Procedure for transfer of shares to Non-Resident- (FC-TRS)

Foreign Currency – transfer of shares (FC-TRS)

FCTRS :

1. The Form FC-TRS shall be file within 60 days from the date of receipt/date of payment of the amount of consideration.

2. There will be no official fee for filing of form FC-TRS, if the form is filed within 60 days .

3. Form shall be filed by the transferor/transferee whosoever is resident in India.

4. The transferor/transferee filing the form shall first register itself with RBI-Firms portal before filing it.

5. The consent letter of both buyer and seller is mandatory to be attached with form FC-TRS.

6. Valuation of shares to be transferred must be as per FDI norms.

7. Sectoral Limits applicable on the company must be taken care of before transferring shares.

8. Share purchase Agreement shall be executed

Registration on RBI-FIRMS Portal

Following 2 registrations are required on RBI FIRMS portal before you can file the form:

• The applicant reporting the transaction should get Entity user registration by visiting https://firms.rbi.org.in
• After getting the Entity user registration, the entity required to get the business user registration as well.

For this, one need to visit on https://firms.rbi.org.in/firms/ and select Registration Form for Business User and fill the necessary details and attach the authorization letter.

Please note that this registration can also be availed by an individual in the case where a resident individual is required to report.

Transfer of securities 

The following steps are to be followed for successful registration of transfer of securities from Resident to Non-Resident:

1. On receipt of consideration from non-resident, obtain FIRC (Foreign Inward Remittance certificate) and KYC (Know your customer) of person residing outside India from AD Category-I bank.

2. Submit Security transfer deed/SH-4 and other documents required with the company.

3. Company shall register the transfer in accordance with Companies Act 2013.

4. File FC-TRS  along with the attachments on FIRMS RBI Portal by logging in with Id password created for Business User Registration .

5. RBI shall approve FC-TRS if it is filed without any discrepancies.

Following documents shall be attached while filling e-form FC-TRS:

1. Duly signed consent letter for transfer/receipt of consideration by the buyer and the seller.

2. The shareholding pattern of the investee company (“the company, whose securities are transferring from one person to another”) before and after the acquisition of securities by a person resident outside India.

3. Certificate of fair value of securities from a Chartered Accountant.

4. Declaration from the buyer to the effect that he is eligible to acquire securities under FDI policy.

5. Declaration from the non-resident transferee.

6. Requests letter from the transferee/transferor to register the transfer of securities in favor of investee Company.

7. Board Resolution of Investee Company to approve and acknowledge the securities transfer.

8. Securities Transfer Deed in form SH 4.

9. Security Purchase agreement, if any.

10. FIRC/KYC received from the AD Bank of transferor/transferee.

Valuation Aspects under Transfer of securities

• The transfer shall be made at or above fair value determined as on arm’s length basis.
• The minimum price shall be the fair value as determined by the chartered accountant.
• If the fair value, so determined, is lower than the face value of the securities of the Investee Company, then in that case the transfer shall be done at or above the face value per security.

Note: The formats of documents are provided by the RBI in their SMF- user manual