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Transfer of shares between Resident and non-resident involve paying and executing the transfer of shares. When it involves transaction between the two, there are regulations about internal and external transfer of funds, submission of FC-TRS form etc. Reserve Bank of India (RBI) allowed the facility to file form FC-TRS (Foreign currency Transfer of shares) electronically on e-Biz platform with the intention of increasing pace of paperless governance.
There are certain essential points that should be taken care of:
Following two registrations are required on e-biz portal before you can file form:
Once the above two registrations are done, the transferor/transferee/consultant can file FC-TRS.
As per the Consolidated FDI Policy 2016, reporting of transfer of shares between Residents and Non-residents and vice- versa is to be made in Form FC-TRS. Within 60 days from the date of receipt/date of payment of the amount of consideration, the Form FC-TRS should be submitted to the AD Category – I bank. The obligation of submission of the Form FC-TRS within the given time frame would be on the transferor/transferee, resident in India.
Case I: Sale from Non-resident to Resident
At present, since the filing of FC-TRS electronically is mandated, it is practically not possible to file FC-TRS within 60 days from the date of receipt of the amount of consideration in case the sale is made from Non-resident to Resident. Before releasing the payment to the Non-resident, the AD Category-I bank requires proof of submitting FC-TRS on the e-biz portal.
Thus, practically, following steps are followed:
Steps for transfer from non-resident to resident under e-biz-
Case II: Transfer from Resident to Non-resident
It becomes essential to attach FIRC for receipt of consideration from non-resident with form FC-TRS if the transfer by way of sale is made from resident to non-resident. Thus, following steps are followed for successful registration of transfer from resident to non-resident:
Steps for transfer from resident to non-resident under e-biz
Following documents shall be attached to the e-form FC-TRS:
Case I: Listed Companies
In terms of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 as may be amended from time to time.
It is important to note that it holds well only for off-market trades of listed securities. For trading on stock exchanges by Non-residents, refer to the SEBI (Foreign Portfolio Investors) Regulations.
Case II: Unlisted Companies
As per any internationally accepted pricing methodology on arm’s length basis.
Case I: Sale from Resident to Non-resident
The transfer shall be made at or above the fair value determined as above. The minimum price shall be the fair value.
Case II: Sale from Non-resident to Resident
The transfer shall be made at or below the fair value determined as above. The maximum price shall be the fair value.
Do not forget to report transfer of shares between Residents and Non-residents and vice- versa to be made in Form FC-TRS. In case you need more information on the same, contact Enterslice.
Read our article:Procedure for Issuance of Duplicate Share Certificate
Ashish M. Shaji has done his graduation in law (BA. LLB) from CCS University. He has keen interests in doing extensive research and writing on legal subjects especially on corporate law. He is a creative thinker and has a great interest in exploring legal subjects.
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