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.
Advised on $100M+ of founder fundraising and $200M+ in deal value, with 10+ IPO and pre-IPO mandates. Figures are internal, as of 2026.
A missed ODI filing goes back through the authorised dealer bank you designated when the investment was first reported, with the late submission fee while the miss is under three years old, and to the Reserve Bank as a compounding application once it is older or the breach is not a reporting breach. Infinilex prepares both files from Noida, New York and Dubai, and Infinilex counsel, company secretary or chartered accountant qualified in India sign what the statute assigns to that professional.
Before the first remittance, the bank is the AD Category-I bank you name in Section A of Form FC, normally the one holding the account the money leaves from. The sequence from the EIN to the UIN to the US account, with what the account provider certifies under 31 CFR 1010.230, is on EIN without an SSN and a US bank account from India. After it, paragraph 26 of the FEM (Overseas Investment) Directions 2022 routes every transaction relating to that foreign entity through the bank so designated, and a move to another bank needs a no-objection certificate from the existing one. For a US LLC, Form FC records equity capital as an amount in foreign currency and rupees and as a percentage stake, with no face value field, and the proof the bank holds within six months is the share certificate or any other relevant document under the host country’s law. The detail is set out below under the designated AD bank. Founders who formed the company through Stripe Atlas or Firstbase can start with registering a US company from India.
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 Infinilex counsel, company secretary or chartered accountant qualified in India sign what the statute assigns to that professional.
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. A founder’s foreign holdco over a US C-corp that owns the Indian company uses both permitted layers, so any further step-down fails the count, and the individual’s Schedule III control condition is tested separately: round-tripping, the two-layer rule and Schedule III.
- 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. A late or rejected FC-GPR or FC-TRS sits in the same late submission fee matrix as Form FC under RBI’s circular of 30 September 2022, for three years from its due date; after that it is a compounding matter.
Inbound reporting from the FEM (Mode of Payment and Reporting of Non-Debt Instruments) Regulations 2019, FEMA 395/2019-RB of 17 October 2019, amended up to 13 June 2026, regulation 4, read 6 October 2026. Regulation 4(3) puts the onus of reporting an FC-TRS on the resident transferor or transferee.
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.
“With their presence in both the US and India, Infinilex provides Indian founders with US-incorporated entities seamless guidance through the complex maze of compliance requirements.”
The designated AD bank: which bank, and what it accepts as proof
Which bank. Section A of Form FC opens with the name and code of the designated AD bank and branch, and paragraph 26 of the OI Directions 2022 then routes all transactions relating to that foreign entity through the bank so designated; a switch to another AD bank follows a no-objection certificate from the existing one. So the first remittance fixes the bank for the life of the holding, and for a founder who has already missed a filing the question answers itself: the late submission fee, the overdue APR and the evidence of investment all go to the bank named on the original Form FC. The rules do not pick a bank for you and we do not name one. What we check is that the bank holds the account the remittance will leave from and that the UIN is allotted before the money moves, since paragraph 27 of the Directions makes the bank liable under sections 11 and 13 of FEMA if it remits without a duly completed Form FC.
What Form FC asks for a stake. Form FC does not ask for a face value. Section B records the financial commitment to the foreign entity as equity capital, loan or non-fund based commitment, in foreign currency and in rupees; item VIII records the shareholding pattern as a percentage stake for the person resident in India and for each foreign partner; item IX asks whether that person has control. Section D carries the investor’s declaration that the share certificate or other evidence required by regulation 9 of the OI Regulations has been submitted, and the statutory auditor’s certificate in Section E, which applies to an Indian entity, records the valuation by number of shares or percentage stake. Where a bank asks for a face value it is asking for the host-country record of what was issued, not for a Form FC field.
A US LLC with no share certificates. Rule 2(1)(h) of the OI Rules 2022 defines a foreign entity as one formed, registered or incorporated outside India that has limited liability, which a US LLC is, and rule 2(1)(e) defines equity capital wider than shares: equity shares or perpetual capital or instruments that are irredeemable or contribution to non-debt capital of a foreign entity in the nature of fully and compulsorily convertible instruments. A membership interest is reported as equity capital by amount and percentage. For the proof, regulation 9(1) of the OI Regulations asks for share certificates or any other relevant documents as per the applicable laws of the host country or the host jurisdiction, within six months of the remittance, and the Directions leave the designated AD bank to retain the evidence and satisfy itself about its bona fides.
