Transfer of Shares from Resident to Non Resident
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
13 June 2010
Hi everyone,
I wanna ask a specific query regarding transfer of shares from a resident individual (transferor/seller) to a non resident individual(transferee/buyer). The transferor received the remittance in the month of March and files an FCTRS form with an AD-I Category Bank. Bank Acknowledges the receipt of Form FCTRS in the Month of May (within a prescribed period of 60 Days) and also files a copy of Form FCTRS with the Company in order to record the transfer of Shares.
Please suggest me what will be the date of Actual Transfer on which the Shares will be deemed to be transfer:-
A. The date on which the Resident individual receives money from Non-resident.
B. The Date on which the AD-I category bank gives an acknowledgement for receipt of Form FCTRS.
C. the Date on which the transferor contacts the Company to record the transfer of shares.
D. The date on which the AD-I category Bank files the Details of the FCTRS Forms received during the moth with the RBI and RBI processed the application.
E. Any other date.
Kindly provide any legal referrence with the answer in order to enable to me to discuss the issue with my seniors.
I wanna ask a specific query regarding transfer of shares from a resident individual (transferor/seller) to a non resident individual(transferee/buyer). The transferor received the remittance in the month of March and files an FCTRS form with an AD-I Category Bank. Bank Acknowledges the receipt of Form FCTRS in the Month of May (within a prescribed period of 60 Days) and also files a copy of Form FCTRS with the Company in order to record the transfer of Shares.
Please suggest me what will be the date of Actual Transfer on which the Shares will be deemed to be transfer:-
A. The date on which the Resident individual receives money from Non-resident.
B. The Date on which the AD-I category bank gives an acknowledgement for receipt of Form FCTRS.
C. the Date on which the transferor contacts the Company to record the transfer of shares.
D. The date on which the AD-I category Bank files the Details of the FCTRS Forms received during the moth with the RBI and RBI processed the application.
E. Any other date.
Kindly provide any legal referrence with the answer in order to enable to me to discuss the issue with my seniors.
13 June 2010
The date on which the shares were actually transfered by the company.
Querist : Anonymous
Querist :
Anonymous
(Querist)
16 June 2010
Dear Sir,
In the above query of mine the shares have been transfered by the Resident Individual (a shareholder of the company) to another shareholder.
The above mentioned shares are not been issued by the company.
If you can provide me any legal supporting for your answer then it will be very helpfull for me.
In the above query of mine the shares have been transfered by the Resident Individual (a shareholder of the company) to another shareholder.
The above mentioned shares are not been issued by the company.
If you can provide me any legal supporting for your answer then it will be very helpfull for me.
02 August 2025
Great question! The transfer of shares from a resident to a non-resident is governed by the Foreign Exchange Management Act (FEMA) and related RBI regulations, especially the filing of the **FCTRS (Foreign Currency Transfer of Shares) Form**.
---
### When is the date of actual transfer deemed?
* **Key point:** The shares are *deemed* to be transferred only after all regulatory compliances, especially under FEMA and RBI rules, are completed.
* The **date of transfer** is important for regulatory, accounting, and tax purposes.
---
### Explanation of options you gave:
| Option | Explanation |
| --------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------- |
| **A. Date on which Resident individual receives money from Non-resident** | This is when payment happens but is not sufficient to deem transfer legally complete since regulatory filings are mandatory. |
| **B. Date on which AD-I bank gives acknowledgment for receipt of FCTRS** | This acknowledgment is important but it’s only the receipt of form, not RBI approval. |
| **C. Date on which transferor contacts the company to record transfer** | This is a procedural step; company registers the transfer after verifying documents. |
| **D. Date on which AD-I bank files details with RBI and RBI processes the application** | This is the crucial step where RBI approval (implicit or explicit) occurs. Transfer can be deemed complete only after this. |
| **E. Any other date** | Sometimes the date on share transfer deed or date of Board approval can be relevant, but subject to RBI approval. |
---
### **Correct Answer:**
**(D) The date on which the AD-I category bank files the details of FCTRS with the RBI and RBI processes the application.**
This is because:
* As per **RBI Master Direction on Foreign Investment in India (FEMA 20/2000-RB)**, the transfer of shares to a non-resident requires prior approval or reporting to RBI.
* The **FCTRS form** filed with the AD bank acts as a notification to RBI for approval.
