If you hold an overseas subsidiary or joint venture, its Annual Performance Report (APR) is due to your AD bank by 31 December 2026. The form runs to a few pages. What sits behind it does not: final (and usually audited) accounts of the foreign entity, reconciled with what India’s records say you invested.
An overseas audit alone can take two to three months from engagement to signed report. Add reconciliation, certification in India and the bank’s own review, and the arithmetic is plain. For most groups, October, November and December are the APR quarter, and 1 October is the real start line.
This note sets out who must file, when an audit is unavoidable, and a week-by-week plan for the next 13 weeks.
Who must file
Every person resident in India who has made overseas direct investment (ODI) must file one APR a year for each foreign entity, under Regulation 10(4) of the Foreign Exchange Management (Overseas Investment) Regulations, 2022. This covers Indian companies, LLPs and other entities, and resident individuals. Acquisitions, transfers or wind-ups of step-down subsidiaries, and changes in the foreign entity’s shareholding during the year, are reported inside that APR.
Where more than one Indian resident has invested in the same foreign entity, the one with the higher stake files. Equal holders may file jointly.
No APR is required in three cases:
- You hold less than 10% of the equity, without control, and have no financial commitment other than equity (no loans, guarantees or pledges).
- The foreign entity is under liquidation, from the date liquidation begins.
- The broken period on disinvestment; transactions since the last APR go in Form FC instead.
The APR is separate from the FLA return (due 15 July). Filing one does not discharge the other.
Audited or unaudited: two tests, both must pass
The default is clear: the APR is based on the foreign entity’s latest audited financial statements. Unaudited accounts are allowed only when both conditions hold: the Indian investor has no control, and the host country does not mandate an audit. Unaudited statements must then be certified by the statutory auditor of the Indian entity, or by a chartered accountant where no statutory audit applies (RBI Form APR).
| Your position | Host country mandates audit? | APR basis |
| Control (e.g. wholly-owned subsidiary) | Yes or no | Audited |
| No control | Yes | Audited |
| No control | No | Unaudited, CA-certified |
“Control” under the OI Rules is wider than a majority stake. It includes the right to appoint a majority of directors or to steer management or policy decisions, including through agreements carrying 10% or more of voting rights.
The trap most groups fall into: a wholly-owned US or UK subsidiary may need no audit under local law. The APR still needs one, because the Indian parent has control. Engage an auditor qualified to sign in that jurisdiction, and confirm early with your AD bank what it will accept.
A worked example
Take an Indian private company, A Ltd, with three overseas holdings (an illustration, not a client):
| Foreign entity | A Ltd’s position | Year-end | APR due 31 Dec 2026? | Accounts to use |
| US Inc (Delaware) | 100%, plus a USD loan | 31 Dec | Yes | Audited, year ended 31 Dec 2025 |
| UK JV Ltd | 40%, right to appoint 2 of 3 directors | 31 Mar | Yes | Audited, year ended 31 Mar 2026 |
| SG Pte Ltd | 8%, no board seat, equity only | 31 Dec | No | Exempt: under 10%, no control, no other commitment |
Two points stand out. The US entity needs an audit even if Delaware law does not require one, because A Ltd controls it. And the UK JV, a minority stake, is still “controlled” because of the board-appointment right, so the UK small-company audit exemption does not help for APR purposes.
If A Ltd later lends to SG Pte Ltd, the third exemption falls away and an APR becomes due for that entity too.
The 13-week plan
Aim to lodge the APR with your AD bank by 15 December. That leaves two weeks to answer queries before the deadline.
APR quarter · 3 phases, 2 dates
October (weeks 1–4): map and engage
- List every foreign entity with its UIN, your stake, whether you have control, its year-end, and every financial commitment (equity, loans, guarantees, pledges).
- Apply the two tests above to each entity and record whether the APR will be audited or unaudited.
- Engage the overseas auditor now. Agree the timetable and the documents they need.
- Ask the foreign entity for its trial balance, ledgers, bank statements and board minutes.
- Check your own compliance history: were earlier APRs filed? Were share certificates submitted to the AD bank within six months of each remittance? Any gap here will surface in the APR declarations.
November (weeks 5–9): audit and reconcile
- Keep the audit moving. Answer auditor queries within two working days; delays here cause most slippage.
- Reconcile the draft figures with your Indian records: equity remitted, loans and interest, guarantees, dividends and other amounts repatriated.
- Note every step-down subsidiary acquired, transferred or wound up, and any change in shareholding during the year.
- For the unaudited route, get the Indian board to take the foreign accounts on record, and line up the CA certification.
- Book the Indian statutory auditor or CA for APR certification in early December.
December (weeks 10–13): certify, file, close
- Receive the signed audit report and final accounts.
- Complete Form APR, matching the UIN and figures exactly across every document. Get it certified.
- Lodge it with the AD bank by 15 December, with the audited accounts and supporting papers.
- Respond to bank queries the same day where possible.
- Obtain the bank’s acknowledgement and keep it on file. A sent email is not proof of filing.
Where APRs come back from the bank
Most returned APRs trace to a handful of avoidable issues:
- UIN mismatch between the APR, the accounts and the bank’s records.
- Unaudited accounts used where the investor has control.
- Figures that do not reconcile with Form FC filings, or are reported in the wrong currency.
- Step-down subsidiary changes left out of the year’s report.
- Missing certification, or an audit report signed by someone not qualified in the host country.
- Wrong filer, where two Indian investors each assume the other will file.
If an earlier year was missed
A delayed APR can be regularised by filing it through the AD bank with a Late Submission Fee (LSF) of ₹7,500 per return. The LSF route is open for three years from the original due date. Beyond that, the default is a contravention under FEMA, dealt with through compounding or penalty proceedings, where the penalty can reach three times the sum involved (Beacon Filing summary of the Master Direction).
The fee is the smaller cost. Until the delay is regularised, you cannot make any further financial commitment in overseas entities or complete a disinvestment. A pending APR can therefore stall a fresh remittance, a loan to the subsidiary, or an exit.
A backlog year still needs its own accounts, audited where the tests above require it. If you have one, run it alongside this year’s engagement from October rather than after it.
Checklist for this week
- ☐ List of foreign entities with UIN, stake, control, year-end and all financial commitments
- ☐ Audited or unaudited route decided for each entity
- ☐ Overseas auditor engaged, timetable agreed
- ☐ Prior-year APRs and share-certificate submissions confirmed
- ☐ Any backlog year identified and scoped
- ☐ Indian CA or statutory auditor booked for early-December certification
- ☐ Internal target date: APR with AD bank by 15 December 2026
APR is a routine filing that becomes difficult only when it starts late. Treat 31 December as the finish line of a quarter’s work, not the start of it.
CA Samir Mahajan is a Partner at Surinder Mahajan & Associates, Chartered Accountants. This article is general information on the law as understood at the date of writing and is not professional advice. Readers should consult their advisers and AD bank on their specific facts.
