The Foreign Exchange Management Act (FEMA) in India has a reporting method known as FC-TRS, which stands for Foreign Currency-Transfer of Shares. For the transfer of shares or convertible securities between resident and non-resident firms, FC-TRS is applicable to both Indian companies and non-resident entities.
FC-TRS offers a systematic and streamlined approach for reporting share transfers, which simplifies the compliance process. By guaranteeing consistency and uniformity in reporting procedures, adhering to the FC-TRS rules streamlines the compliance process for organisations involved in cross-border share transactions
1. Reporting Requirement: As per FC-TRS, every transfer of shares or convertible securities between resident and non-resident firms must be reported to the Authorised Dealer bank within a certain time frame by Indian corporations and non-resident entities.
2. Reporting Method: The FC-TRS report must be submitted online on the RBI's website within the allotted time window. Giving precise information regarding the transferor, transferee, shareholding pattern, transaction details, and other pertinent specifics as demanded by the RBI is a requirement of the reporting procedure.
3. Due date: The FC-TRS report must be submitted within 60 days from the date of money receipt. To avoid fines or other non-compliance difficulties, the reporting requirement must be complied with promptly.
4. Authorised Dealer Bank: The Authorised Dealer bank receives the FC-TRS report and serves as a liaison between the Indian company and the RBI. After reviewing the report, the Authorised Dealer bank sends it to the RBI for processing.
5. Monitoring of Compliance: To ensure that transactions of shares or convertible securities between resident and non-resident entities are appropriately reported, the RBI checks compliance with FC-TRS laws. Penalties or other regulatory actions may follow from failure to comply with the FC-TRS reporting requirements.
6. Transfer Pricing Regulations: Additional documentation and reporting requirements can be necessary when the transfer of shares or convertible securities involves a non-resident firm and is covered by transfer pricing regulations.
Procedure for change of name
1. Regulatory Compliance: Submitting an FC-TRS form guarantees adherence to the rules set forth by the Reserve Bank of India (RBI) under FEMA. It exhibits compliance with the rules and requirements for reporting share transfers between resident and non-resident entities.
2. Accountability and openness: The FC-TRS filing encourages accountability and openness in share transfer operations. It offers a formal record of the transfer, complete with information on the transferor and transferee, shareholding structure, and transactional details. This improves cross-border transaction transparency and encourages regulatory supervision.
3. Investor Confidence: Meeting FC-TRS criteria contributes to fostering investor confidence. Companies and entities that transfer shares in accordance with the rules and proper procedures are valued by foreign investors. Investors are reassured by timely and accurate FC-TRS disclosures regarding the reliability and openness of the transfer procedure.
4. A trail of share transfer transactions is provided by the FC-TRS filings for recordkeeping and auditing purposes. As a result, recordkeeping is made easier and internal and external audits are supported. It is easier to settle disagreements, identify ownership, and ensure accuracy in financial reporting when share transactions are properly documented.
What is the FC-TRS?
FC-TRS stands for the reporting system established by FEMA in India for businesses engaged in the exchange of convertible securities or shares between residents and non-residents.
Who must submit an FC-TRS form?
When there is a transfer of shares or convertible securities between Indian firms and non-resident entities, FC-TRS reports must be filed.
What is due date of filing FC-TRS?
The FC-TRS filing must be made within 60 days from the date of receipt of money.
Which details must be reported in FC-TRS?
As required by the RBI, the FC-TRS report includes information about the transferor, transferee, shareholding pattern before and after the transfer, transaction details, and other pertinent factors.
How should the FC-TRS be submitted?
FC-TRS reports must be submitted online on the RBI's website. The Authorised Dealer bank, which serves as a middleman between the parties engaged in the transfer, handles the reporting.
What does FC-TRS tracks?
FC-TRS filing permits the monitoring and documentation of share transfers between resident and non-resident firms as well as ensuring compliance with the reporting requirements under FEMA.
Can the FC-TRS be submitted physically or offline?
FC-TRS filings aren't done in person; instead, they're done online using the RBI's site. Offline or physical filing is not permitted.