Note:

 All the reporting is required to be done through the Single Master Form (SMF) available on the
Foreign Investment Reporting and Management System (FIRMS) platform at
https://firms.rbi.org.in

 The user manual for reporting is available at

https://firms.rbi.org.in/firms/faces/pages/login.xhtml. The format of the SMF and KYC report is
available in the user manual.

Rule 3.1
Schedule 1- Purchase or sale of equity instruments of an Indian company by a person
resident outside India

A. Mode of Payment

S.No Payment Mode Requirements

Inward Remittance Through banking channels or from funds in
1 from Abroad NRE/FCNR(B)/Escrow account
Consideration includes:
(i) Issue of equity shares by an Indian company
(ii) Swap of equity instruments
Timing of Equity
2 Issuance Within 60 days from date of consideration receipt
Note: For partly paid equity shares, 60 days from each
call payment
If equity instruments not issued within 60 days, refund
3 Refund in Delay within 15 days after the 60-day period
Foreign Currency Indian company may open with Authorised Dealer in
4 Account India

B. Remittance of Sale Proceeds

S.No Proceeds Handling Requirements

1 Remittance Abroad or Credited to NRE/FCNR(B) Net of taxes
Rule 4- Reporting Requirements

Required for Foreign Direct Investment (FDI) in equity instruments by a

person resident outside India.
Must be submitted within 30 days from the date of issuing equity
instruments with the AD Category - 1 bank.
The onus of submission of the Form FC-TRS within the given timeframe

Form FC-GPR would be on the resident transferor/transferee or the person resident

outside India holding capital instruments on a non–repatriable basis, as the

(Foreign
case may be.
in cases where the NR investor, including an NRI, acquires shares on the
stock exchanges under the FDI scheme, the person resident outside India
Currency-Gross would have to file form FC-TRS with the AD Category-I bank. (ii) The sale
consideration in respect of equity instruments purchased by a person
Provisional resident outside India, remitted into India through normal banking channels,
shall be subjected to a Know Your Customer (KYC) check by the remittance

Return) receiving AD Category-I bank at the time of receipt of funds.

In case, the remittance receiving AD Category-I bank is different from the
AD Category-I bank handling the transfer transaction, the KYC check should
be carried out by the remittance receiving bank and the KYC report be
submitted by the customer to the AD Category-I bank carrying out the
transaction along with the Form FC-TRS.

Annual Return
Mandatory for Indian companies or LLPs receiving FDI or investment by
on Foreign capital contribution.
Submission of Form FLA to the Reserve Bank by July 15 of each year.
Liabilities and Reporting year is from April to March.

Assets (FLA)

a) Reporting Scenarios:
Transfer between a person resident outside India (repatriable basis) and a
person resident outside India (non-repatriable basis).
Form FC-TRS Transfer between a person resident outside India (repatriable basis) and a
person resident in India.
(Foreign Note: Sale between a person resident outside India (non-repatriable basis)
and a person resident in India is exempt.
Currency- (b) Stock Exchange Transfer:
Reporting required for equity instrument transfer on a recognized stock
Transfer of exchange by a person resident outside India.
(c) Rule 9(6) Transfers:

Shares) Reporting in Form FC-TRS for transfers prescribed in Rule 9(6) of the Rules.
Timing of Filing:
Form FC-TRS should be filed within sixty days of the equity instrument
transfer or receipt/remittance of funds, whichever is earlier.
Rule 5- Delays in Reporting
The person / entity responsible for filing the reports provided in Regulation 4 above shall be liable
for payment of late submission fee, as may be decided by the Reserve Bank, in consultation with the
Central Government, for any delays in reporting.

