RBI Reporting in Form of FC-TRS Regarding Transfer of Shares From Resident to Non-Resident / Non-Resident to Resident

RBI Reporting in Form of FC-TRS Regarding Transfer of Shares From Resident to Non-Resident / Non-Resident to Resident

REPORTING OF FOREIGN CURRENCY TRANSFER OF SHARE- FC-TRS

FC-TRS is a reporting form regarding the transfer of shares / compulsorily and mandatorily convertible preference shares (CMCPS) / debentures /others by way of sale from resident to non-resident/non-resident to resident

Form FC-TRS stand for Foreign Currency Transfer of Shares. This form is specified by RBI for making reporting of Transfer of Capital Instruments between a person resident in India and a person resident outside India.

This Declaration form is to be submitted to the designated AD branch in quadruplicate within 60 days from the date

WHO AND WHEN SHOULD FILE FORM FC-TRS?

FC-TRS is a reporting form required to submit to the RBI when a resident transfers its securities to a non-resident or vis a vis. Government approval is not required for the transfer of shares in the investee company from one non-resident to another non-resident in sectors which are under automatic route.

Reporting is done in Form FC-TRS by the Indian resident whether transferor or transferee or the person resident outside India holding capital instruments on a non-repatriable basis, as the case may be.
In case the shares are acquired by a Non-resident investor on the stock exchanges under the FDI Scheme, reporting is done by person resident outside India with AD Category-I Bank

WHERE DO I FILE FCTRS?

The form FC-TRS shall be filed with the Authorized Dealer bank within 60 days of the transfer of capital instruments or receipt/ remittance of funds whichever is earlier at RBI portal.

PORTAL FOR RBI REPORTING: https://firms.rbi.org.in

DOCUMENTS REQUIRED FOR FCTRS REPORTING

There are two kinds of Transfer for which FC-TRS is required to Report to the RBI

1. Transfer by way of Sale

2. Transfer by way of Gift

We will discuss separately the documents required in the case of both transfers mentioned above.

Documents Required in case of transfer by way of Sale

1. Buyer & Seller Consent Letter: We required a Consent Letter for receipt/ transfer of consideration duly signed by the buyer & Seller.

2. Shareholding Pattern: Shareholding pattern of the investee company before & after the acquisition of securities by a person outside India.

3. Needed the Transfer agreement: Relevant extract of the transfer agreement along with the consent letter between buyer and seller. For sale / Purchase on a stock exchange, the contract note may be attached, to the “Valuation certificate / Transfer agreement”.

4. Transfer agreement / Valuation certificate: Valuation Certificate as per FEMA 20 ( R ) to be attached at “ Transfer / Valuation certificate”.

5. Declaration from Buyer of Securities: Declaration from the buyer to the effect that he is eligible to acquire shares/ compulsorily and mandatorily convertible preference shares /debentures under FDI policy.

6. Declaration by the Non-resident: required the declaration from the non-resident transferee as per the format provided by the RBI in their SMF- user manual.

7. Required company Board Resolution: Needed the Board Resolution of Investee Company to approve & ack the securities transfer.

8. Needed Transfer Deed: we required (form SH-4) a Securities Transfer Deed.

9. Outward Remittance copy/ FIRC: Outward remittance certificate FIRC & KYC to be attached at the specified attachment.

Documents Required in case of transfer by way of Gift

1. Consent Letter between both donor and donee

2. Relevant Regulatory Approval wherever applicable.

3. Declaration from Buyer of Securities: Declaration from the buyer to the effect that he is eligible to acquire shares/ compulsorily and mandatorily convertible preference shares /debentures under FDI policy.

4. Declaration by the Non-resident: required the declaration from the non-resident transferee as per the format provided by the RBI in their SMF- user manual.