* The **transfer of shares is legally complete and effective only after RBI processes the form** and the company records the transfer based on this approval.
* Until RBI processes and approves the remittance and form, transfer is not valid for FEMA purposes.
---
### Legal References & Circulars:
* **Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000**.
* **RBI Circulars on FCTRS filing and transfer of shares**.
* **Master Direction - Foreign Investment in India (Transfer or Issue of Security by a Person Resident Outside India), 2017**.
* Section 5 of FEMA 1999 (Prohibition on certain payments).
* **RBI A.P. (DIR Series) Circular No. 40 dated 13-12-2004** regarding transfer of shares by Resident to Non-Resident.
---
### Summary for discussion with seniors:
| Step | Responsible | Key Document/Action | Effect |
| -------------------------------- | ------------------ | ------------------------------------------------ | -------------------------- |
| Receipt of remittance | Resident | Payment received | Initiates process |
| Filing of FCTRS form | Resident & AD bank | FCTRS filed with AD bank | Notifies RBI |
| Acknowledgment by AD bank | AD bank | Acknowledgment to resident | Confirms form receipt |
| Filing of FCTRS details with RBI | AD bank | Monthly filing & RBI processing | RBI approval / processing |
| Recording transfer in company | Resident & Company | Company updates share register post RBI approval | Transfer legally effective |
---
If you want, I can help you draft a note or summary with citations for your internal discussion. Would you like that?
---
### When is the date of actual transfer deemed?
* **Key point:** The shares are *deemed* to be transferred only after all regulatory compliances, especially under FEMA and RBI rules, are completed.
* The **date of transfer** is important for regulatory, accounting, and tax purposes.
---
### Explanation of options you gave:
| Option | Explanation |
| --------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------- |
| **A. Date on which Resident individual receives money from Non-resident** | This is when payment happens but is not sufficient to deem transfer legally complete since regulatory filings are mandatory. |
| **B. Date on which AD-I bank gives acknowledgment for receipt of FCTRS** | This acknowledgment is important but it’s only the receipt of form, not RBI approval. |
| **C. Date on which transferor contacts the company to record transfer** | This is a procedural step; company registers the transfer after verifying documents. |
| **D. Date on which AD-I bank files details with RBI and RBI processes the application** | This is the crucial step where RBI approval (implicit or explicit) occurs. Transfer can be deemed complete only after this. |
| **E. Any other date** | Sometimes the date on share transfer deed or date of Board approval can be relevant, but subject to RBI approval. |
---
### **Correct Answer:**
**(D) The date on which the AD-I category bank files the details of FCTRS with the RBI and RBI processes the application.**
This is because:
* As per **RBI Master Direction on Foreign Investment in India (FEMA 20/2000-RB)**, the transfer of shares to a non-resident requires prior approval or reporting to RBI.
* The **FCTRS form** filed with the AD bank acts as a notification to RBI for approval.
* The **transfer of shares is legally complete and effective only after RBI processes the form** and the company records the transfer based on this approval.
* Until RBI processes and approves the remittance and form, transfer is not valid for FEMA purposes.
---
### Legal References & Circulars:
* **Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000**.
* **RBI Circulars on FCTRS filing and transfer of shares**.
* **Master Direction - Foreign Investment in India (Transfer or Issue of Security by a Person Resident Outside India), 2017**.
* Section 5 of FEMA 1999 (Prohibition on certain payments).
* **RBI A.P. (DIR Series) Circular No. 40 dated 13-12-2004** regarding transfer of shares by Resident to Non-Resident.
---
### Summary for discussion with seniors:
| Step | Responsible | Key Document/Action | Effect |
| -------------------------------- | ------------------ | ------------------------------------------------ | -------------------------- |
| Receipt of remittance | Resident | Payment received | Initiates process |
| Filing of FCTRS form | Resident & AD bank | FCTRS filed with AD bank | Notifies RBI |
| Acknowledgment by AD bank | AD bank | Acknowledgment to resident | Confirms form receipt |
| Filing of FCTRS details with RBI | AD bank | Monthly filing & RBI processing | RBI approval / processing |
| Recording transfer in company | Resident & Company | Company updates share register post RBI approval | Transfer legally effective |
---
If you want, I can help you draft a note or summary with citations for your internal discussion. Would you like that?
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