Modified
Reporting Mechanism for Shares FDI
Sub: Foreign Direct Investment in India - Transfer
of Shares / Preference Shares / Convertible Debentures by way of Sale -
Modified Reporting Mechanism
[Ref: RBI
Circular - AP(DIR Srs) Cir.63
dated 22.04.2009]
Attention of the Authorised
Dealer Category – I (AD Category - I) banks is invited to paragraph 6 of the Annex
to A. P. (DIR Series) Circular No.16 dated October 4, 2004, wherein, it has
been stipulated that in case of transfer of shares from a resident to a
non-resident / non-resident Indian and vice versa, the transferee / his duly
appointed agent is required to approach the investee company to record the
transfer in their books along with the certificate in form FC-TRS from the designated AD branch that the remittances have
been received by the transferor / payment has been made by the transferee. In
addition, the designated AD branch is also required to submit two copies of the
form FC-TRS received from their constituents/
customers together with the statement of inflows / outflows on account of
remittances received / made in connection with transfer of shares, by way of
sale, to IBD/FED or the nodal office designated for
the purpose by the AD Category – I bank. The IBD/FED
or the nodal office of the AD Category – I bank in turn submits a consolidated
monthly statement in respect of all the transactions reported by the branches
to the Reserve Bank, in the prescribed proforma.
Further, it may be noted that in terms of Regulation 2
of Notification No. FEMA 20/2000-RB dated 3rd May 2000, as amended from time to
time, "preference shares" mean compulsorily and mandatorily
convertible preference shares and
"debenture" means compulsorily and mandatorily convertible
debentures.
2. In order to capture the details of investment received by way of
transfer of the existing shares / compulsorily and mandatorily convertible
preference shares (CMCPS) / debentures [hereinafter
referred to as equity instruments], of an Indian company, by way of sale, in a
more comprehensive manner, the form FC-TRS has been
revised (format in Annex I). Accordingly, the proforma
for reporting of inflows / outflows on account of remittances received / made
in connection with the transfer of equity instruments by way of sale, submitted
by IBD/FED/nodal branch of the AD Category – I bank
to the Reserve Bank has also been modified (format in Annex III).
3. The sale
consideration in respect of equity instruments purchased by a person resident
outside India, remitted into India through normal banking channels, shall be
subjected to a KYC check (format in Annex II) by the
remittance 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.
4. Further, in
order to ensure that the form FC-TRS is submitted
within a reasonable timeframe, it has been decided that henceforth, the form
FC-TRS should be submitted to the AD Category – I
bank, within 60 days from the date of receipt of the amount of consideration.
The onus of submission of the form FC-TRS within the
given timeframe would be on the transferor / transferee, resident in India.
5 In case of
transfer of equity instruments where the non-resident acquirer proposes
deferment of payment of the amount of consideration, prior approval of the
Reserve Bank would be required, as hitherto. Further, in case approval is
granted for a transaction, the same should be reported in form FC-TRS, duly certified by the AD Category – I bank, within 60
days from the date of receipt of the full and final amount of consideration.
5. These
directions will become operative with immediate effect.
6. AD Category – I banks may bring the contents of this circular to
the notice of their constituents and customers concerned.
7. The
directions contained in this circular have been issued under sections 10(4) and
11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and is without
prejudice to permissions / approvals, if any, required under any other law.
Annex I
[A. P. (DIR Series) Circular No.63 dated April 22,
2009]
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Form FC-TRS |
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Declaration regarding transfer of shares
/ compulsorily and mandatorily convertible preference shares (CMCPS) / debentures by way of sale from resident to non
resident / non-resident to resident |
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(to be submitted to the designated AD branch in
quadruplicate within 60 days from the date of receipt of funds) |
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The
following documents are enclosed For
sale of shares / compulsorily and mandatorily convertible preference shares /
debentures by a person resident in India i.
Consent Letter duly signed by the seller and buyer or their duly appointed
agent and in the latter case the Power of Attorney Document. ii.
The shareholding pattern of the investee company after the acquisition of
shares by a person resident outside India. iii.
Certificate indicating fair value of shares from a Chartered Accountant. iv.
Copy of Broker's note if sale is made on Stock Exchange. v.
Declaration from the buyer to the effect that he is eligible to acquire
shares / compulsorily and mandatorily convertible preference shares /
debentures under FDI policy and the existing sectoral limits and Pricing
Guidelines have been complied with. vi.
Declaration
from the FII/sub account to the effect that the individual FII / Sub account
ceiling as prescribed has not been breached. Additional
documents in respect of sale of shares / compulsorily and mandatorily
convertible preference shares / debentures by a person resident outside India
vii.
If the sellers are NRIs/OCBs,
the copies of RBI approvals, if applicable, evidencing the shares held by
them on repatriation/non-repatriation basis. viii.
No Objection/Tax Clearance Certificate from Income Tax Authority/Chartered
Account. |
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1
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Name
of the company |
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Address
(including e-mail , telephone Number, Fax no) |
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Activity
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NIC
Code No. |
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2
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Whether
FDI is allowed under Automatic route |
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Sectoral
Cap under FDI Policy |
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3
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Nature
of transaction (Strike
out whichever is not applicable) |
Transfer
from resident to non resident / Transfer
from non resident to resident |
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4
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Name
of the buyer |
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Constitution
/ Nature of the investing Entity Specify
whether 1.
Individual 2.
Company 3.
FII 4.
FVCI 5.
Foreign Trust 6.
Private Equity Fund 7.
Pension/ Provident Fund 8.
Sovereign Wealth Fund (SWF*) 9.
Partnership / Proprietorship firm 10.
Financial Institution 11.
