• Private and public limited companies with any non-resident shareholder, however small the holding
• Wholly-owned subsidiaries of foreign parents and Indian joint venture companies
• Startups funded by overseas angels, accelerators, syndicates, or funds
• Companies that have granted ESOPs to employees resident outside India
• Foreign Owned or Controlled Companies (FOCCs) — Indian companies that are themselves foreign-owned or controlled and that invest downstream into other Indian entities
• LLPs that have received foreign capital contribution
• Indian companies holding overseas subsidiaries, joint ventures, or portfolio investment
• Companies with outstanding External Commercial Borrowings or cross-border guarantees
• Branch, liaison, and project offices of foreign companies operating in India
• Indian companies receiving investment from NRIs and OCIs on a repatriable basis

There is no de minimis threshold, and no exemption for dormancy. A company that issued one hundred shares to an overseas relative of a founder five years ago and has done nothing since is still filing an annual FLA return every 15 July. A company that has never traded but holds foreign share capital is in exactly the same position as one closing a ₹200 crore round.

The obligation sits on the Indian entity, not on the investor. The person who sent the money from abroad has no filing duty in India. This single misunderstanding accounts for more first-round FEMA defaults than any other cause.

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The Legal Architecture

The important structural point: the NDI Rules are made by the Ministry of Finance, sectoral policy is set by DPIIT, and the operational machinery — portals, forms, verification — is run by the RBI through AD Category-I banks. Three authorities, one transaction. A change announced by DPIIT in a press note does not take legal effect until the corresponding FEMA notification is issued, which is why the gap between “announced” and “notified” matters and is frequently misread.

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The Vocabulary That Decides Everything

Most FEMA errors are classification errors made months before anyone opens a form. Five definitions do most of the work.

The instrument classification point deserves emphasis. A SAFE, a convertible loan with an optional conversion, or a debenture convertible at the investor’s discretion is not a capital instrument. Treating it as FDI and filing FC-GPR does not make it FDI; it creates a reported transaction that is misclassified on the RBI’s own record. Where the instrument is debt in substance, the ECB route and its own eligibility, maturity and end-use conditions apply.

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Entry Routes and Sectoral Caps

Every inbound investment must clear three gates before a rupee moves.

Is the sector open at all?

Foreign investment is prohibited in:

• Lottery business, including government, private, and online lotteries
• Gambling and betting, including casinos
• Chit funds and Nidhi companies
• Trading in Transferable Development Rights
• Real estate business and construction of farm houses (this does not cover development of townships, construction of buildings, roads, bridges, or REITs)
• Manufacturing of cigars, cheroots, cigarillos, and cigarettes and of tobacco substitutes
• Sectors not open to private investment — atomic energy and most railway operations

Automatic route or government approval?

Under the automatic route, no prior approval is needed: the company issues, prices correctly, and reports within the window. Most sectors sit here.

Under the government approval route, prior approval must be obtained through the Foreign Investment Facilitation Portal before the investment is made. Approval cannot be obtained retrospectively. A company that receives money first and applies afterwards has a contravention that compounding, not correction, will have to resolve.

Indicative sectoral caps

Schedule I of the NDI Rules is amended frequently — the insurance entry alone has moved from 26% to 49% to 74% to 100% within a decade. The cap applicable is the cap in force on the date of the transaction, and it must be checked then, not recalled from a previous deal.

The land-border rule

Investment by an entity or citizen of a country sharing a land border with India — or where the beneficial ownership of the investment is traceable to such a country — requires prior government approval regardless of sector and regardless of size.

This test was significantly tightened in 2026. Press Note 2 (2026), issued on 15 March 2026 and given effect by the FEM (Non-debt Instruments) (Amendment) Rules, 2026 notified on 2 May 2026, substituted Rule 6(a) of the NDI Rules in full and introduced a 10% beneficial ownership threshold referenced to PMLA definitions. Structures that previously fell outside the rule because ownership was fragmented across intermediate holding vehicles now require re-testing. The same amendment clarified that the issue or transfer of a participating interest or right in an oil field to a non-resident is itself foreign investment.

For any round involving an investor with beneficial owners traceable to a land-border jurisdiction, this analysis belongs at term sheet stage. It is the one FEMA question that can invalidate an entire transaction rather than merely delay its reporting.

