FEMA & RBI

Your Indian employees hold options in your foreign parent company. RBI wants a filing every six months

If your Indian company sits under a foreign holding company and grants stock options in that parent to Indian-resident staff, this is a filing your company owes, not a one-time setup detail.

Your Indian company sits under a foreign holding company, a common structure for a startup with global ambitions, and Indian-resident employees, sometimes including your Indian co-founders, hold stock options in that foreign parent rather than in the Indian entity itself. It feels like a settled, one-time piece of legal setup. It isn't. Every time an employee's holding changes, and even when it doesn't, your Indian company owes RBI a report through its bank, on a cadence that changed in 2022 and that a lot of companies are still filing on the old rhythm.

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Last reviewed: 5 September 20265 min readReviewed by Preetesh Maloo, CA

The short answer

If your Indian company sits under a foreign holding company and Indian-resident employees hold stock options in that foreign parent, the Indian company, not the employee, has to report it to RBI on Form OPI, filed through its bank every half-year, by 31 March and 30 September, within 60 days of each. This replaced a single annual filing in August 2022, and cashless (net-settled) exercises are no longer exempt, everything gets reported now. Even in a half-year where nobody exercised anything, a Nil Form OPI still has to be filed; treating a quiet period as nothing to report is exactly the default that draws a Rs 7,500 late fee per missed form.

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Related situations

It's your company's filing, not the employee's

The reporting obligation sits with the Indian entity, not with whichever employee or director actually holds the options. Your company reports through its own Authorised Dealer bank, covering every Indian resident who holds shares or options in the foreign parent, whether that's a handful of senior hires or your own Indian co-founders. The foreign parent having no other presence in India doesn't change this; the trigger is an Indian resident holding foreign equity, not the foreign company's own footprint here.

The cadence changed in 2022, and so did the exemption

Before August 2022, this was a single annual filing, and a cashless, net-settled exercise was exempt from it entirely. Since then, it's a half-yearly Form OPI, due within 60 days of 31 March and 30 September each, and there's no cashless exemption left, every exercise, cash or cashless, is reportable. A company still filing once a year, or still treating net-settled exercises as outside scope, because that's how it was set up originally, is working from a rulebook that's several years out of date.

A quiet half-year still needs a filing, just a Nil one

The instinct when nobody exercised anything in a given half-year is that there's nothing to report, so nothing gets filed. That's the wrong call. A Nil Form OPI is still due for that period, and skipping it because it felt like a non-event is exactly what accrues the late fee, currently Rs 7,500 per form not filed on time. The filing obligation runs on the calendar, not on whether anything actually happened in it.

What goes wrong without a CA

The recurring pattern: the foreign-holdco structure and the ESOP plan get set up correctly at the start, with proper legal advice on the equity side, but the recurring FEMA reporting never gets wired into anyone's calendar, because whoever handled the group structuring treated it as a one-time task rather than a standing obligation. It surfaces at an investor's diligence or an internal review, by which point several half-years, including quiet ones that still needed a Nil filing, are simply missing from the record.

What's involved

What the CA actually does

1
We identify exactly who triggers this
We map which Indian-resident employees and directors actually hold shares or options in your foreign parent, so nobody's grant is missed from the filing, and confirm the OPI classification genuinely applies to your structure.
2
We run the half-yearly Form OPI filing as routine
Including the Nil filing in a quiet half-year, so the 60-day deadline after 31 March and 30 September never slips because nothing seemed to happen that period.
3
We reconstruct a missed filing history
Where past half-years were never reported, we work out the correct position and get your company current before it's found in someone else's diligence.

What to have ready

Documents you'll typically need

The foreign parent's ESOP or equity-incentive plan and individual grant letters
A list of Indian-resident employees and directors holding grants or shares in the foreign parent
Any Form OPI, or the earlier annual ESOP Reporting form, already filed
The group's holding structure showing the foreign parent and Indian subsidiary relationship

References on this page

Foreign Exchange Management (Overseas Investment) Rules/Regulations 2022, effective 22 August 2022 (RBI/2022-2023/110, A.P. (DIR Series) Circular No. 12): shares received by an Indian resident under an overseas parent's ESOP are classified as Overseas Portfolio Investment (OPI), provided the holding stays under 10% of the foreign company's equity and confers no control
Form OPI, filed by the Indian employer through its Authorised Dealer bank, for each half-year ending 31 March and 30 September, within 60 days of the half-year's end, replacing the earlier regime's single annual 'ESOP Reporting' filing
No exemption for cashless (net-settled) exercises under the current rules; all exercises, cash or cashless, are reportable, and a Nil Form OPI is required even where nothing was exercised or remitted in the half-year
Late Submission Fee of Rs 7,500 per Form OPI not filed by its due date, under the Overseas Investment Regulations read with A.P. (DIR Series) Circular No. 16 (30 September 2022)

Frequently asked questions

Common questions

Yes, if any Indian-resident employee or director holds shares or options in the foreign parent, this reporting is triggered. Money movement isn't what triggers it, the equity holding is, and a Nil filing is still due even where no cash actually moved.

No. That single annual filing was replaced in August 2022 by a half-yearly Form OPI, due within 60 days of 31 March and 30 September each. Filing once a year now leaves at least one half-year unreported.

Yes. A Nil Form OPI is required even where nothing was exercised or remitted. Treating a quiet half-year as needing no filing is exactly what draws the Rs 7,500 late fee.

Not anymore. The earlier exemption for cashless exercises was removed under the 2022 rules; every exercise, cash or cashless, is reportable now.

The exceptions that change the answer

Where the general rule stops applying to you

Every rule below has a carve-out, a cut-off date or a condition that flips the answer. These are the ones that decide real cases.

Late filing fee

Right now: Rs 5,000, reduced to Rs 1,000 where total income is up to Rs 5 lakh

Where it works differently

Total income is below the taxable limit: No fee, even if the return is late.; The fee attaches only where a return was required under s.139(1).
Capital losses are being carried forward: The bigger cost is losing the carry-forward, not the Rs 5,000.; s.80 requires a timely return.

Commonly got wrong

The late fee can be Rs 10,000. The Rs 10,000 tier was removed from AY 2021-22.The late-filing fee is Rs 5,000, or Rs 1,000 where total income is up to Rs 5 lakh. The larger cost is usually losing the loss carry-forward, not the fee.

If this matched your situation, these go further

Setting up an Indian private limited company as an NRI founder FC-GPR, FC-TRS and the FLA return: the RBI filings most companies miss You wired your company money and called it a director loan. FEMA disagrees Your foreign holding company invests back into India. FEMA counts how many layers deep that structure goes You promised your overseas advisor 'some equity' through your ESOP scheme. Under Indian law, you can't actually give it to them

Does your Indian company sit under a foreign parent with ESOPs granted to Indian staff?

Tell us how your group is structured and who holds equity in the foreign parent. A practising CA will confirm the Form OPI position, including any Nil filings owed, and get your half-yearly filing running properly, on a free call, no obligation.