 Consolidated Policy of 2020 makes certain considerations: [ Please refer to Annexure 2 on

Page 72]

1. After the submission of the FCTRS to the AD Category-I bank, it would forward the same to its
link office. The link office would consolidate the Forms and submit a monthly report to the
Reserve Bank.
2. For the purpose the Authorized Dealers may designate branches to specifically handle such
transactions. These branches could be staffed with adequately trained staff for this purpose to
ensure that the transactions are put through smoothly. The ADs may also designate a nodal
office to coordinate the work at these branches and also ensure the reporting of these
transactions to the Reserve Bank.
3. When the transfer is on private arrangement basis, on settlement of the transactions, the
transferee/his duly appointed agent should approach the investee company to record the
transfer in their books along with the certificate in the Form FC-TRS from the AD branch that the
remittances have been received by the transferor/payment has been made by the transferee.
On receipt of the certificate from the AD, the company may record the transfer in its books.
4. The actual inflows and outflows on account of such transfer of shares shall be reported by the
AD branch in the R-returns in the normal course.
Pricing Guidelines [Section 1, point 2]

Applicable in case of Transfer of shares by a resident to a non-resident under a private

arrangement

shall not be less than the price at which the

preferential allotment of shares can be made
Listed on a stock exchange under the SEBI guidelines , as applicable,
provided the same is determined for such
duration as specified therein, preceding the
relevant date, which shall be the date of
purchase or sale of shares
shall not be less than the fair value to be
determined by a SEBI registered Merchant
Not listed on the stock exchange Banker or a Chartered Accountant as per any
internationally accepted pricing methodology
on arm’s length basis. The price per share
arrived at should be certified by a SEBI
registered Merchant Banker or a Chartered
Accountant.

Documentation [Section 1, Point 5]

Besides Declaration in FC TRS, the AD branch should arrange to obtain and keep on record the
following documents:

A. Consent Letter duly signed by the seller and buyer or their duly appointed agent indicating the
details of transfer:

i. Number of shares to be transferred,

ii. Name of the investee company whose shares are being transferred and the price at which shares
are being transferred. In case there is no formal Sale Agreement, letters exchanged to this effect may
be kept on record.

B. Where Consent Letter has been signed by their duly appointed agent, the Power of Attorney
Document executed by the seller/buyer authorizing the agent to purchase/sell shares.
C. The shareholding pattern of the investee company after the acquisition of shares by a person
resident outside India showing equity participation of residents and non- residents category-wise
(i.e. NRIs/OCBs/foreign nationals/incorporated non-resident entities/, FPIs) and its percentage of
paid up capital obtained by the seller/buyer or their duly appointed agent from the company, where
the sectoral cap/limits have been prescribed.

D. Certificate indicating fair value of shares from a Chartered Accountant.

E. Copy of Broker’s note if sale is made on Stock Exchange.

F. Undertaking from the buyer to the effect that he is eligible to acquire shares/convertible
debentures under FDI policy and the existing sectoral limits and Pricing Guidelines have been
complied with.

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

The Form FC-TRS can be filed using the following steps:
 Logging in to SMF and reach out to your workspace.
 Select the Return type.
 Entity details
 Common details
 Particulars of transfer
 Remittance details
 Shareholding pattern
 Submitting the form

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

The Form FC-GPR can be filed using the following steps:
 Registration for Business User.
 Logging in to firms.
 Logging in to SMF and reach out to your workspace.
 Select the Return type.
 Common Investment details.
 Issue Details.
 Foreign Investment Details.
 Amount of Issue.
 Particulars of Issue.
 Shareholding Pattern.
 Submitting the Form.
 Important Considerations under NDI Rules, 2019
Rule 6a + Schedule 1

In case of transfer of equity instruments between a person resident in India and a person
resident outside India, a person resident outside India may open an escrow account in
accordance with the Foreign Exchange Management (Deposit) Regulations, 2016 and such
escrow account may be funded by way of inward remittance through banking channels and/
or by way of guarantee issued by an authorised dealer bank, subject to the terms and
conditions as specified in the Foreign Exchange Management (Guarantees) Regulations, 2000.
An Indian company may issue, subject to compliance with the conditions prescribed by the
Central Government and/or the Reserve Bank from time to time, equity instruments to a
person resident outside India, if the Indian investee company is engaged in an automatic
route sector, against,-
(i) swap of equity instruments; or
(ii) import of capital goods or machinery or equipment (excluding second-hand machinery);
iii) pre-operative or pre-incorporation expenses (including payments of rent etc.)