The evidence file for an LLC. Delaware, where most of these LLCs are formed, makes a certificate optional: section 18-702(c) of the Delaware LLC Act provides that an interest may be evidenced by a certificate of limited liability company interest issued by the LLC. So the evidence file we assemble for an LLC is the certificate of formation, the operating agreement with its members’ schedule showing the percentage and the capital contribution against the member’s name, a certificate of interest if the agreement provides for one and the LLC issues it, a capital contribution acknowledgement signed by the LLC, and the LLC’s US bank statement showing the remittance received as capital. The LLC’s own account, at a neobank or a branch bank, is only where the money lands; the ODI documentation is about what that money bought. Each AD bank sets its own checklist, so the list is confirmed with yours before the remittance, and the LLC statute of any other state is checked.
Sources, read 6 October 2026: FEM (Overseas Investment) Regulations 2022, FEMA 400/2022-RB of 22 August 2022, regulations 9 to 12; FEM (Overseas Investment) Directions 2022, paragraphs 16, 17, 26 and 27; Form FC, Sections A to E; FEM (Overseas Investment) Rules 2022, G.S.R. 646(E) of 22 August 2022, rule 2(1)(e) and (h); Delaware Code, title 6, section 18-702.
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 6 October 2026, the application carries a fee of Rs 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 monthly export-of-services cycle runs the same way and is set out in FEMA compliance for export of services. The plan and the cost are agreed first: see how engagements work.
What the ODI leg costs, from published sources
The regulator’s charges are fixed by instrument. The late submission fee under RBI’s circular of 30 September 2022 is Rs 7,500 per return for the APR, the FLA return and Form OPI, and Rs 7,500 plus 0.025% of the amount involved per year of delay for a flow return such as Form FC, FC-GPR or FC-TRS, capped at 100% of that amount. The compounding application fee under the Master Directions of 22 April 2025 is Rs 10,000 plus GST, stated there as 18% at present, and the compounding amount itself is set by the RBI on the facts.
Professional fees are fixed by nobody. Infinilex agrees its scope and fee on the discovery call and does not publish it here.
Who signs what on the FEMA filings
Infinilex is a consultancy: we run the analysis, prepare the filings and hold the evidence file, and Infinilex counsel qualified in each jurisdiction sign the legs of the work. The India leg is signed by Infinilex counsel enrolled as advocates in India, or by Infinilex’s company secretary or chartered accountant where a statute names that professional, as the APR certification does; a US leg by Infinilex counsel admitted in the US; an ADGM or DIFC leg by Infinilex counsel qualified for that regulator. Statutory signatories stay as the statute names them: the company or its directors sign Form FC and the APR, and the authorised dealer bank remains the channel for Form FC, the UIN, evidence of investment and the late submission fee, reporting to the RBI.
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 Rs 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 names. Form FC and the Annual Performance Report are signed by the company or its directors and go through the authorised dealer bank, which reports to the RBI and checks arm's length pricing. The APR is certified by a chartered accountant where statutory audit does not apply; where a statute names a company secretary or chartered accountant, Infinilex's company secretary or chartered accountant signs. The India leg otherwise sits with Infinilex counsel enrolled as advocates in India, a US leg with Infinilex counsel admitted in the US, and an ADGM or DIFC leg with Infinilex counsel qualified for that regulator. Infinilex runs the analysis, the evidence file and the calendar.
Which bank should I use for ODI filings, and can I change it later?
The AD Category-I bank you name in Section A of Form FC, which is normally the bank holding the account the remittance leaves from. Paragraph 26 of the FEM (Overseas Investment) Directions 2022 then routes all transactions relating to that foreign entity through the designated AD bank, and a switch to another bank is made after obtaining a no-objection certificate from the existing one. The rules do not pick a bank for you and Infinilex does not name one; the test is whether the bank can stay with the holding for its life, because the evidence of investment, every Annual Performance Report, any disinvestment and any late submission fee go back through it. Where filings have already been missed the question is settled: they go to the bank named on the original Form FC.
Who handles a late submission fee or a compounding application for us?
