Filing of SMF with RBI (FEMA)

In conjunction with the Indian Government’s constant pursuit to strengthen foreign

investment and ease of operating in India, the Reserve Bank of India (RBI), on 7th June,
2018 issued an important circular A.P. (DIR Series) Circular No.30 with the aim of
altering the reporting procedures under the Foreign Exchange and Management Act,
1999 (FEMA).

Major developments in the reporting structure introduced by RBI include-

Forms Particulars Timeline

Integrates the
reporting
requirements for
Foreign Direct
Single Master Investment (FDI) in To be made available w.e.f.
Form (“SMF”) India, irrespective of 1st August,2018
the Instrument
through which
Foreign Investment
is made.
One-time reporting To be filed online between
Entity Master of all form of foreign 28th June, 2018 and 12th July,
Form (“EMF”) investment in all 2018
Indian Entities

 The reporting of FDI, which is presently a two-step process viz., ARF and FC-GPR
would be merged into a single revised FC-GPR.
 Reporting of indirect foreign investment through form DI and reporting of inflows in
investment vehicles through Form In Vi.
 The reporting in FC-TRS, LLP-I, LLP-II, ESOP, DRR and CN would also be made in
SMF only.
 IPO Support

 IPO stands for Initial Public Offering. It is a process by which a privately held company
becomes a publicly traded company by offering its shares to the public for the first time.
A private company, that has a handful of shareholders, shares the ownership by going
public by trading its shares. Through an IPO, a company can raise cash either through
debt or equity.
 Steps in the IPO process in India-

1. Preparation of registration document- Before a company comes out with its

IPO, its required to submit a registration statement to SEBI which includes a
detailed report of its fiscal wellness and business plans. SEBI scrutinizes and
checks the report to ensure that it fulfills all the requirements and satisfies the
mandatory rules and regulations.
2. Preparation of the prospectus- While waiting for the approval, the company
hires the underwriters and prepares a preliminary 'Red Herring' prospectus which
includes detailed financial records, future plans and the specification of
expected share price range. This is meant for the future buyers who would be
interested in buying the stocks of the company. It also contains a
legal warning about the pending SEBI approval for the IPO.
3. Roadshow- After the prospectus is ready, the underwriters and company officials
go to major trade hubs and promote the company's IPO among select few private
buyers (Usually corporates or HNIs) countrywide. The main aim of such shows is
to feed them significant information like company's future plans and growth
potential. They gauge investor response through these and try to attract big
investors.
4. SEBI approval and go ahead- After being satisfied with the registration
statement, SEBI approves it and gives a go ahead for the IPO and decides a date
for the same. Sometimes, it may suggest amendments before approval. The
company is then required to select a stock exchange where it wants to sell its
shares and gets listed.
5. Deciding the price band and number of shares- Post SEBI’s approval, the
company and the underwriters decide the price of the share and the number to be
sold.
6. Available to public for purchase- On the dates mentioned in the prospectus, the
shares are presented before the public. The investors can fill out the IPO form and
specify the price at which they wish to make the purchase and submit the
application.
7. Price fixation and allotment- At the end of the subscription period, the
underwriters and the issuing company determine the share price on the basis of
the demand and the price bid quoted by the prospective buyers. After the price
fixation, the shares are allotted.
 8. Listing and unblocking of funds- Listing in stock exchanges is the final step of
IPO. The allotees would get their shares demat and credited to their accounts and
those who did not get any shares will get their money credited back to their
accounts.

The IPO process needs professional assistance and support at all stages in order for it to be
carried out successfully.