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Pricing and Mode of Payment

The pricing rule

The rule exists to prevent value leaving India cheaply and money entering expensively. It applies to a founder-to-relative transfer exactly as to an arm’s length secondary sale — sentiment is not a defence, and a transfer at face value where fair value is higher is a straightforward contravention.

Two practical points. A valuation certificate has a shelf life; one produced for a round in April will not comfortably support an allotment in December. And the certificate must show its methodology — a one-line certificate stating a number is the attachment that generates a bank query and consumes half the reporting window.

Mode of payment

Consideration must be received through banking channels — by inward remittance, or by debit to an NRE, FCNR(B), or escrow account, and in certain cases an NRO or SNRR account depending on the nature of the investment and whether it is repatriable. Cash consideration is not permitted. Payment through a route not permitted for that class of investment is itself a contravention, independent of pricing or reporting.

Where shares are issued against a non-cash consideration — swap of shares, import of capital goods, pre-incorporation expenses, conversion of ECB, or a legitimate payable — additional conditions and, in some cases, valuation or approval requirements apply.

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The FDI Reporting Calendar

Event-based reporting

All inbound transaction reporting runs on the Single Master Form on the RBI’s FIRMS portal, filed by the Indian entity and verified onward by its AD Category-I bank. Registration on FIRMS — Entity User, Entity Master Form, Business User, and AD branch mapping — must be completed before the first deadline runs, and cannot be compressed into the last week of a thirty-day window.

Two allied timing rules sit ahead of the reporting window and are contravened more often than it is: shares must be allotted within 60 days of receipt of consideration, and if they are not, the money must be refunded within the following 15 days through the same banking channel.

The form-level mechanics — attachments, AD bank verification, and the reasons filings are returned — are covered in detail on our FC-GPR and FC-TRS page.

Annual reporting

The FLA return is filed directly by the entity on the FLAIR portal — the AD bank is not involved, and a Class 3 Digital Signature Certificate is required. It is annual and recurring for as long as the investment remains on the books, which is precisely why companies with otherwise clean transaction reporting so often have a five-year FLA gap.

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Outbound Investment: ODI and OPI

Where an Indian entity invests outside India, the FEM (Overseas Investment) Rules and Regulations, 2022 apply.

The APR is the outbound equivalent of the FLA return, and is missed for the same reason: it recurs annually while the underlying transaction happened once, years earlier.

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Borrowing: External Commercial Borrowings

Where the instrument is debt rather than equity — including instruments that are optionally convertible and therefore fall outside the NDI Rules — the ECB framework applies.

Form ECB-2 is the quiet obligation in this framework. It is monthly, it runs for the entire life of the loan, and a borrower who files eleven returns in a year has eleven compliant months and one contravention.

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Establishment: Branch, Liaison and Project Offices

A foreign company operating in India without incorporating a subsidiary does so through a branch, liaison, or project office, each with its own permissible activities and its own dual reporting.

These are commonly overlooked because the RBI approval feels like the end of the setup. It is the beginning of a dual calendar with two regulators.

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Documentation Checklist

Establishing eligibility

• Investor identity documents — passport and address proof, notarised or apostilled; incorporation and constitutional documents for corporate investors
• Declaration of beneficial ownership, tested against the land-border rule
• Confirmation of the sector, the NIC 2008 code for the actual business activity, and the applicable cap and route
• Government approval letter, where the approval route applies
• Tax residency certificate, where treaty benefits or repatriation are in issue

Establishing price

• Valuation certificate from a Chartered Accountant, SEBI-registered Merchant Banker, or practising Cost Accountant, on a stated methodology, dated before the transaction
• Supporting financials, projections, and comparables relied on in the valuation

Establishing the flow of funds

• FIRC — Foreign Inward Remittance Certificate — for each remittance
• Foreign Inward Remittance Advice and the underlying SWIFT message
• KYC report on the investor from the overseas remitting bank
• Bank statement evidencing credit of the consideration, and confirmation of the permitted account type used

Establishing the corporate act

• Board and shareholders’ resolutions, and the Articles where transfer is restricted
• Form PAS-3 and the return of allotment, or Form SH-4 with stamp duty paid for a transfer
• Updated register of members and share certificates
• Shareholding pattern before and after, fully diluted
• Share subscription and shareholders’ agreement

Execution

• Completed FIRMS registration — Entity User, Entity Master Form, Business User, AD bank mapping
• Company Secretary certificate in the prescribed format, and the declaration by the authorised representative
• Digital Signature Certificate for the authorised signatory; Class 3 for the FLA return
• Reason for delay and the LSF computation, with debit authorisation, where a filing is late

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The Real Cost of Non-Compliance

Late Submission Fee — the regularisation route

The LSF framework, set out in A.P. (DIR Series) Circular No. 16 of 30 September 2022 and retained in the current Master Direction, allows a late filing to be cured by a formula-driven payment rather than a compounding proceeding.

