Filing of Form FC-TRS: Transfer of Shares

Priyanka Bajpayee

12 Nov, 2019

Form FC-TRS is to be submitted to the designated AD branch in quadruplicate within 60 days from the date of receipt of funds regarding-

Transfer of shares

1. Compulsorily and mandatorily convertible preference shares (CMCPS)/
2. Debentures,
3. Others by way of sale from resident to non-resident/non-resident to resident.

Every transfer of shares /securities between the non-resident and resident shall require prior approval of RBI and the reporting shall be made in the Form FC-TRS.

What is FC-TRS?

Form FC-TRS is filed, In case of transfer of shares or convertible debentures of an Indian Company from a resident to a Non-Resident/Non-Resident Indian and vice versa by way of sale. The Indian company is required to report the transactions to the AD Category – I bank in the form FC-TRS.

Form FC-TRS has been revised with a view to capture the details of investment in a more comprehensive manner, which is enclosed as Annex^[1] I. The reporting of inflow/outflow details on account of remittances received / made in connection with the transfer of shares / convertible debentures, by way of sale, submitted by the AD Category – I bank to the Reserve Bank of India.

Who is responsible for filing the Form-FC-TRS?

The onus of filing the Form FC-TRS is on the Indian resident whether transferor or transferee.

What are the documents required for filing Form FC-TRS?

For filing Form, FC-TRS below mentioned documents are enclosed-

1. Consent Letter by the seller and buyer or their duly appointed agent and in the latter case the Power of Attorney Document.
2. Disclosure of the shareholding pattern of the investee company after the acquisition of shares by a person resident outside India.
3. Certificate from a Chartered accountant indicating the fair value of shares.
4. Broker’s note, in case of a sale, is made on the Stock Exchange.
5. Buyer’s declaration that he is eligible under FDI policy and the existing sectoral limits and Pricing Guidelines to have been complied with.

• Declaration from the FII/sub-account to the effect that the individual FII / Sub account ceiling as prescribed has not been breached.
• The copies of RBI approvals, if the sellers are NRIs/OCBs, evidencing the shares held by them on repatriation/non-repatriation basis.
• No Objection Certificate from Income Tax Authority/CharteredAccount.

What additional information’s are required for filing FC-TRS?

The additional information that is required for filing FC-TRS are-

1. Name of the company including email id and telephone number, activity code and NIC code number.
2. Disclosure of whether FDI is allowed under Automatic route and details of the sectoral cap under FDI policy.
3. Nature of transaction whether transfer from resident to non-resident or vice-versa.
4. Details of the buyer along with with with the address and also the nature of investing Entity. In the case of company-date and place of Incorporation.
5. Details of the seller along with with with 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.

Format of the declaration by the transferor/transferee –

Further, a certificate by the AD Branch is required certifying that the application is complete in all respects. The receipts and payments for the transactions are in accordance with the FEMA regulations and Reserve Bank of India guidelines.

The declaration must be signed by the name and designation of the officer along with the AD Branch name and Branch Code.