Filing Form FC-TRS (Foreign Collaboration – Transfer of Shares) is mandatory under the Foreign Exchange Management Act (FEMA) for reporting the transfer of shares or other eligible securities between residents and non-residents. Below is a comprehensive guide:

What is Form FC-TRS?

Form FC-TRS is filed to report the transfer of:

1. Equity shares.
2. Fully and compulsorily convertible debentures or preference shares.
3. Share warrants.

The form must be filed when there is a transfer:

• From a resident to a non-resident (or vice versa).
• Between two non-residents, where shares of an Indian company are involved.

When to File Form FC-TRS?

• Timeline: Within 60 days of receiving the money for the transfer of securities.

Who Needs to File?

1. Transferor/Transferee:
   • Either the resident or non-resident party can file, but it is usually done through the Authorized Dealer (AD) Bank of the resident party.
2. Resident Party’s Responsibility:
   • The resident seller (if transferring to a non-resident) or resident buyer (if purchasing from a non-resident) typically ensures compliance.

Steps to File Form FC-TRS

1. Register on FIRMS Portal:
   • Access the FIRMS portal: https://firms.rbi.org.in.
   • Log in or create an account linked to the Entity Master for the respective company.
2. Gather Required Documents:
   • Shareholding Pattern before and after the transfer.
   • Copy of Share Transfer Agreement or consent letter for the transaction.
   • Valuation Certificate:
     • Issued by a Chartered Accountant or SEBI-registered Merchant Banker certifying the fair value of shares as per internationally accepted pricing methods.
   • FIRC (Foreign Inward Remittance Certificate) for funds received from the non-resident (in case of purchase).
   • KYC of Non-Resident Buyer/Seller:
     • Issued by the AD Bank.
   • PAN details of the parties involved.
   • Board Resolution of the Indian company (if required).
3. Fill Form FC-TRS:
   • Log in to the FIRMS portal and navigate to the Single Master Form (SMF) section.
   • Choose Form FC-TRS.
   • Fill in the required details:
     • Nature of transaction (resident to non-resident or vice versa).
     • Investor and investee details.
     • Details of the securities being transferred (type, number, value, etc.).
     • Payment details (mode, amount, and date).
   • Upload all supporting documents in the prescribed format (PDF files).
4. Submit to the AD Bank:
   • After completing the form, submit it online.
   • The form will be sent to the resident party’s Authorized Dealer Bank for verification.
   • Address any queries raised by the bank.
5. Approval by RBI:
   • After verification by the AD Bank, the form is forwarded to the RBI for final approval.

Key Compliance Points

1. Pricing Guidelines:
   • The transfer price must adhere to the fair value determined as per the internationally accepted pricing method.
2. Timely Filing:
   • File within 60 days of the transfer to avoid penalties.
3. KYC Compliance:
   • Ensure KYC norms are fulfilled for all parties.

Consequences of Non-Compliance

1. Penalties under FEMA.
2. Regulatory scrutiny and potential rejection of the transfer.
3. Delays in processing future transactions.

Common Mistakes to Avoid

1. Missing or incomplete documentation.
2. Incorrect valuation of shares.
3. Filing beyond the 60-day deadline.
4. Errors in Entity Master registration on the FIRMS portal.

Checklist of Documents for Form FC-TRS

Would you like help with preparing Form FC-TRS, gathering documentation, or addressing AD Bank queries?