Where A is the amount involved and n is the delay in years, rounded up to the nearest month and expressed to two decimal places. Three conditions govern it:

• The fee is capped at 100% of A, rounded up to the nearest hundred.
• The route is available only for three years from the due date of reporting.
• An LSF advice, once issued, must be paid within 30 days, failing which it lapses and a fresh application restarts the calculation.

Worked example. ₹5 crore of equity allotted on 1 March 2026; FC-GPR due 31 March 2026; filed 30 September 2026, six months late, so n = 0.50. LSF = ₹7,500 + (0.025% × ₹5,00,00,000 × 0.50) = ₹13,750.

The figure is deliberately modest. The fee is cheap; the three-year window is the asset. The expensive outcome is not paying it — it is discovering the default in year four, when it is no longer available.

Compounding — where the LSF window has closed

Where three years have passed, or the contravention is substantive rather than procedural — investment above the cap, a transfer at the wrong price, an approval never obtained, an impermissible instrument — the route is compounding under Section 15 of FEMA.

The Foreign Exchange (Compounding Proceedings) Rules, 2024, in force from 1 October 2024, replaced the 2000 Rules:

• Application fee ₹10,000 plus GST, doubled from ₹5,000, payable by NEFT, RTGS, or other electronic modes rather than only by demand draft
• Monetary limits for RBI officers raised substantially — Assistant General Manager up to ₹60 lakh, Deputy General Manager up to ₹2.5 crore, General Manager up to ₹5 crore, Chief General Manager above ₹5 crore — so more cases are disposed of without escalation
• The RBI will not process an application until the applicant has completed the requisite administrative action — obtaining the approval, unwinding the transaction, or making the corrective filing. Compounding regularises a contravention; it does not substitute for fixing it
• The compounding penalty must be paid within 15 days of the order; the authority has 180 days to dispose of an application
• Not available where money laundering or terror financing is suspected, or, through an RBI officer, where a similar contravention was compounded within the preceding three years

Adjudication and Section 13

Where a contravention is not compounded, it is adjudicated. Section 13 provides for a penalty of up to three times the amount involved, or ₹2 lakh where the amount is not quantifiable, with a further ₹5,000 per day for a continuing contravention. Liability attaches to the company and to the person who was in charge of and responsible to it for the conduct of its business.

In practice most procedural defaults are compounded well below the statutory ceiling. But the ceiling is what appears in a due diligence report, and a buyer prices the ceiling, not the likely outcome.

Consequences that outlast the money

• Repatriation blocked. An unresolved contravention on the record makes dividend and sale-proceeds repatriation materially harder. The AD bank is the party that has to be satisfied, and it will not be.
• The next round stalls. Investor and acquirer diligence pulls the FIRMS record and the FLA history as standard. An open default becomes a condition precedent, an indemnity, an escrow, or a price adjustment — and always a delay.
• Structural consequences. An investment made above a cap, in a prohibited sector, or without a required approval may have to be unwound rather than merely regularised, with tax and commercial consequences that dwarf the penalty.
• Personal exposure. FEMA liability reaches individual officers, not only the company.

