What is Consequences of violating FEMA regulations for FDI?
Nexa Consultancy | Startup & Finance Glossary
Non-compliance with FEMA regulations, such as not reporting foreign investment within the stipulated time, can lead to heavy penalties that can be a percentage of the transaction amount. The company may have to go through a "compounding" process with the RBI to settle the contravention.
Startup Example: A startup receives $500,000 from a US investor but files the required Form FC-GPR 60 days late. They will have to apply for compounding and pay a significant penalty calculated by the RBI.
Our fundraising advisory includes managing FEMA compliance.