FEMA Perspective- Bonus Shares to Foreign Investors

Bonus Shares to Foreign Investors? Does FCGPR Still Applies.


In transactions involving foreign investors, there's one compliance detail that often slips through the cracks — Form FCGPR filing for bonus share allotments.


A common misconception?

 “No funds received = No FCGPR required.”

 Unfortunately, that’s not how FEMA works.


Under the current FEMA and RBI framework, even if the company is issuing bonus shares, an FCGPR filing is mandatory within 30 days of the allotment.


Here’s what that means in practice:


Yes, FCGPR is required.


Even if no consideration is received, the regulatory reporting obligations remain intact. Delays or defaults here can impact future capital rounds and RBI approvals.


No remittance? Here’s how to fill the form:


1. The “Issue Price per Instrument” field, enter “0”.

2. Under “Mode of Payment,” select “Others” and include the note:

 “Bonus shares issued without receipt of consideration.”


What about FIRC/KYC?

Since there's no fund flow, banks won’t issue FIRC or KYC. In this case, a declaration stating that the issue involves no remittance should be attached instead.


Valuation Requirements:

Companies Act, 2013: No valuation needed for bonus shares to residents.

FEMA & RBI: Valuation may still be required when issuing bonus shares to non-residents — even without consideration.


Key Takeaway:

Bonus shares don’t exempt you from compliance. Failing to file Form FCGPR — even when no funds are received — could trigger regulatory scrutiny and complicate foreign investment pathways.


When dealing with cross-border shareholding structures, attention to detail isn’t optional.


 It’s strategic.

This blog is authored by Company Secretary Ronak Gupta. He is author of many blogs and runs many websites and youtube channels. His work is dedicated to corporate laws, legal, secretarial, professional services and also in strategy formulations for corporates. Mail him at: csronakgupta23@gmail.com or call at :9910226715

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