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The Compliance Cycle, Step by Step

1. Classify before you structure. Residency of the investor, character of the instrument, and whether the transaction is FDI, FPI, FVCI, or ECB. Every later step follows from this.
2. Clear the gates. Sector, cap, entry route, and the land-border beneficial-ownership test. Obtain government approval first where required.
3. Register on FIRMS. Entity User, Entity Master Form, Business User, AD bank mapping — at incorporation for any company expecting foreign investment.
4. Value before you price. Certificate from an eligible professional, on a stated methodology, dated ahead of the transaction.
5. Receive funds through a permitted channel and collect the FIRC and the investor KYC report.
6. Complete the corporate act on time — allot within 60 days of receipt, refund within 15 days if you cannot, and file PAS-3 with the ROC within 30 days.
7. Report the transaction — FC-GPR within 30 days of allotment, FC-TRS within 60 days of transfer or consideration, or the applicable SMF form for ESOPs, downstream investment, convertible notes, or LLP contribution.
8. Track to approval. A form is filed when the AD bank approves it and the FIRMS record updates, not when it is submitted. Archive the acknowledgement with the transaction file.
9. Run the annual returns. FLA by 15 July, revised by 30 September if provisional; APR by 31 December; ECB-2 monthly; guarantees quarterly.
10. Reconcile annually. The register of members, the shareholding pattern in MGT-7, the FIRMS entity master, and the FLA figures must all tell the same story.

Note that this framework has been amended repeatedly since 2024 and the RBI has signalled further consolidation of its reporting systems. Any company reporting for the first time in several years, or working from guidance written before 2024, should expect the position to differ from what it remembers.

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A Note on FOCCs and Downstream Investment

The most commonly missed obligation in the entire framework is not a form — it is a status.

An Indian company that is owned or controlled by non-residents is a Foreign Owned or Controlled Company. When a FOCC invests in another Indian company, that investment is indirect foreign investment. Three consequences follow:

• The downstream company must comply with the sectoral cap and entry route applicable to its own business, as though the money had come directly from abroad
• The investment must comply with pricing guidelines
• Form DI must be filed within 30 days of allotment

Groups that establish a foreign parent, an Indian holding company, and Indian operating subsidiaries are almost always within this framework. Almost none of them file Form DI the first time, because nothing about funding one’s own subsidiary feels like foreign investment. It is, and the diligence that discovers it will treat it as one.

There are also restrictions on the number of layers and on downstream investment funded by domestic borrowing, which is why FOCC structures should be designed with the downstream position in view rather than retro-fitted to it.

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A FEMA Health Check

If you are unsure of your position, these questions will surface most problems within an hour:

• Is the company registered on FIRMS, and does the Entity Master reflect the current shareholding?
• For every allotment to a non-resident since incorporation, is there an approved FC-GPR on the FIRMS record — not merely a submitted one?
• Was every allotment made within 60 days of the money arriving?
• For every share transfer involving a non-resident, is there an approved FC-GPR or FC-TRS, and does the price match a valuation dated before the transfer?
• Has an FLA return been filed on FLAIR for every year since the first foreign investment, including years with no activity?
• Have ESOPs been granted to anyone based outside India, and was Form ESOP filed?
• Has the company invested in any other Indian company while itself foreign-owned or controlled, and was Form DI filed?
• Does the shareholding pattern in the last MGT-7 match the FIRMS entity master and the FLA return?
• Is there any investor with beneficial ownership traceable to a land-border country, tested against the 10% threshold now in force?
• Is there any outstanding ECB, and has Form ECB-2 been filed for every month of its life?

A “no” or “not sure” to any of these is worth resolving now, while the LSF window is likely still open, rather than during a transaction when it is not.

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How Delhi Legal Company Supports Your FEMA Compliance

Structuring advice before the money moves. The cheapest FEMA work is done at term sheet stage — residency and instrument classification, sectoral cap, entry route, beneficial ownership analysis, and valuation approach settled before the wire is sent. Approvals cannot be obtained retrospectively and agreed prices cannot be un-agreed.

FIRMS and FLAIR onboarding ahead of the first deadline. Entity User, Entity Master Form, Business User registration, AD bank mapping, and FLAIR credentials in place before they are needed, so the first thirty-day window is spent on documents rather than registration queues.

Complete filing packs, not just forms. Valuation coordination, Company Secretary certification, resolutions, declarations, and the reconciliation between the FIRC, the allotment, the ROC filing, and the FEMA form — which is where nearly every resubmission originates.

One calendar for MCA and RBI. FC-GPR and PAS-3 on the same allotment, FC-TRS and SH-4 on the same transfer, FLA and AOC-4 in the same year — prepared so that the register of members, the shareholding pattern in MGT-7, the FIRMS entity master, and the FLA figures agree with one another.

Outbound and borrowing, not only inbound. Form FC and the annual APR for overseas subsidiaries, Form OPI, ECB registration and the monthly ECB-2 discipline, and quarterly guarantee reporting under the 2026 regulations.

