The ODI route: how an Indian founder legally owns a US company

Why this exists: FEMA treats owning a foreign company as regulated capital, not a personal purchase

Under India’s Foreign Exchange Management Act, an Indian resident individual or an Indian entity acquiring equity, or a membership interest carrying equity-like rights, in a foreign entity is making an Overseas Direct Investment — a distinct, RBI-regulated category, separate from remittances for travel, education, or gifts. A US LLC membership interest or US C-Corp common stock both qualify as ODI once the Indian party ends up holding an ownership stake, whether that stake was bought for cash, issued at incorporation, or received as founder stock.

The practical consequence is that the money moving from India to the US to fund the company cannot be sent as a routine wire transfer initiated on a personal banking app. It has to be routed through the ODI reporting mechanism at a bank the RBI has specifically authorised to handle this category of outward investment — an Authorised Dealer Category-1 bank. Most major Indian banks with a foreign-exchange desk hold this authorisation; the founder’s task is to identify which of their existing banking relationships carries it, or open one that does, before the first rupee moves.

Form FC and Form A2: two different forms doing two different jobs at the bank

Form FC is the ODI reporting form itself — it captures the details of the overseas investment (the foreign entity, the amount, the nature of the holding) for the RBI’s ODI records via the bank. Form A2 is the standard foreign-exchange declaration required for any outward remittance from India above a threshold, regardless of purpose — it is the form that authorises the bank to actually release the funds abroad and confirms the remittance is not for a purpose FEMA restricts. An ODI transaction needs both: Form FC establishes that this outward transfer is a reportable overseas investment with a UIN attached to it, and Form A2 is the mechanical remittance instruction that moves the money once Form FC’s reporting obligation is satisfied.

In practice a founder experiences this as one coordinated submission at the AD Cat-1 bank’s ODI/forex desk rather than two separate errands, but it helps to know which document is doing which job when the bank asks for supporting paperwork a second time or when a delay needs to be traced to a specific step.

The two annual filings that continue for as long as the holding exists

Owning the US entity is not a one-time compliance event — it creates two recurring annual obligations back in India. The Annual Performance Report (APR) reports the US entity’s financial performance and the Indian party’s continued holding, and is due by 31 December each year. The Foreign Liabilities and Assets (FLA) return is a separate annual survey capturing India’s cross-border investment position and is due by 15 July each year — it applies regardless of whether the US entity had any activity in the reporting year.

These two deadlines are not aligned with each other or with the Indian or US financial year, which is exactly why founders miss one or the other: the FLA return in July arrives mid-financial-year with no other filing due at the same time, and the APR in December often lands during a founder’s attention on US-side year-end matters instead. Both should sit on a compliance calendar the moment the UIN is issued, not be discovered when a deadline is already close.

Who does each step

The chain works because each step sits with the party actually equipped to do it, not because any one party can do all of it.

• The AD Category-1 bank: obtains the UIN, processes Form FC and Form A2, receives the share certificate as evidence, and is the party the RBI holds accountable for the reporting chain being correct.
• The founder or the Indian company: supplies the underlying facts (investment amount, ownership percentage, US entity details) to the bank, initiates the remittance request, and is responsible for the annual APR and FLA filings continuing to be made on time.
• A Chartered Accountant: where the bank or the RBI’s framework requires a CA certificate — commonly for the APR, and for confirming the investment figures reported align with the Indian party’s own books — that certification comes from a CA, not from the bank or the founder directly.
• CapEasy: prepares the documentation package for the bank, tracks the UIN, the APR and FLA deadlines, and the share-certificate evidence trail, and coordinates with the AD Cat-1 bank and the CA issuing any required certificate — the filings themselves are made by the bank and, where certification is required, signed by the CA.