FCTRS and FCGPR

FC-TRS and FC-GPR

By Dhaval Rughani

Team Mehta & Mehta

Mehta and Mehta

Company Secretaries

, Worli

Introduction

 Every company having foreign investment(FDI), is required to report

Reserve Bank Of India. Below two conditions need to be looked in to in

case of FDI:

1. Foreign investment must be in compliant to FDI policy.

2. Securities issued must be in accordance with the Foreign Exchange

Management.

 As announced in the First Bi-monthly Monetary Policy Review dated

April 5, 2018 that, with the objective of integrating the extant reporting

structures of various types of foreign investment in India, it will

introduce a Single Master Form (SMF) subsuming all the existing

reports. The filing of SMF would be online.

 Under the head Single Master form FC-GPR, FC-TRS, LLP-I, LLP-II, CN,

ESOP, DI, DRR, InVi are to be filed and submitted. The Reserve Bank of

India (the “RBI“), on September 1, 2018, released a user manual (the

“SMF Manual“) to clearly set out the procedure for filing a single

master form (the “SMF“), which it introduced on June 7, 2018, to

integrate the existing reporting norms for foreign investment in India.

MEHTA & MEHTA

What is FC-TRS

and FC-GPR

FC-TRS

• The literal full form of Form FC-TRS is Foreign Currency Transfer of shares.

• It is a form used by shareholder resident outside India and resident Indian or

vice versa when they transfer their shares.

• The form FC-TRS will be submitted to its authorized dealer bank, who will

submit the same to the RBI.

• The form FC-TRS has to be filed with the AD bank within sixty days of

receipt/ remittance of funds or transfer of capital instruments whichever is

earlier.

• The onus of reporting is on the resident (transferor or transferee) or the

person resident outside India holding capital instruments on a non-

repatriable basis, as the case may be.

FC-GPR

• Form FC-GPR (Foreign Currency-Gross Provisional Return) is Issue of capital

instruments by an Indian company to a person resident outside India

• It is a form issued by RBI under Foreign Exchange Management Act,1999.

When the company receives the foreign investment and against such

investment the company allots shares to such foreign investor then it is the

duty of the company to file details of such allotment of shares with The RBI

within 30 days and for that company has to use the form FC-GPR for

submitting details with RBI.

MEHTA & MEHTA

Steps to file

FC-TRS

Detailed steps as to how to file Form FC-TRS with RBI:

The Form FC-TRS can be filed using the following steps:

 Step 1: Registration for Business User

 Step 2: Logging in to firms

 Step 3: Logging in to SMF and reach out to your workspace.

 Step 4: Select the Return type.

 Step 5: Entity details

 Step 6: Common details

 Step 7: Particulars of transfer

 Step 8: Remittance details

 Step 9: Shareholding pattern

 Step 10: Submitting the form

MEHTA & MEHTA

Steps to File

FC-GPR

Detailed steps as to how to file Form FC-GPR with RBI:

 The Form FC-GPR can be filed using the following steps:

 Step 1: Registration for Business User.

 Step 2: Logging in to firms.

 Step 3: Logging in to SMF and reach out to your workspace.

 Step 4: Select the Return type.

 Step 5: Common Investment details.

 Step 6: Issue Details.

 Step 7: Foreign Investment Details.

 Step 8: Amount of Issue.

 Step 9: Particulars of Issue.

 Step 10: Shareholding Pattern.

 Step 11: Submitting the Form.

MEHTA & MEHTA

Documents

Required to

be submitted

along with

Form FC-TRS

 The following documents must be attached while filling in the FC-TRS electronic

form:

 Letter of approval to transfer/receive consideration duly signed by the buyer

and seller.

 The pattern of shares in the investing company (“the company whose securities

are transferred from one person to another”) before and after a person residing

outside India obtains the securities.

 A certificate indicating the fair value of the securities from a chartered

accountant.

 The buyer has declared that he is eligible for acquiring compulsory convertible

shares / preferred shares compulsorily in accordance with the FDI policy.

 A declaration from the non-resident transferee obtained according to the form

provided by the Reserve Bank of India in their SMF-User Manual.

 The Investee Board of Directors’ decision to approve and acknowledge the

transfer of securities.

 Securities transfer deed in SH 4 form.

 Purchase security agreement, if any.

 FIRC / KYC is received from the AD bank of the transferor/transferee.

MEHTA & MEHTA

Documents

Required to

be submitted

along with

Form FC-GPR

 The following documents must be attached while filling in the FC-TRS electronic

form:

 Declaration to be attached as other attachments as per the format given in the

RBI user manual.

 Certificate from Company Secretary that all the requirements have been

complied with as per Companies Act, 2013 to be attached as other

attachments as per the format given in the RBI user manual.