Regularisation and remediation. Where filings are late, we compute the exposure, prepare the LSF application while the three-year window remains open, and handle compounding under the 2024 Rules where it does not — including the administrative action the RBI now requires before an application will be processed at all.

Diligence readiness. For companies heading into a funding round, acquisition, or exit, we reconstruct and reconcile the historic FEMA record so that the position stands up to the buyer’s counsel instead of becoming a condition precedent.

Our office in Connaught Place, New Delhi gives us direct working proximity to the regulatory authorities and to the AD bank compliance desks that actually clear these filings. Our team handles FEMA compliance for foreign-funded startups, wholly-owned subsidiaries, joint ventures, Indian groups with overseas operations, and India offices of foreign parents across time zones.

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Frequently Asked Questions on FEMA Compliance and FDI Reporting

1. What is FEMA and how does it apply to my company? 

A. The Foreign Exchange Management Act, 1999 governs all foreign exchange transactions and cross-border investment involving India. It applies to your company the moment it has a non-resident shareholder, receives foreign investment, invests outside India, borrows offshore, or operates as the Indian office of a foreign company. It sits alongside the Companies Act, not inside it — complying with one does not discharge the other.

2. Who is a “person resident outside India” for FEMA purposes? 

A. It is determined by period of stay in India and the purpose of that stay under Section 2 of FEMA, not by citizenship. An Indian citizen who has moved abroad for employment or business may be a person resident outside India from the date of departure; a foreign national employed in India may be a person resident in India. Misclassifying residency at the outset means the entire reporting treatment is wrong.

3. What instruments count as FDI? 

A. Only capital instruments — equity shares, fully and compulsorily convertible preference shares, fully and compulsorily convertible debentures, and share warrants. Instruments that are optionally or partially convertible are debt, and fall under the External Commercial Borrowing framework with its own eligibility, maturity, and end-use conditions. Filing FC-GPR on a debt instrument does not convert it into equity.

4. Is government approval needed for foreign investment? 

A. Only where the sector is outside the automatic route — defence beyond the prescribed threshold, banking beyond specified limits, print and digital news media, news broadcasting, multi-brand retail, and others — or where the land-border rule applies. Everything else is automatic: the company issues, prices at fair value, and reports within the window. Approval must be obtained before the investment, never after.

5. What is the land-border rule and has it changed? 

A. An entity or citizen of a country sharing a land border with India, or an investment whose beneficial ownership is traceable to such a country, requires prior government approval regardless of sector. Press Note 2 (2026) of 15 March 2026, given effect by the NDI Amendment Rules notified on 2 May 2026, rewrote Rule 6(a) and introduced a 10% beneficial ownership threshold referenced to PMLA definitions. Structures previously outside the rule may now be within it.

6. What is the FDI limit in the insurance sector now? 

A. 100% under the automatic route for insurance companies and intermediaries, subject to IRDAI verification, following the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025 and the FEM (Non-debt Instruments) (Second Amendment) Rules, 2026. Foreign investment in LIC remains capped at 20%. This replaced the previous 74% ceiling.

7. How is the price of shares issued to a foreign investor determined? 

A. For an unlisted company, fair value on any internationally accepted pricing methodology on an arm’s length basis, certified by a Chartered Accountant, SEBI-registered Merchant Banker, or practising Cost Accountant. An issue or a transfer to a non-resident must be at not less than fair value; a transfer from a non-resident to a resident at not more than fair value. Listed companies are priced under SEBI guidelines.

8. Which forms have to be filed and when? 

A. FC-GPR within 30 days of allotment; FC-TRS within 60 days of a transfer or the consideration, whichever is earlier; Form ESOP, Form DI, Form CN, and Form LLP-I within 30 days; Form LLP-II within 60 days. Annually, the FLA return by 15 July, the APR by 31 December where there is overseas investment, and Form ECB-2 monthly where there is an outstanding ECB.

9. What is the FIRMS portal? 

A. The RBI’s Foreign Investment Reporting and Management System, on which the Single Master Form filings are made. Before filing anything an entity must complete Entity User registration, the Entity Master Form, and Business User registration, and be mapped to its AD Category-I bank, which verifies and forwards every filing. The FLA return runs on a separate portal, FLAIR, and does not involve the bank.

