Imagine an Indian company listed in India that wants to raise funds from investors in Europe and the United States. Instead of listing its shares directly on a foreign stock exchange, the company decides to use the depository receipt (DR) route.

The issue is completed, and the company receives the investment. Now its finance team needs to understand the next compliance requirement: which details must be reported to the Reserve Bank of India (RBI), and what is the applicable deadline?

This process can be unfamiliar to companies that usually deal with regular foreign investment filings. Depository receipt transactions have separate reporting requirements under FEMA.

This guide explains Form DRR, including its purpose, filing responsibilities, timelines, required documents, and the procedure for submitting the report.

What Are Depository Receipts (ADRs and GDRs)?

A depository receipt is a financial instrument issued by a foreign bank against shares of an Indian company. Each receipt represents a specified number of underlying shares.

The original shares remain in India with a bank known as the domestic custodian. A foreign bank, called the depository, issues receipts against those shares. Investors in overseas markets can then purchase and trade these receipts.

There are two common types:

• ADRs: American Depository Receipts, generally traded in the United States.
• GDRs: Global Depository Receipts, which can be traded in international financial markets, including Europe and Asia.

Through this arrangement, an Indian company can access overseas investors without directly listing its equity shares on a foreign stock exchange.

What Is Form DRR Under FEMA?

Form DRR is a reporting form used for notifying the Reserve Bank of India about specified depository receipt transactions involving Indian companies.

The report is submitted electronically through the RBI’s FIRMS portal, in accordance with the applicable reporting procedure.

It captures information about the depository receipt issue and related transactions, including the underlying shares and foreign investment details.

For companies involved in overseas fundraising through depository receipts, this reporting requirement forms an important part of FEMA compliance.

Why Form DRR Matters for Foreign Investment Reporting

Reporting depository receipt transactions helps maintain proper records of overseas investment in Indian companies.

Form DR plays an important role in the reporting framework for several reasons:

• It allows RBI to maintain records of foreign investment received through depository receipts.
• It supports regulatory checks relating to sectoral investment limits and applicable pricing requirements.
• It helps maintain accurate foreign investment information.
• It provides a reporting trail for the company’s FEMA compliance.

Proper reporting can also help companies during statutory audits, future fundraising activities, and investor due diligence.

Legal Framework: FEMA, NDI Rules and the Depository Receipts Scheme

Companies issuing depository receipts must consider the applicable foreign exchange laws and reporting requirements.

The main regulatory references include:

• FEMA, 1999: The principal legislation governing foreign exchange transactions in India.
• FEMA Non-Debt Instruments Rules, 2019: Contains provisions relating to foreign investment in Indian companies.
• Depository Receipts Scheme, 2014: Provides the framework for issuing and holding depository receipts.
• RBI Master Direction on foreign investment: Contains reporting procedures and related instructions for companies and authorised dealer banks.

Regulatory provisions may be amended over time. Companies should consult the latest applicable rules and RBI directions before completing their filings.

Who Is Responsible for Filing Form DRR?

Depository receipt transactions generally involve two important participants:

• The Indian issuing company: The company whose shares form the basis of the depository receipts.
• The domestic custodian bank: The Indian bank responsible for holding the underlying shares and performing the relevant custodial functions.

The reporting responsibility may vary depending on the type of transaction, such as a fresh issue, transfer, or conversion of depository receipts.

Therefore, companies should not assume that every reporting requirement rests with the issuing company alone.

Before proceeding, identify the reporting responsibility for the particular transaction by referring to the latest RBI Master Direction. The company should also coordinate with its authorised dealer (AD) bank and domestic custodian to confirm the applicable procedure.

When Should Form DRR Be Filed?

The reporting timeline depends on the nature of the depository receipt transaction and the applicable RBI instructions.

A commonly referenced reporting period is 30 days from the relevant event, such as the completion of an issue or a transfer. However, companies should verify the exact event date and applicable deadline under the latest Master Direction before relying on this timeline.

Example for understanding:

Suppose a depository receipt issue is completed on 1 March. If a 30-day reporting period applies from that date, the corresponding deadline would fall on 31 March.

Companies should begin preparing the report well before the due date. This gives the AD bank and custodian sufficient time to review the information and supporting documents.

Information Required in Form DRR

The information requested in the report relates to the company, the depository receipt arrangement, and the underlying shares.