5. Pre and Post Transaction shareholding pattern

6. Board resolution for transfer of Shares

RBI Reporting in Form of FC-TRS Regarding Transfer of Shares From Resident to Non-Resident Non-Resident to Resident

Apart from the above the following information needs while filing of FCTRS

Name of the company including email id and telephone number, activity code, and NIC code number.
Disclosure of whether FDI is allowed under the Automatic route and details of the sectoral cap under FDI policy.
Nature of transaction whether transfer from resident to non-resident or vice-versa.
Details of the buyer along with the address and also the nature of investing Entity. In the case of company-date and place of Incorporation.
Details of the seller along with the address and also the nature of disinvesting Entity. In the case of company-date and place of Incorporation.
Disclosure of earlier Reserve Bank of India/FIPB approval.
Details of the transactions regarding shares/convertible debentures to be transferred.
Disclosure of foreign investments in the company.
Disclosure of where the shares of the entity are listed on the stock exchange i.e. name of the stock exchange along with the price quoted on the stock exchange.

PROCESS FOR FC-TRS REPORTING

1. The applicant reporting for the transaction has Registered for Entity User and for Business User account at FIRMS Portal at https://firms.rbi.org.in

2. Registration for Entity User on Firms Portal: The Company has of all needs to get the registration of Entity user on the FIRM Portal in case the reporting of FDI is being made the first time for the Company. In case of subsequent reporting, the Company does not need to make any registration for entity user. Documents required for the purpose of Entity User are Authorisation Latter along with Pan of Entity as well as the Authorised Representative of the Entity.

3. Registration for Business User on Firm Portal: After the creation of Entity User, the Company needs to create a Business user, the required documents for this purpose are an Authority Letter from the Company along with Pan of Entity as well as the Authorised Representative of the Entity.

4. The applicant has Login to FIRM’s portal using his Business user Credentials for FC- TRS reporting into Single Master Form and reaches out to the workspace. The applicant has selected the Return Type as FC-TRS.

5. The applicant has filled in the common investment details wherein certain details are pre-filled like- CIN, Company name, PAN Number, etc. while other details like entry route and applicable sectoral caps/statutory ceiling will have to be filled by the applicant. Other Details such as Transfer by way of Sale/Gift

Change in the shareholding pattern if any.
The transfer is made from and towards whom.
Nature of transfer, Type of transfer and
The Details of the Buyer or Seller in case of transfer by sale or Donor or Donee details in case of transfer by way of gift are filled in the following tab of Form FC-TRS.

Particulars of Transfer: The details of transfer are filled like-

Type of Capital Instruments
Number of instruments
Conversion ratio
Number of equity shares on a fully diluted basis.
Face Value.
Transfer Price Per Instrument.
Total Amount of Consideration and
Fair Value of the capital instrument at the time of transfer

Remittance details (Not applicable in case of transfer by gift) :

The applicant has filled in Remittance Details like-

Mode of Payment.
Name of Authorized Dealer Bank.
Address of Authorized Dealer Bank, IFSC Code.
The amount received/remitted in Rupees.
Tranche Number.
Whether the transaction for which reporting is done is the Last Tranche
Which the remitter is different from the foreign investor.

After filing the all details, the user needs to click on the “Save and Submit Button” or the user can click on the “Save as Draft” button to submit the Form later.

After filing Form FCTRS, the AD Bank will check the form FC TRS, in case of any discrepancy found in the form, then they will reject the Form giving the appropriate reasoning, or otherwise, they will approve the form.

In case the Form got rejected, then the Company needs to file the Form again after removing all the discrepancies.

CONSEQUENCES OF LATE FILING OF FORM FC-TRS

If the Company makes reporting of the Transfer of Capital instrument after the period of 60 days of the transfer of capital instrument or receipt/remittance of funds whichever is earlier, then the Company shall be liable to late submission fees as decided by the RBI.

FCTRS REPORTING IS NOT REQUIRED IN THE FOLLOWING CASES

Transfer of Shares from a person resident outside India holding the capital instrument in an Indian Company on a repatriable basis to a person resident outside India holding the capital instrument in an Indian company on a repatriable basis.
A person resident outside India holding Capital Instrument in an Indian Company on a Non-Repatriable basis transfer his shares to a person resident in India then in that case no reporting is required to be made in the form FC-TRS

IMPORTANT NOTE

Transfer of Capital Instrument between resident and Non-Resident shall be regulated by Foreign Exchange Management (Transfer or issue of Security by a Person Resident Outside India) Regulations, 2017.

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