10. Do we have to file anything if nothing happened during the year? 

A. Yes. The FLA return is a position-based annual return and is due every 15 July for as long as foreign investment remains on the books, whether or not there was any activity. Similarly the APR is due every 31 December for as long as an overseas entity is held. Dormancy reduces nothing.

11. What happens if we miss a FEMA deadline? 

A. For most reporting delays, a Late Submission Fee regularises the position — ₹7,500 for non-flow returns, and ₹7,500 plus 0.025% of the amount involved multiplied by the years of delay for transaction reporting, capped at 100% of the amount. The route is available for three years from the due date. Beyond that, or for substantive contraventions, compounding under Section 15 applies.

12. What is compounding and what does it now cost? 

A. Compounding is the voluntary route to admit and settle a FEMA contravention by paying a monetary penalty. Under the Foreign Exchange (Compounding Proceedings) Rules, 2024, the application fee is ₹10,000 plus GST, payment may be made electronically, RBI officers can now dispose of substantially larger cases, and the RBI will not process an application until the underlying defect has actually been corrected.

13. What is the maximum penalty under FEMA? 

A. Section 13 provides for up to three times the amount involved where it is quantifiable, or ₹2 lakh where it is not, with a further ₹5,000 per day for a continuing contravention. Most procedural defaults settle far below this — but the statutory ceiling is what appears in a diligence report and what a buyer prices.

14. What is a Foreign Owned or Controlled Company, and why does it matter? 

A. An Indian company owned — more than 50% beneficial interest — or controlled by non-residents. When it invests in another Indian company, that is indirect foreign investment: the downstream company must respect its own sectoral cap and the pricing rules, and Form DI must be filed within 30 days. Groups with a foreign parent and multiple Indian entities are usually within this and usually unaware of it.

15. Can an LLP receive foreign investment? 

A. Yes, but only in sectors where 100% FDI is permitted under the automatic route without performance-linked conditions. An LLP files Form LLP-I within 30 days of receiving contribution and Form LLP-II within 60 days of a disinvestment. It does not file FC-GPR or FC-TRS, but it does file the annual FLA return.

16. What FEMA compliance applies to investing outside India? 

A. The FEM (Overseas Investment) Rules and Regulations, 2022. Initial reporting is in Form FC through the AD bank with a UIN allotted by the RBI; financial commitment is generally limited to 400% of net worth under the automatic route; the Annual Performance Report is due for each overseas entity by 31 December; and overseas portfolio investment is reported in Form OPI within 60 days of each half-year end.

17. Does a branch or liaison office of a foreign company have FEMA obligations? 

Yes, and dual ones. RBI approval is needed to establish it, an Annual Activity Certificate certified by the statutory auditor goes to the AD bank each year, and separately the office must register under Section 380 of the Companies Act and file Forms FC-3 and FC-4 with the Registrar of Companies. These are frequently overlooked because the RBI approval feels like the end of the setup.

Does filing with the ROC satisfy the RBI requirement? 

No. PAS-3 is a Companies Act filing; FC-GPR is a FEMA filing. Both are due within 30 days of the same allotment, both must be made, and each is verified by a different authority. The same applies to a transfer — the register of members and SH-4 sit on the ROC side, FC-TRS on the RBI side.

How do I check what the RBI has recorded against my company? 

The entity master and transaction history on the FIRMS portal show what has actually been recorded and approved, and the FLAIR portal shows the annual return history. Where the FIRMS position does not match the register of members or the shareholding pattern reported in MGT-7, that gap should be reconciled and corrected before a transaction forces the issue.

We have never filed anything under FEMA — what should we do? 

Start with a health check rather than a filing. Establish what transactions occurred, what was reportable, what the amounts and dates were, and how much of it still sits inside the three-year LSF window. Then file in the correct sequence with LSF where available and compounding where it is not. Regularising voluntarily is materially cheaper and better received than being found in diligence or by the AD bank.

How much does FEMA compliance cost to run properly? 

For a company with a single foreign shareholder and no transactions in the year, it is one annual return and a modest professional fee. For a company completing a funding round, it is the valuation, the filing pack, and the transaction reporting. In every case it is a fraction of the cost of a compounding application, an unwound transaction, or a stalled round — which is the comparison that matters, because the alternative is not zero.