“Two of us own the company. So who files the APR?” The question comes up the first time two Indian investors share a foreign entity. The answer sits in one short instruction on RBI’s own APR form, and most finance teams never read it. Get it wrong and nobody files, because each side assumes the other has it covered. That is how a routine annual return becomes a FEMA compliance problem.
What the RBI instruction says. Every resident who makes overseas direct investment in a foreign entity must report on it each year. Where more than one resident has invested in the same entity, Instruction 4 to the APR form settles who files. The resident holding the highest stake files. If holdings are equal, the APR may be filed jointly, or the investors can authorise one of them to file for all. This is a rule about responsibility, not about splitting the report. There is one APR for each foreign entity, filed through the AD bank by 31 December, and not one APR per investor.
Working out the highest stake. The test compares each Indian investor’s own shareholding in the foreign entity. If Company A holds 40%, Company B holds 35% and a foreign partner holds 25%, Company A files. If A and B each hold 30% and the foreign partner holds 40%, the stakes are equal, so you file jointly or authorise one. One detail catches people out: the capital structure paragraph of the form shows the combined stake of all Indian residents, so in the first example the APR would show 75% Indian even though Company A holds 40%. The form reports the combined holding, while the highest-stake test picks the filer.
Equal stakes: two ways to handle it. Filing jointly keeps both investors visibly involved, but it needs two boards, two sets of signatories and possibly two AD banks to move in step. Authorising one filer is usually more practical, with one owner and one timeline. Pick the investor with the stronger finance team or the easier bank relationship. Choosing the filer also decides whose auditor signs, so settle it before the audit starts, not after.
What the filer takes on. Being the filer means owning more than the submission. The form asks the filer to confirm that all earlier APRs for the entity have been filed, so a gap in one investor’s record can hold up the filing for everyone. Shareholding changes during the year must be reported, and leaving them out counts as not submitting the APR at all. And the control answer decides whether unaudited accounts are ever possible.
The audit in a jointly owned company. Audited financial statements of the foreign entity are the default basis, and the exception needs both no control and no audit mandate in the host country. In a joint venture that is open to argument, so treat an audit as the working assumption. One audit of the entity serves the APR for every Indian investor. The practical work is agreeing who instructs the auditor, how the fee is split, and who chases the books, especially when the foreign partner runs the accounts.
Put it in writing. A short authorisation note should name the foreign entity and each investor’s UIN, the years it covers, who signs and which board approvals are needed, a date by which final accounts must reach the filer well before 31 December, how audit costs and any late fee are shared, and what happens if the filer sells down or changes AD bank.
Where it goes wrong. Nobody files, because each investor assumes the other has it. A late APR can be regularised with a flat late submission fee of Rs 7,500 per return for up to three years, after which compounding is needed, and banks have reportedly held back further remittances until pending APRs are cleared. Stakes also shift: a capital top-up can make a different investor the highest holder, so recheck the position every year.
The rule is short, but it only works if someone owns it. Decide before December, record the decision, and put a yearly recheck in the calendar.
Read the complete guide, including the full stake examples and authorisation checklist:
https://accorppartners.com/blogs/apr/equal-stakes-one-apr-how-two-indian-investors-file-jointly-or-authorise-a-single-filer
Top comments (0)