Companies should be prepared to provide details such as:

• Legal name and Corporate Identification Number (CIN) of the issuing company
• Particulars of the domestic custodian and overseas depository
• Category of depository receipt, such as ADR or GDR
• Total receipts issued and the number of underlying shares represented by each receipt
• Foreign currency proceeds and their corresponding Indian rupee value
• Details of the underlying equity shares, including face value and ISIN
• Intended utilisation of the funds, wherever required

All information should be checked against the transaction agreements, share records, and relevant banking documents before submission.

Documents Required for Form DRR Filing

Keeping the supporting papers organised can make the reporting process easier and help reduce queries during verification.

The documents generally required may include:

• Board and shareholder resolutions approving the depository receipt issue
• Contracts governing the arrangement between the company, depository, and domestic custodian
• Offer documents and relevant listing-related papers
• Bank advice or other evidence confirming receipt of funds
• Information relating to the underlying equity shares
• Confirmation from the domestic custodian regarding the shares held
• Valuation reports or pricing-related documents, wherever applicable

The AD bank may request additional records depending on the transaction. It is advisable to obtain its document checklist before preparing the final submission.

Step-by-Step Form DRR Filing Process on the FIRMS Portal

Companies should follow the applicable RBI reporting procedure and coordinate with the concerned bank and custodian throughout the process.

Step 1: Identify the Reporting Responsibility

Start by reviewing the transaction and determining which party is responsible for submitting the relevant report. The issuing company and domestic custodian should coordinate before beginning the filing.

Step 2: Arrange the Supporting Information

Collect the transaction agreements, banking records, share details, and other required documents. Cross-check the figures to ensure that the same information appears consistently across all records.

Step 3: Access the FIRMS Portal

Open the RBI’s FIRMS portal and sign in using the appropriate entity user credentials. If the company has not completed the required registration, follow the applicable registration procedure first.

Step 4: Locate the Relevant Reporting Option

Navigate to the Single Master Form (SMF) and identify the reporting option applicable to the depository receipt transaction.

Step 5: Enter the Transaction Information

Provide the required particulars of the Indian company, domestic custodian, foreign depository, receipts issued, underlying shares, and investment amount.

Step 6: Attach Supporting Records

Upload the relevant approvals, agreements, banking evidence, and other documents requested for the transaction.

Step 7: Complete Bank Verification and Submission

After the report is prepared, it is routed through the applicable authorised dealer bank. The bank reviews the information and supporting records before forwarding the report to RBI, as required under the reporting procedure.

Step 8: Retain the Filing Confirmation

Once the submission process is completed, save the acknowledgement and related correspondence. These records can be useful during future audits and compliance reviews.

Portal layouts and filing instructions may be revised. Always follow the current instructions available on the RBI FIRMS portal.

Role of the AD Bank and Domestic Custodian

The authorised dealer bank and domestic custodian have different responsibilities in the depository receipt reporting process.

Responsibilities of the AD Bank

The AD bank generally:

• Reviews the report and supporting documents.
• Checks the information against applicable FEMA requirements.
• Handles the required verification and submission process.
• Communicates with the company if further information or clarification is needed.

Responsibilities of the Domestic Custodian

The domestic custodian generally:

• Maintains custody of the underlying shares in India.
• Verifies the number and particulars of shares represented by the receipts.
• Provides relevant confirmations and transaction information.
• Performs reporting or supporting functions as prescribed under the applicable rules.

Regular communication between the company, AD bank, and custodian can help avoid delays and inconsistencies.

Form DRR vs FC-GPR: Which One Applies?

Both Form DRR and Form FC-GPR relate to foreign investment reporting, but they cover different investment arrangements.

• Form FC-GPR: Used for reporting the issue of eligible capital instruments by an Indian company to a person resident outside India, subject to applicable FEMA requirements.
• Form DRR: Relates to reporting specified transactions under the depository receipt route, where overseas investors hold receipts issued against underlying Indian shares.

The nature of the investment arrangement determines the relevant reporting requirement. Depending on the transaction, more than one compliance obligation may need to be considered.

Companies should confirm the applicable forms and reporting responsibilities under the latest RBI directions.

You can also read our guides on Form FC-GPR and the RBI FIRMS Portal to understand direct foreign investment reporting.

Penalties and Compounding for Late or Missed Filing

Failure to meet applicable FEMA reporting requirements can result in a regulatory contravention.

Section 13 of FEMA, 1999 provides for penalties in cases involving contraventions of the Act, rules, regulations, notifications, or directions issued under it.

