 180 days from an application complete in all respects, and the sum is paid within 15 days. The guidance matrix in the Master Directions only broadly indicates the basis of the amount, which may vary with the case, so nobody can promise a number. The RBI encourages applicants to attend the hearing themselves rather than through consultants. Our work is the file behind it.
How a FEMA engagement is staged
Fixed-scope stages, mapped before anything starts, on a free discovery call. Stage one is the diagnostic: every foreign holding and inbound tranche classified, the filings that were due listed, and each miss sorted into the late submission fee window or the compounding route. It stands on its own. Stage two is execution: the filings, the evidence file, the AD bank sequence, and the compounding application where one is needed. The APR cycle and the FLA return run on a monthly retainer if you want the calendar owned, which is the fractional general counsel retainer. The plan and the cost are agreed first: see how engagements work.
Who signs what on the FEMA filings
Infinilex is a consultancy: we run the analysis, prepare the filings, hold the evidence file and coordinate the signatures the work needs. An Indian leg is signed by an Indian advocate, company secretary or chartered accountant; a US leg by US securities counsel or a CPA; an ADGM or DIFC leg by ADGM- or DIFC-registered counsel. The authorised dealer bank remains the channel for Form FC, the UIN, evidence of investment and the late submission fee.
Frequently asked questions
Which ODI filings will you prepare, and who files them?
Form FC goes to the authorised dealer bank for allotment of a unique identification number on or before the initial overseas direct investment, and the bank facilitates the remittance only once the UIN is allotted. Evidence of the investment follows within six months, failing which the funds remitted have to be repatriated within that period. An Annual Performance Report is filed for each foreign entity by 31 December under the Overseas Investment Regulations, certified by a chartered accountant where statutory audit does not apply, including for resident individuals. Disinvestment is reported in Section G of Form FC within 30 days of receipt of the proceeds.
How do I fix a missed Form FC or Annual Performance Report?
Through the designated authorised dealer bank, with a late submission fee, if the miss is inside the window. RBI's uniform late submission fee matrix of 30 September 2022 prices delayed overseas investment filings per return, and the option is available up to three years from the due date of that filing. Until the delay is regularised the bank will not facilitate any further outward remittance or financial commitment towards the foreign entity, which is how most founders find out. The ODI regularisation checklist sets out the sequence we run.
When does a missed FEMA filing go to compounding instead of a late submission fee?
When the three-year late submission fee window has closed, or when the breach is not a reporting breach at all. Pricing away from arm's length, an individual's overseas direct investment in a financial services entity, or a structure left with more than two layers of subsidiaries are not cured by a fee. Compounding is a voluntary application to the RBI, made after the requisite administrative action is complete, and the RBI decides whether a contravention is compounded or belongs with the Directorate of Enforcement.
What goes through PRAVAAH, and what goes through the AD bank?
A compounding application goes to the RBI, either physically or through PRAVAAH, the centralised portal for regulatory authorisations and approvals that the RBI launched on 28 May 2024, and it may be made suo moto or in answer to a Memorandum of Contraventions. Under the Master Directions on Compounding of 22 April 2025, updated 24 April 2025, the application fee is INR 10,000 plus GST, which those Directions state is 18% at present. Everything that is still a reporting fix goes through the designated authorised dealer bank instead: Form FC and the UIN, evidence of investment, the Annual Performance Report, disinvestment reporting and any late submission fee. Which of the two a given miss belongs to turns on the filing, its age and whether the breach is a reporting breach at all, and the RBI decides whether a contravention is compounded.
What do you check before a founder remits under LRS into a foreign startup?
Within the conditions of Schedule III of the Overseas Investment Rules 2022, yes. The investment has to be in an operating foreign entity that is not engaged in financial services activity and which, where the individual has control, has no subsidiary or step-down subsidiary. Overseas direct investment in a start-up recognised in the host country has to come from the individual's own funds. Equity in an unlisted foreign company is ODI whatever the cheque size, so a small angel ticket carries the same Form FC, UIN and reporting trail as a large one.
Is my Delaware or Dubai shareholding ODI?
If it is equity in an unlisted foreign company it is overseas direct investment whatever the cheque size, so a Delaware C-corp holding and a Dubai free zone company holding run on the same trail: Form FC to the authorised dealer bank for a UIN on or before the initial investment, evidence of investment within six months, and an Annual Performance Report for that foreign entity. Ten per cent or more of a listed foreign entity, or any stake carrying control, is also ODI, and once an investment is ODI it stays ODI even if the holding later falls below ten per cent or control is lost.
Who signs the FEMA filings if Infinilex is a consultancy?
The professional each filing calls for. The Annual Performance Report is certified by a chartered accountant where statutory audit does not apply, including for resident individuals, and the authorised dealer bank checks arm's length pricing against an internationally accepted valuation methodology. On the company side an Indian company secretary or chartered accountant signs; on a US leg, US securities counsel or a CPA; in a UAE financial free zone, ADGM- or DIFC-registered counsel. Infinilex runs the analysis, the evidence file and the calendar, and coordinates them.
Holding foreign shares, or about to remit?
Send what you hold, how it was funded and what the Indian company has received from abroad. We will map the character of each position, the filings due, and the sequence to fix anything missed.
Further reading
LRS vs ODI for Indian founders · The ODI regularisation checklist · FDI: automatic route vs approval route · The FEMA and FC-GPR compliance checklist · The Delaware flip from India
Related services: cross-border structuring · the fractional general counsel retainer · how engagements work
This page is general information about the service, not legal, tax or regulatory advice for your facts. Rules, directions, fees and RBI practice change; positions here are stated as at 12 September 2026. Whether a holding is ODI, which route cures a miss and what the RBI decides in a compounding matter depend on facts and documents, and no outcome is promised.