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.
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
Apart from the above the following information needs while filing of FCTRS
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
Particulars of Transfer: The details of transfer are filled like-
Remittance details (Not applicable in case of transfer by gift) :
The applicant has filled in Remittance Details like-
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 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.