NRIs / PIOs 12.
others |
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Date
and Place of Incorporation |
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Address
of the buyer (including e-mail, telephone number. Fax no.) |
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*SWF
means a Government investment vehicle which is funded by foreign exchange
assets, and which manages those assets separately from the official reserves
of the monetary authorities. |
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5
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Name
of the seller |
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Constitution
/ Nature of the disinvesting entity (Specify
whether 1.
Individual 2.
Company 3.
FII 4.
FVCI 5.
Foreign Trust 6.
Private Equity Fund 7.
Pension/ Provident Fund 8.
Sovereign Wealth Fund (SWF*) 9.
Partnership/ Proprietorship firm 10.
Financial Institution 11.
NRIs/PIOs 12.
others) |
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Date
and Place of Incorporation |
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Address
of the seller (including e-mail, telephone Number Fax no) |
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*SWF
means a Government investment vehicle which is funded by foreign exchange
assets, and which manages those assets separately from the official reserves
of the monetary authorities. |
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6
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Particulars
of earlier Reserve Bank / FIPB approvals |
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7 |
Details
regarding shares / compulsorily and mandatorily convertible preference shares
(CMCPS) / debentures to be transferred |
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Date
of the transaction |
Number
of shares CMCPS / debentures |
Face
value in Rs. |
Negotiated
Price for the transfer**in Rs. |
Amount
of consideration in Rs. |
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8
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Foreign
Investments in the company |
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No
of shares |
Percentage |
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Before
the transfer |
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After
the transfer |
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9
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Where
the shares / CMCPS / debentures are listed on Stock
Exchange |
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Name
of the Stock exchange |
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Price
Quoted on the Stock exchange |
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Where
the shares / CMCPS / debentures are Unlisted |
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Price
as per Valuation guidelines* |
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Price
as per Chartered Accountants |
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*
/ ** Valuation report (CA Certificate to be attached) |
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Declaration
by the transferor / transferee I
/ We hereby declare that : i.
The particulars given above are true and correct to the best of my/our
knowledge and belief. ii.
I/ We was/were holding the shares compulsorily and mandatorily convertible
preference shares / debentures as per FDI Policy under FERA/
FEMA Regulations on repatriation/non repatriation basis. iii.
I/ We am/are eligible to acquire the shares compulsorily and mandatorily
convertible preference shares / debentures of the company in terms of the FDI
Policy. It is not a transfer relating to shares compulsorily and mandatorily
convertible preference shares / debentures of a company engaged in financial
services sector or a sector where general permission is not available. iv.
The Sectoral limit under the FDI Policy and the pricing guidelines have been adhered to. Signature
of the Declarant or his duly Date:
Note:
In respect of the transfer of shares / compulsorily
and mandatorily convertible preference shares / compulsorily and mandatorily
convertible debentures from resident to non resident the declaration has to
be signed by the non resident buyer, and in respect of the transfer of shares
/ compulsorily and mandatorily convertible preference shares / compulsorily
and mandatorily convertible debentures from non-resident to resident the
declaration has to be signed by the non-resident seller. |
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Certificate by the AD Branch It
is certified that the application is complete in all respects. The
receipt /payment for the transaction are in accordance with FEMA Regulations
/ Reserve Bank guidelines. Signature Name and Designation of the Officer Date:
Name of the AD Branch AD Branch Code |
Annex II
[A. P. (DIR Series) Circular No.63 dated April 22,
2009]
Know Your Customer
(KYC) Form in respect of the non-resident investor
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Registered
Name of the Remitter / Investor (Name, if the investor is an Individual) |
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Registration
Number (Unique Identification Number* in case remitter is an Individual) |
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Registered
Address (Permanent Address if remitter Individual) |
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Name
of the Remitter’s Bank |
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Remitter’s
Bank Account No. |
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Period
of banking relationship with the remitter |
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*Passport
No., Social Security No, or any Unique No. certifying the bonafides
of the remitter as prevalent in the remitter’s country.
We
confirm that all the information furnished above is true and accurate as
provided by the overseas remitting bank of the non-resident investor.
(Signature
of the Authorised Official of
the AD bank receiving the remittance)
Date:
Place:
Stamp :
Annex III
[A. P. (DIR Series) Circular No 63 dated April 22,
2009]
Proforma
Statement of inflows/outflows on account of remittance
received/made in connection with
transfer of shares / compulsorily and mandatorily convertible preference shares
/ debentures, by way of sale
Category-wise
Part
A - NRI/erstwhile OCB
Part
B - Foreign National/non-resident incorporated entity
Part
C - Foreign Institutional Investors
Inflow -Transfer from resident to non-resident
[Amount
in Rs.]
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Date
of Transaction |
Name
of the Company |
Activity
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NIC
Code |
Name
of the Buyer |
Constitution/
Nature of Business of the Buyer |
Name
of the Seller |
Constitution/
Nature of Business of the Seller |
No.
of Shares transferred |
Face
Value |
Sale
price per share |
Total
Inflow |
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(1)
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(2)
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(3)
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(4)
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(5)
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(6)
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(7)
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(8)
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(9)
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(10)
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(11)
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(12) |
Outflow
- Transfer from non-resident to resident
[Amount in Rs.]
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Date
of Transaction |
Name
of the Company |
Activity
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NIC
Code |
Name
of the Seller |
Constitution/
Nature of Business of the Seller |
Name
of the Buyer |
Constitution/
Nature of Business of the Buyer |
No.
of Shares transferred |
Face
Value |
Sale
price per share |
Total
outflow |
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(1)
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(2)
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(3)
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(4)
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(5)
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(6)
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(7)
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(8)
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(9)
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(10)
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(11)
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(12) |