Raising funds from an NRE account to the current account of a private limited company in India through private placement without complying with FEMA, MCA, and Income Tax Act requirements is a serious compliance lapse. However, corrective steps can still be taken. Here’s a breakdown of the situation and the possible remedies:

🚨 Issues Involved

1. FEMA (Foreign Exchange Management Act):
   • NRE account represents foreign source of funds.
   • Investment from a non-resident in a private limited company must comply with FDI guidelines, pricing norms, and be reported to the RBI (through Form FC-GPR).
   • Sectoral caps, entry routes, and KYC compliance might be applicable.
2. MCA (Companies Act, 2013):
   • Private placement requires strict compliance under Section 42:
     • Board and special resolutions.
     • Filing of PAS-4, PAS-3, etc.
     • Offer letter and proper allotment procedure.
     • Proper use of a separate bank account for subscription money.
3. Income Tax Act:
   • Possible violation of:
     • Section 56(2)(viib) (tax on excess consideration above fair value).
     • Non-reporting may attract scrutiny or penalties.
     • Source of funds must be explained and properly documented.

✅ Step-by-Step Solutions

1. Rectify FEMA Non-Compliance

• KYC of Investor: Get KYC and eligibility documents from the NRI investor.
• Check FDI Eligibility: Ensure the company operates in a sector where FDI is allowed under automatic route.
• Pricing Compliance: Get a valuation report from a CA or merchant banker.
• File Form FC-GPR: Submit the delayed Form FC-GPR with RBI via FIRMS Portal.
• Compounding with RBI: Since FC-GPR is not filed within 30 days, file a compounding application with RBI for the delay.

2. Regularize under Companies Act

• Hold Board and EGM Resolutions (retrospective if needed).
• File PAS-3 (Return of Allotment) with late fee and condonation, if required.
• Prepare PAS-4 (Private Placement Offer Letter) and maintain a proper register of allotments.
• Consider Compounding under Section 42 with Regional Director (RD) for procedural lapses.

3. Income Tax Compliance

• Valuation Report: Ensure shares were issued at FMV to avoid Section 56(2)(viib) implications.
• Disclose in Audit Report: If audit is applicable, ensure disclosure of share capital received.
• If scrutiny arises, prepare documentation to prove source, identity, and genuineness of funds.
• Revise ITRs, if required, with appropriate explanations.

📑 Documents Required

• Shareholders’ resolution and Board resolution.
• Valuation certificate from a CA/registered valuer.
• KYC of investor (passport, address, NRE account statement).
• FC-GPR, PAS-3, PAS-4, and Form MGT-14.
• Bank statements showing receipt of funds.

🛡️ Risk Mitigation

• Going forward, ensure proper professional advice before any foreign funding.
• Maintain proper documentation for each step.
• Implement internal compliance checklist.

💡 Suggestion

Hire a company secretary (CS) and a chartered accountant (CA) with experience in FEMA compliance and FDI reporting to handle the compounding process and rectify historical lapses.

Let me know if you want a draft compounding application format or a stepwise checklist for this correction.