14 July 2024
When a company in India allots shares to an Overseas Citizen of India (OCI) and receives payment through an NRO (Non-Resident Ordinary) account, there are specific regulations and procedures to follow regarding reporting to the Reserve Bank of India (RBI) and potential transfers to non-residents. Here’s a detailed response to your queries:
### 1. Form FC GPR Filing Requirement:
**Form FC GPR** (Foreign Currency - Gross Provisional Return) is required to be filed with the RBI for reporting inward remittances received against allotment of shares to non-residents, including OCIs. Here are the key points:
- **Applicability**: Form FC GPR needs to be filed within 30 days from the date of receipt of funds for the allotment of shares. - **Documents Required**: You will typically need to submit documents such as a certified copy of the resolution passed by the Board of Directors authorizing the allotment of shares to OCIs, along with other relevant documents. - **Reporting Platform**: Form FC GPR should be filed electronically through the RBI’s online reporting platform (eBiz portal).
Given that the shares were allotted to an OCI and the payment was received through an NRO account, it is advisable to consult with a professional or refer to the latest guidelines on the RBI’s website to ensure compliance with reporting requirements.
### 2. Procedure for Transfer of Shares to Non-Resident:
If an OCI wishes to transfer shares to a non-resident, here’s a general outline of the procedure:
- **Transfer Process**: The transfer of shares to a non-resident, whether another OCI or a different category of non-resident, must comply with the Foreign Exchange Management Act (FEMA) regulations. - **Reporting**: The transfer of shares would typically involve filing Form FC-TRS (Transfer of Shares) with the company and subsequently reporting the transfer to the RBI within 60 days of the transfer date. - **Documents**: The company would require documents such as a copy of the share transfer deed, the buyer’s PAN (if applicable), and other supporting documents as per FEMA regulations. - **Compliance**: Ensure that the transfer complies with the pricing guidelines and other applicable regulations under FEMA.
### Conclusion:
For both the initial allotment of shares to an OCI and any subsequent transfer to a non-resident, it’s crucial to adhere to the regulatory framework outlined by the RBI under FEMA. This includes timely filing of Form FC GPR for initial allotments and Form FC-TRS for share transfers. Consulting with a legal or financial advisor who specializes in FEMA regulations can provide tailored guidance based on the specific circumstances of your client’s transactions.
Always refer to the latest guidelines and notifications issued by the RBI to ensure compliance with current regulations.
If you have further questions or need clarification on any specific aspect, feel free to ask.
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