FEMA Due Diligence

FEMA Due Diligence

Whenever a company raises foreign funding, restructures ownership, buys shares from a non-resident, sets up an overseas subsidiary, or goes through an audit or acquisition, FEMA becomes a checkpoint. FEMA due diligence examines whether every cross-border transaction, filing, and document aligns with RBI rules — before it turns into a compliance problem.

It protects buyers, investors, founders, and advisors from hidden FEMA exposures that may delay deals or trigger compounding.

What FEMA due diligence covers

  • Review of FDI received since incorporation

  • Check FC-GPR, FC-TRS, EMF, SMF, FLA and other filings

  • Pricing and valuation compliance

  • Sectoral cap, approval vs automatic route review

  • ODI, ECB, and overseas JV/subsidiary compliance

  • Share transfer history and foreign exits

  • Bank KYC, FIRCs, and reporting timelines

  • FEMA contraventions, gaps, or missing documentation

Why it matters

  • Required during funding, mergers, acquisitions, and audits

  • Helps avoid penalties, delays, or investor objections

  • Increases transaction confidence and transparency

  • Supports bankers, legal teams, and due diligence checklists

  • Makes the company future-round ready

How we help

  • Collect and review FEMA-linked documents and filings

  • Identify non-compliance, risks, and irregularities

  • Prepare a clear compliance report with action items

  • Assist in regularising past gaps and delayed reporting

  • Coordinate with banks, investors, and legal teams

  • Advisory on restructuring or upcoming transactions

Documents usually required

  • Incorporation documents, capital structure, cap table

  • FIRCs, KYC reports, SWIFT copies, bank advice

  • Valuation certificates and board approvals

  • Past FEMA forms and RBI acknowledgments

  • Share purchase agreements, transfer records

  • Financial statements and statutory registers

Our approach

  1. Understand deal or compliance objective

  2. Review documents, filings, and timelines

  3. Flag gaps, risks, and potential violations

  4. Recommend corrective actions with priorities

  5. Support filings, clarifications, or compounding if required

Frequently Asked Questions

1. When is FEMA due diligence needed?

During fundraising, M&A, audits, promoter exits, restructuring, or before issuing shares to a foreign investor.

 

2. Is it required even if compliance seems done?

Yes. Many companies discover missed filings only during diligence.

 

3. Can non-compliance be corrected after discovery?

Usually yes, through delayed reporting or compounding, depending on the issue.

 

4. Who conducts FEMA due diligence — CA, CS, or lawyer?

Often a combination, but firms experienced in FEMA filings and bank coordination are preferred.

 

5. Does private placement to a foreign investor need diligence?

Ideally yes, to confirm pricing, timelines, and filings.