Step-by-Step Guide to FC-TRS Filing for Transfer of Shares Between Resident and Non-Resident

In the realm of cross-border investments, the transfer of shares between residents and non-residents in India necessitates strict compliance with the Foreign Exchange Management Act, 1999 (FEMA). One of the pivotal compliance requirements in such transactions is the filing of Form FC-TRS through the FIRMS (Foreign Investment Reporting and Management System) portal of the Reserve Bank of India (RBI).

This guide delineates the step-by-step procedure for FC-TRS filing, ensuring adherence to regulatory norms and facilitating seamless execution of share transfer transactions.

📌 Understanding Form FC-TRS

Form FC-TRS (Foreign Currency-Transfer of Shares) is a mandatory filing under FEMA regulations, required when there is a transfer of equity instruments (such as equity shares, compulsorily convertible preference shares, or debentures) between:

• A resident and a non-resident, or

• A non-resident and a resident

This includes transactions such as:

• Sale or purchase of shares

• Gift of shares

• Transfer pursuant to mergers or demergers

Note: The form must be filed within 60 days from the date of receipt or remittance of consideration or the date of transfer, whichever is earlier.

🧾 Pre-requisites for FC-TRS Filing

Before initiating the FC-TRS filing process, ensure the following:

1. Entity User Registration: The Indian company involved in the share transfer must register as an Entity User on the FIRMS portal.

2. Business User Registration: An authorized individual must register as a Business User to file the FC-TRS form.

3. Necessary Documentation: Gather all requisite documents, including share transfer agreements, valuation reports, KYC documents, and payment proofs.

🧭 Step-by-Step Procedure for FC-TRS Filing

Step 1: Register as Entity User

1. Access the FIRMS Portal:

   • Visit the FIRMS portal.

2. Initiate Entity User Registration:

   • Click on “Registration Form for New Entity User”.

3. Fill in the Required Details:

   • Provide information such as:

     • Name and contact details of the authorized representative

     • Company details (CIN, PAN, etc.)

4. Attach Supporting Documents:

   • Upload the following:

     • Authorization letter from the entity

     • PAN of the authorized person

5. Submit the Registration Form:

   • After completing the form and attaching the necessary documents, click “Submit”.

6. Verification and Approval:

   • The RBI will verify the submitted details and documents.

   • Upon approval, login credentials will be sent to the registered email address.

Step 2: Register as Business User

1. Access the FIRMS Portal:

   • Visit the FIRMS portal.

2. Initiate Business User Registration:

   • Click on “Registration Form for New Business User”.

3. Fill in the Required Details:

   • Provide information such as:

     • Name and contact details of the authorized individual

     • Designation and PAN

     • Entity details (CIN, name, etc.)

     • Select the IFSC code of the Authorized Dealer (AD) bank branch through which the transaction will be reported

4. Attach Supporting Documents:

   • Upload the following:

     • Authorization letter from the entity

     • KYC documents of the non-resident investor, if applicable

     • Details of the AD bank branch

5. Submit the Registration Form:

   • After completing the form and attaching the necessary documents, click “Submit”.

6. Verification by AD Bank:

   • The submitted details and documents will be verified by the selected AD bank branch.

   • Approval or rejection of the registration will be communicated via email.

7. Access Credentials:

   • Upon approval, the Business User will receive login credentials through email.

Step 3: Filing Form FC-TRS

1. Login to FIRMS Portal:

   • Use the Business User credentials to log in.

2. Access Single Master Form (SMF):

   • Navigate to “Single Master Form” under the “File Return” section.

3. Select Return Type:

   • Choose “Form FC-TRS” from the dropdown menu and click on “Add New Return”.

4. Fill in the Form:

   • Provide details such as:

     • Nature of the transaction (sale/gift)

     • Details of the buyer and seller

     • Type and number of equity instruments

     • Date of transfer

     • Transfer price and mode of payment

     • Entry route and sectoral cap/statutory ceiling

5. Documents Required for FC-TRS Filing:

   • Upload necessary documents, including:

     • Share transfer agreement or gift deed

     • Valuation certificate from a SEBI-registered Merchant Banker or Chartered Accountant

     • FIRC or outward remittance certificate

     • KYC report from the AD bank

     • Declaration from the buyer/seller

     • Board resolutions and identification proofs

6. Submit the Form:

   • After filling in the details and attaching the documents, submit the form.

7. Acknowledgment and Verification:

   • An acknowledgment email will be received upon successful submission.

   • The AD bank will verify the form and documents.

   • Approval or queries will be communicated via email.

📚 Legal Framework and Compliance

• Governing Law: Foreign Exchange Management Act, 1999 (FEMA)

• Applicable Rules: Foreign Exchange Management (Non-Debt Instruments) Rules, 2019

• Regulatory Authority: Reserve Bank of India (RBI)

• Reporting Platform: FIRMS portal

Timeline: The FC-TRS form must be filed within 60 days from the date of receipt or remittance of consideration or the date of transfer, whichever is earlier.

✅ Checklist for FC-TRS Filing

•  Register as Entity User on FIRMS portal

•  Register as Business User on FIRMS portal

•  Gather necessary documents:

  • Share transfer agreement or gift deed

  • Valuation certificate

  • FIRC or outward remittance certificate

  • KYC documents

  • Declarations and board resolutions

•  Fill and submit Form FC-TRS within the stipulated timeline

•  Respond to any queries from the AD bank promptly

❓ Frequently Asked Questions (FAQs)

1. Who is required to file Form FC-TRS?

The responsibility to file Form FC-TRS lies with the resident transferor/transferee or the investee company, depending on the nature of the transaction.

2. What is the difference between Entity User and Business User?

• Entity User: Registers the company on the FIRMS portal and can view filings but cannot submit forms.

• Business User: Authorized individual who can file forms such as FC-TRS on behalf of the company.

3. Can one person be both Entity User and Business User?

Yes, provided they are authorized by the company and complete both registration processes separately.

4. What is the deadline for filing Form FC-TRS?

The form must be filed within 60 days from the date of receipt or remittance of consideration or the date of transfer, whichever is earlier.

5. Is a valuation certificate mandatory for all share transfers?

Yes, a valuation certificate from a SEBI-registered Merchant Banker or Chartered Accountant is required to ensure compliance with pricing guidelines under FEMA.

6. Can the FC-TRS form be revised after submission?

Once submitted, the form cannot be edited. In case of errors, the form may be rejected, and a new form must be filed.

7. Are there any penalties for delayed filing?

Yes, delayed filing attracts Late Submission Fee (LSF) to be adjudicated by the AD Bank during approval of Form. This needs to be paid through RTGS to the RBI's bank account details provided by the AD Bank through email.

8. Is FC-TRS filing required for gift of shares?

Yes, FC-TRS filing is mandatory for the transfer of shares by way of gift between a resident and a non-resident.

By adhering to the above procedures and timelines, entities can ensure compliance with FEMA regulations and facilitate smooth cross-border share transfer transactions.

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