Reporting of FC-TRS (Transfer of shares) through online through E-Biz Portal

Reporting of FC-TRS (Transfer of shares) through online through E-Biz Portal

Description:- Foreign investors can invest in Indian companies by purchasing / acquiring existing shares from Indian shareholders or from other non-resident shareholders. General permission has been granted to non-residents / NRIs for acquisition of shares by way of transfer in the following manner. 1.     Transfer of shares by a Person resident outside India a.     Non-Resident to Non-Resident (Sale / Gift) Note: Transfer of shares from or by erstwhile OCBs would require prior approval of the Reserve Bank of India. b.     NRI to NRI (Sale / Gift) c.      Non-Resident to Resident(Sale / Gift) Note: Transfer of shares from a Non-Resident to Resident other than under SEBI regulations and where the FEMA pricing guidelines are not met would require the prior approval of the Reserve Bank of India. 2.     Transfer of shares/convertible debentures from Resident to Person Resident outside India 3.     Transfer of Shares by Resident which requires Government approval 4.     Prior permission of the Reserve Bank in certain cases for acquisition / transfer of security 5.     Escrow account for transfer of shares Reporting of FDI for Transfer of shares route         i.            The actual inflows and outflows on account of such transfer of shares shall be reported by the AD branch in the R-returns in the normal course.       ii.            Reporting of transfer of shares between residents and non-residents and vice- versa is to be made in Form FC-TRS. The Form FC-TRS should be submitted to the AD Category  I bank, within 60 days from the date of receipt of the amount of consideration. The onus of submission of the Form FC-TRS within the given timeframe would be on the transferor / transferee, resident in India. You can download the copy of the FC-TRS from the following link: https://www.ebiz.gov.in/idc/groups/ebiz/@service/@trs/@cen/documents/documents/doc_002488.pdf     iii.            The sale consideration in respect of equity instruments purchased by a person resident outside India, remitted into India through normal banking channels, shall be subjected to a KYC check (Annex 9-ii) by the remittance receiving AD Category- I bank at the time of receipt of funds. In case, the remittance receiving AD Category- I bank is different from the AD Category - I bank handling the transfer transaction, the KYC check should be carried out by the remittance receiving bank and the KYC report be submitted by the customer to the AD Category -I bank carrying out the transaction along with the Form FC-TRS.     iv.            The AD bank should scrutinize the transactions and on being satisfied about the transactions should certify the form FC-TRS as being in order.       v.            The transferee/his duly appointed agent should approach the investee company to record the transfer in their books along with the certificate in the Form FC-TRS from the AD branch that the remittances have been received by the transferor/payment has been made by the transferee. On receipt of the certificate from the AD, the company may record the transfer in its books. In case of transfer of shares by way of sale from resident to non-resident/ non-resident to resident, the resident transferor / transferee / Investee Company/ NRI transferor / Non Resident transferor should file FC-TRS within 60 days from receipt of funds In terms of Section 2 (ze) of Foreign Exchange Management Act, 1999 "Transfer" includes sale, purchase, exchange, mortgage, pledge, gift, loan or any other form of transfer of right, title, possession or lien. Please click on the link "Master Circular for Foreign Investment in India"for further information on Foreign Investments in India issued by RBI Prerequisites:- Before reporting the transaction, applicant needs to obtain following documents in soft copy: Certificate indicating fair value of shares from a Chartered Accountant / SEBI registered Category I Merchant Banker. Copy of Broker's note if sale/ purchase is made on Stock Exchange. Declaration from the NR buyer to the effect that he is eligible to acquire shares / compulsorily and mandatorily convertible preference shares / debentures/others under FDI policy and the existing sectoral limits and conditionality (such as minimum capitalization norms, etc) and Pricing Guidelines 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 Extracts of Share Purchase Agreement (SPA) containing: Name of the buyer and seller Name of the investee company No. of shares to be transferred Price at which they are transferred Mode of transfer Date of transfer Any other relevant information If the sellers are NRIs/ erstwhile OCBs, the copies of RBI approvals, if applicable, evidencing the shares held by them on repatriation/non-repatriation basis No Objection/Tax Clearance Certificate from Income Tax Authority/ Chartered Accountant Approval letter from RBI / FIPB Power of attorney (if signatory is agent) Payment Details:- There is no payment required to avail this service on eBiz. Service Window:- Applicant can apply for Reporting of FC-TRS at any time of the year. Processing Steps:- Application, once submitted will flow through following status before request is completed. Applicant can use this information to track status of his application. 1.     Submitted 2.     Resubmission Required* 3.     Application Approved 4.     Application Rejected* 5.     Clarification Required* Note: Items marked with * are states in certain exception flows. Your application may not necessarily pass through these states during processing. Department Foreign Exchange Department Reserve Bank of India (www.rbi.org.in) Contact Department Address: Reserve Bank of India, Central Office Fort Mumbai - 400 001 India Telephone Nos: +91 22 - 22601000 Fax: +91 22 - 22665330 Website Address: www.rbi.org.in

General Problem faced after submitting FCGPR thru ebiz:
After submitting FCGPR thru ebiz portal, RBI can raise the following queries:

1) RBI need the acknowledgment letter for UIN generated thru ebiz portal, even though there is no mandatory field to attach the same. In case of multiple tranches of inward remittance, take print out of all acknowledgment and then scan it in one pdf file. There is only one additional option for attachment (apart from mandatory attachment) so if u received money in three tranches, u can attach only one acknowledgement if u r planning to attach acknowledgement separately for each tranches (after filing advance reporting).

2) RBI do ask for clarification that the conversion of Preference Shares or Debentures will not take place below value price as per valuation report. In that case, certificate required from company means that company need to give declaration and not any kind of certificate to be issued.

3) Whenever RBI ask for certificate from PCS and from Company for any clarification, it means only certificate to be issued by PCS and company need to give declaration.

Compliance pertaining to notice / mail received from RBI is much Important.