FC-TRS Reporting in India: A Complete Guide to Cross-Border Share Transfers
Md Saddam Hussain
Md Saddam Hussain is a highly skilled and experienced Company Secretary specializing in corporate laws, regulatory compliance, and legal advisory. With expertise in the Companies Act, FEMA, LLP regulations, SEBI compliance, NCLT proceedings, and liaisoning with government authorities, he provides strategic guidance to businesses, ensuring seamless adherence to statutory obligations. Known for his meticulous approach and in-depth knowledge of corporate governance, he assists companies in mitigating risks, handling regulatory filings, and navigating complex legal frameworks. With a commitment to excellence and integrity, Md Saddam Hussain plays a crucial role in supporting businesses with compliance, litigation, and corporate structuring.
Overview
As India continues to attract rising levels of foreign direct investment (FDI), regulatory requirements for companies engaging in cross-border transactions have expanded. One such key compliance is FC-TRS (Foreign Currency – Transfer of Shares)—a mandatory reporting mechanism regulated by the Reserve Bank of India (RBI). It applies when ownership of shares in an Indian company changes hands between a resident and a non-resident, or vice versa.
Understanding the procedure, legalities, and responsibilities under FC-TRS is vital for individuals and entities involved in such share transfers.
What Is FC-TRS, and When Is It Applicable?
The FC-TRS form must be filed in scenarios where equity instruments—such as shares, compulsorily convertible debentures, or preference shares—are transferred between:
- A person resident in India and a non-resident (foreign national or NRI)
- A non-resident and a person resident in India
This applies whether the transfer is made for consideration (i.e., a sale) or without consideration (i.e., a gift). In transactions involving listed shares purchased by a foreign entity through a stock exchange, the responsibility to report shifts to the non-resident buyer.
The FIRMS Portal and SMF Integration
To streamline the reporting process, the RBI has launched an online system known as FIRMS (Foreign Investment Reporting and Management System). Through this platform, various reporting forms have been integrated into a unified structure known as the Single Master Form (SMF).
This consolidation allows for a more efficient and unified process for reporting all types of foreign investments, including FC-TRS, FDI inflows, and LLP contributions.
Who Should File the FC-TRS Form?
In most cases, the resident party—either the transferor or transferee—is responsible for filing the FC-TRS form. However, when a non-resident acquires shares directly via a recognized stock exchange, the obligation to report the transaction lies with the non-resident.
This ensures that all transactions involving foreign currency and Indian equity instruments are accurately reported to the RBI.
Deadlines and Consequences for Late Filing
- The FC-TRS form must be submitted within 60 days from the date of either:
- Transfer of securities, or
- Receipt or payment of consideration, whichever occurs earlier.
- No fee is levied for submitting the form within the stipulated timeframe.
- A Late Submission Fee (LSF) will be applicable for delays beyond the 60-day window, with the fee amount depending on the value and delay period.
It’s important to adhere to this timeline to avoid regulatory penalties under FEMA.
FIRMS Portal Registration Process
Before filing, the reporting entity must register on the FIRMS portal. There are two types of registrations:
- Entity User Registration: For companies, LLPs, and startups involved in the transaction.
- Business User Registration: For the individual authorized to submit the report to the RBI. This individual must undergo electronic Know Your Customer (e-KYC) verification.
Without these registrations, access to the Single Master Form cannot be obtained.
Information and Documentation Required
Filing the FC-TRS form requires detailed information related to the investment and transaction. Some of the required inputs include:
General Transaction Information
- Corporate Identification Number (CIN)
- PAN of the Indian company
- Sector and business activity of the investee company
- Transferor and transferee details, including nationality and residency status
Investment & Remittance Details
- Mode and channel of payment (e.g., NRE/NRO account, wire transfer)
- Name of the Authorized Dealer (AD) bank
- Date of remittance or receipt
Supporting Documents (Depending on Nature of Transfer)
If the transfer is a gift:
- Names and addresses of both donor and recipient
- Relationship between both parties
- Written reason or justification for the gift
- Gift declaration or deed
If the transfer is a sale:
- Consent letters from both parties
- The shareholding structure before and after the transaction
- A valuation report (in the case of unlisted securities)
- FIRC and KYC documents
Valuation and Sectoral Compliance
All share valuations must comply with the RBI’s FDI pricing guidelines:
- For listed securities, pricing should follow SEBI regulations.
- For unlisted shares, the valuation must be conducted by a SEBI-registered merchant banker or a chartered accountant, using internationally accepted methods such as the Discounted Cash Flow (DCF) or Net Asset Value (NAV) approach.
Moreover, sectoral FDI limits and caps must be reviewed to ensure that the transfer complies with India’s foreign investment policy.
Conclusion
FC-TRS compliance is an essential part of cross-border equity transactions in India. Whether you’re a resident transferring shares to a non-resident or vice versa, timely reporting ensures transparency and legal compliance under FEMA.
With the RBI’s digital-first approach through the FIRMS portal, the process is now more structured and centralized, but still requires accuracy and vigilance. Late reporting or failure to adhere to valuation norms can lead to regulatory scrutiny and penalties.
Disclaimer
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