Depending on the nature of the delay and the applicable provisions, the company may need to consider:

• Late Submission Fee (LSF): Where the relevant RBI reporting framework permits payment of an LSF for delayed submission.
• Compounding: An application to the RBI or the designated authority for resolution of an eligible FEMA contravention through the prescribed compounding procedure.

Repeated reporting gaps can also create difficulties during future fundraising, audits, and regulatory reviews.

If a company has missed a reporting deadline, it should first assess the nature of the delay and the applicable regulatory procedure before taking corrective action.

Common Mistakes in Depository Receipt Reporting

Companies may face avoidable compliance issues when they do not properly coordinate the reporting process.

Some common mistakes include:

• Not confirming whether the company or domestic custodian is responsible for a particular filing.
• Calculating the reporting deadline from an incorrect transaction date.
• Confusing Form DRR requirements with Form FC-GPR.
• Providing figures that differ from the transaction agreements or bank records.
• Starting the bank verification process too close to the deadline.
• Not sharing relevant information with the domestic custodian.
• Relying on outdated forms, portal instructions, or regulatory guidance.

A proper review before submission can help reduce errors and unnecessary delays.

Compliance Tips for Companies Raising Money Through Depository Receipts

Companies planning to raise overseas capital through depository receipts should consider the following practices:

• Identify all applicable FEMA reporting requirements before launching the issue.
• Clearly allocate responsibilities between the company, domestic custodian, and AD bank.
• Maintain complete records of approvals, agreements, and financial transactions.
• Create an internal compliance calendar to track reporting deadlines.
• Review RBI notifications and updated directions before each submission.
• Seek professional advice for large, complex, or unusual transactions.

These measures can help companies maintain an organised reporting process and reduce compliance risks.

Why Choose FEMA Expert as Your FEMA Consultant in India?

FEMA Expert is led by CA Happy Agarwal, a Chartered Accountant with over 8 years of experience in FEMA, FDI, and cross-border transactions.

As a FEMA consultant in India, we support companies with foreign investment reporting and related regulatory requirements.

Our assistance includes:

• Reviewing foreign investment transactions to identify applicable RBI reporting requirements.
• Coordinating with authorised dealer banks and domestic custodians.
• Organising supporting documents and monitoring filing timelines.
• Providing guidance on delayed reporting and applicable compounding procedures.

Our FDI consultant in India team also assists with Form FC-GPR, Form FC-TRS, annual FLA returns, and other RBI reporting requirements.

With professional guidance, businesses can manage their foreign investment compliance requirements in a more structured manner.

Planning a depository receipt issue? Contact FEMA Expert for assistance with the applicable FEMA reporting process.

Conclusion

Form DRR is an important part of the reporting framework for Indian companies raising overseas capital through depository receipts. Understanding the reporting responsibilities, transaction details, and applicable deadlines can help businesses avoid unnecessary compliance issues.

Companies should coordinate with their domestic custodian and authorised dealer bank, maintain proper transaction records, and refer to the latest RBI directions before submitting the report.

If your company is planning a depository receipt issue or needs assistance with foreign investment reporting, FEMA Expert can guide you through the applicable FEMA compliance requirements.

(FAQs)

1. What is Form DRR?

Form DRR is a reporting form associated with specified depository receipt transactions involving Indian companies. The applicable report is submitted through the RBI reporting framework.

2. What are ADRs and GDRs?

ADRs and GDRs are financial instruments issued overseas against shares of an Indian company. ADRs are generally traded in the United States, while GDRs can be traded in other international markets.

3. Who is responsible for Form DRR filing?

The reporting responsibility may involve the Indian issuing company, domestic custodian, or both, depending on the transaction and applicable RBI instructions.

4. What is the deadline for Form DRR submission?

The applicable timeline depends on the transaction and the relevant RBI directions. A 30-day period is commonly referenced for certain reporting events, but the exact deadline should be verified before filing.

5. Is Form DRR the same as Form FC-GPR?

No. Form FC-GPR relates to the issue of eligible capital instruments directly to non-residents, while Form DRR relates to the depository receipt reporting framework.

6. Where is Form DRR submitted?

The relevant reporting is carried out through the RBI’s FIRMS portal, following the applicable procedure and authorised dealer bank requirements.

7. What happens if Form DRR is submitted late?

A Late Submission Fee may be available where permitted under the applicable reporting framework. Other FEMA contraventions may require a separate compounding process, depending on the circumstances.

8. How can FEMA Expert help with Form DRR?

FEMA Expert can assist companies in understanding reporting requirements, coordinating with banks and custodians, preparing documents, and managing applicable FEMA compliance procedures.