 Valuation certificate to be attached in the place of Valuation certificate as

prescribed and applicable under FEMA 20(R). However, for the rights issue, the

valuation certificate is not required. A declaration in the plain paper can be

attached that the rights issue to persons or individual resident outside India is not

within the range of price less than the price offered to a person resident in India.

 Appointment of Authorised Representative.

 Board resolution for the Allotment of Securities to be attached as other

attachments with the relevant extracts.

 Letter of Debit Authorization.

 FIRC (Foreign Inward Remittance Certificate) and KYC to be attached in the

place of the specified attachments.

MEHTA & MEHTA

FC-TRS Form

Filing

MEHTA & MEHTA

FC-TRS Form

Filing

MEHTA & MEHTA

FC-TRS Form

Filing

MEHTA & MEHTA

FC-TRS Form

Filing

MEHTA & MEHTA

FC-TRS Form

Filing

MEHTA & MEHTA

FC-TRS Form

Filing

MEHTA & MEHTA

FC-TRS Form

Filing

MEHTA & MEHTA

Late

Submission

Fee (LSF) for

FC-TRS

 For the transactions undertaken on or after November 7, 2017, in case

of reporting delays, the person/ entity responsible for filing the reports

as provided in Part IV of the Master Direction on Reporting shall be

liable for payment of Late Submission Fee (LSF). The payment of LSF is

an additional option for regularising reporting delays without

undergoing the compounding procedure.

The amount involved

in reporting (in Rs.)

Late Submission Fee

(LSF) as % of the

amount involved *

The maximum

amount of LSF

applicable

Up to 10 million

0.05 percent

Rs.1 million or 300% of

the amount involved,

whichever is lower

More than 10 million

0.15 percent

Rs.10 million or 300%

of the amount

involved, whichever

is lower

* The % of LSF will be doubled every twelve months.

The floor (minimum applicable amount) for LSF will be Rs. 100

MEHTA & MEHTA

Late

Submission

Fee (LSF) for

FC-GPR

 In case of delay beyond the prescribed time period

shall be liable to penalty of 1% of the total amount of

investment subject minimum of Rs. 5,000 and Maximum

of Rs/. 5,00,000 per month or part for 1st six months of

delay and twice that rate thereafter, to be paid online

into a designated account in RBI.

MEHTA & MEHTA

Guidance Note

Computation

Matrix

Type of contravention

Existing Formula

Reporting Contraventions

A) FEMA 20

Para 9(1)(A), 9(1)(B), part B of FC(GPR),

FCTRS (Reg. 10) and taking on record

FCTRS (Reg. 4)

Fixed amount : Rs10000/

- (applied once

for each contravention in a compounding

application) +

Variable amount as under

Up to 10 lakhs: 1000 per year

Above

Rs.10 lakhs &

below Rs.

40 lakhs: 2500 per year

Rs.40

lakhs or more &

below Rs. 100 lakhs: 7000 per year

Rs.1

-10 crore: 50000 per year

Rs.10

100 Crore: 100000 per year

Above Rs.100 Crore: 200000 per year

MEHTA & MEHTA

Compounding

of Offences

Delegation of Powers

 As a measure of customer service and in order to facilitate the operational convenience,

compounding powers have been delegated to the Regional Offices/ Sub-Offices of the

Reserve Bank of India and they are accordingly empowered to compound the

contraventions of FEMA 20, FEMA 20(R), FEM (NDI) Rules

 Process of Compounding

 An Application To The Compounding Authority Needs To Be Submitted Along With The

Demand Draft Of Rs. 5000/- Along With The Following:

• Compounding Application: As Per The Format Prescribed In Annexure II Of The Foreign

Exchange (Compounding Proceedings) Rules, 2000.

• Details Of Application: In Case Of Contravention Relating To Foreign Direct Investment,

External Commercial Borrowings (C)overseas Direct Investment And (D) Branch

Office/Liaison Office, The Applicants Are Required To Furnish Details As Per Annexure III Of

The Foreign Exchange (Compounding Proceedings) Rules, 2000.

• Undertaking: An Undertaking That The Applicant Is Not Under Any Investigation By Any

Agency Such As Doe, CBI Etc.

• Copy Of Memorandum Of Association

• Latest Audited Balance Sheet

 Time Limit for Completion

 The application for compounding filed with the RBI for compounding of contravention is

required to be disposed off by RBI within 180 days of the receipt of application.

MEHTA & MEHTA

Thank You

Knowledge Management Team

MEHTA & MEHTA

Legal & Advisory Services

201-206, Shiv Smriti, 2nd Floor, 49A, Dr. Annie Besant Road,

Above Corporation Bank, Worli, Mumbai – 400 018 |

B: +91 (22) 6611 9696 | D: +91 (22) 6611 9614 |98202 23978

E: info@mehta-mehta.com | W: www.mehta-mehta.com |

MEHTA & MEHTA