Infinilex does. For a reporting miss under three years old we prepare the overdue filing and the late submission fee file for the designated AD bank, which computes the fee under RBI's circular of 30 September 2022 and will not process any further outward remittance until the delay is regularised. For an older miss, or a breach that is not a reporting breach, we prepare the compounding application to the RBI, filed physically or through PRAVAAH, with the administrative action completed first. Infinilex counsel qualified in India sign the India leg, and where a US or UAE leg arises Infinilex counsel qualified there sign it; the company or its directors sign Form FC and the APR as the statute names them, and Infinilex's chartered accountant certifies the APR where statutory audit does not apply. The RBI encourages the applicant to appear at the compounding hearing in person or by video rather than through consultants, so we prepare the applicant for it. Email is answered within one working day.
What does Form FC need for a US LLC that has membership interests rather than shares?
The same entries as for a corporation, because Form FC does not ask for a face value. Section B records the financial commitment as equity capital in foreign currency and in rupees, item VIII records the shareholding pattern as a percentage stake for the person resident in India and for each foreign partner, and item IX asks whether that person has control. Under rule 2(1)(e) of the OI Rules 2022 equity capital is wider than shares: equity shares or perpetual capital or instruments that are irredeemable or contribution to non-debt capital of a foreign entity in the nature of fully and compulsorily convertible instruments. Under rule 2(1)(h) a foreign entity is one formed, registered or incorporated outside India that has limited liability, which a US LLC is. A membership interest is therefore reported as equity capital by amount and percentage, and the Form FC goes through the designated AD bank for the UIN before the remittance.
My AD bank wants proof of stake and face value for my US LLC. What do I give it?
Regulation 9(1) of the FEM (Overseas Investment) Regulations 2022 asks for share certificates or any other relevant documents as per the applicable laws of the host country or host jurisdiction, submitted to the AD bank within six months of the remittance, and the OI Directions leave the bank to satisfy itself about the bona fides of what it receives. Delaware, where most of these LLCs are formed, makes a certificate optional: section 18-702(c) of the Delaware LLC Act says an interest may be evidenced by a certificate of limited liability company interest issued by the LLC. So the file is the certificate of formation, the operating agreement with the members' schedule showing the percentage and the capital contribution against your name, a certificate of interest if the agreement provides for one and the LLC issues it, a capital contribution acknowledgement signed by the LLC, and the LLC's US bank statement showing the remittance received as capital. Face value is not a Form FC field; where the bank asks for it, the operating agreement's statement of the contribution and the percentage it buys is the answer. Each bank runs its own checklist, so confirm it with yours before the remittance, and check the LLC statute of any other state.
Our FC-TRS from the flip came back rejected years later. Late submission fee or compounding?
It turns on how old the miss is. FC-TRS is inbound reporting, due within 60 days of the transfer or of the funds moving, whichever is earlier, and RBI's circular of 30 September 2022 puts it in the same late submission fee matrix as Form FC: Rs 7,500 plus 0.025 per cent of the amount involved per year of delay, capped at 100 per cent of that amount, with the fee option available up to three years from the due date. Expect the delay to be counted from the original due date rather than from the rejection; the AD bank confirms the arithmetic. Inside three years the resident party to the transfer, which in a flip is normally the founders who swapped their shares, refiles the FC-TRS on FIRMS through the AD bank and pays the fee, since regulation 4(3) of the FEM (Mode of Payment and Reporting of Non-Debt Instruments) Regulations 2019 puts the onus of reporting on the resident transferor or transferee. Beyond three years, or where the transfer itself breached pricing or route conditions, it is a compounding application to the RBI, and the founders' own Form FC position on the shares received in the flip is checked at the same time.
Do you work with founders outside Noida and the NCR?
Yes. Infinilex has offices in Noida, New York and Dubai, and FEMA work runs on documents: the Form FC, the evidence file and the APR go to your designated AD bank wherever its branch sits, and a compounding application goes to the RBI on paper or through PRAVAAH. Founders in Bengaluru, Hyderabad, Pune or abroad run the same sequence by email and video. Email is answered within one working day.
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.
Thirty minutes with Prashant Sharma, the founder, who does the work himself. You leave with next steps either way. Email is read by the founder and answered within one working day.
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 · Round-tripping under FEMA: the two-layer rule and Schedule III
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 6 October 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.