FC TRS late filing

N Muralidharan (Expert) 20 February 2009
Please go through the Master Circular on Foreign Investment in India pertaining to your period - RBI/2007-2008/18
Master Circular No.02/2007-08
July 2, 2007, All Category - I Authorised Dealer banks.
In page No. 15 of the Circular it is stated as
Reporting of transfer of shares between residents and non-residents
and vice versa is to be done in Form FC-TRS (enclosed in Annex-7).
This Form needs to be submitted to the AD Bank, which will forward the same to its link office. The link office will consolidate the Form and submit a report to RBI.

I feel that even now it can be belatedly submitted to the authorised bank through whom the consideration was routed through.

But the practical problems are:-

1. The sellers of the shares should co-operate to sign the form and endorse the same in bank.

2. The Companies Annual returns for the calender year ended 31.12.08 is not submitted to Registrar of Companies.

BEING A GENERAL PERMISSION CIRCULAR, THE TRANSFER IS VALID IF AND ONLY IF THE PROCEDURES STATED ARE DULY COMPLIED. HENCE IT IS PRUDENT TO FILE THE SAME NOW. At a future date, if the sellers of the shares claims that as the prescribed procedures were not followed, the transfer is null and void, ratifying it now itself will atleast protect the buyers of the shares.

I am not an expert in FEMA / RBI regulations. The above are my opinions and feeling only.

Being a procedural mistake committed with out any intention and the genuinenity of the transaction can be established, I feel no penal action would be taken.

MURALI