Fdi invetsment
This query is : Resolved
19 April 2012
Dear All
Pls advice!!
Shares of an Indian Company has been transferred by resident to a non resident Indian (NRI)and to a Person of Indian Origin (PIO). The funds has been received through foreign accounts in the account of transferor.
Will this to be treated as FDI ?
Do we need to file the Form FC-TRS in this case ??
Any advice appreciated !!
Pls advice!!
Shares of an Indian Company has been transferred by resident to a non resident Indian (NRI)and to a Person of Indian Origin (PIO). The funds has been received through foreign accounts in the account of transferor.
Will this to be treated as FDI ?
Do we need to file the Form FC-TRS in this case ??
Any advice appreciated !!
20 April 2012
Hi
Go to the following link:
https://www.caclubindia.com/forum/short-note-on-foreign-direct-investment-in-india-195561.asp
Go to the following link:
https://www.caclubindia.com/forum/short-note-on-foreign-direct-investment-in-india-195561.asp
20 April 2012
Yes, it will be treated as FDI.
Under Foreign Exchange Management (Transfer or Issue of Security by Persons Resident Outside India) Regulations, 2000 (notification No.FEMA 20/2000-RB dated May 3, 2000) read with Section 6(3)(b) of the Foreign Exchange Management Act, 1999, the Indian Companies are allowed to raise funds from overseas investors. Regulation 9, 10 and 11 of Foreign Exchange Management (Transfer or Issue of Security by Persons Resident Outside India) Regulations, 2000 deal with transfer of shares and convertible debentures of an Indian Company by a person resident in India to a person resident in India or vice versa. An Indian company, which is not engaged in any activity or in manufacturing of item, may issue fresh shares subject to the condition and sectoral cap as indicated under Foreign Direct Scheme, subject to the terms and condition specified. The said regulation is made by RBI to prohibit, restrict or regulate, transfer or issue of securities.
Regards
Under Foreign Exchange Management (Transfer or Issue of Security by Persons Resident Outside India) Regulations, 2000 (notification No.FEMA 20/2000-RB dated May 3, 2000) read with Section 6(3)(b) of the Foreign Exchange Management Act, 1999, the Indian Companies are allowed to raise funds from overseas investors. Regulation 9, 10 and 11 of Foreign Exchange Management (Transfer or Issue of Security by Persons Resident Outside India) Regulations, 2000 deal with transfer of shares and convertible debentures of an Indian Company by a person resident in India to a person resident in India or vice versa. An Indian company, which is not engaged in any activity or in manufacturing of item, may issue fresh shares subject to the condition and sectoral cap as indicated under Foreign Direct Scheme, subject to the terms and condition specified. The said regulation is made by RBI to prohibit, restrict or regulate, transfer or issue of securities.
Regards
20 April 2012
Hi
RULES AND REGULATIONS
As per Regulation 3 of Foreign Exchange Management (Transfer or Issue of Security by Persons Resident Outside India) Regulations, 2000, save as otherwise provided in the Act, or rules or regulations made there under, no person resident outside India shall transfer or issue any security without the approval of RBI. In simple term, any transfer by person resident outside India against the rules and regulation made for transfer of capital and without the approval of RBI will not be considered by the Company for giving effect of such transfer and making entry in Register of members.
Regulation 9 of Foreign Exchange Management (Transfer or Issue of Security by Persons Resident Outside India) Regulations, 2000 deal with transfer by way of sale of shares and convertible debentures held by a person resident in India to any person resident outside India subject to the permission of Central Government .
Regulation 10 of Foreign Exchange Management (Transfer or Issue of Security by Persons Resident Outside India) Regulations, 2000 requires prior permission of Reserve Bank of India (RBI) in case of transfer of shares by way or sale or gift between a person resident in India and a person resident outside India in accordance with the provisions provided in the Act, or rules or regulations made there under.
Section 108 of the Companies Act, 1956 deal with transfer of securities issued. It says a company whether public or private, shall not register transfer of shares in or debentures of the company unless a proper instrument of transfer duly stamped and executed by or on behalf of the transferor and transferee has been delivered to the company along with the certificate relating to shares or debentures.
CAPITAL
As per Regulation 2(ii) of Foreign Exchange Management (Transfer or Issue of Security by Persons Resident outside India) Regulations, 2000 Capital means equity shares, preference shares, convertible preference shares and convertible debentures.
PARTIES INVOLVED IN THE TRANSACTION
Transfer of securities of Indian Company by a person resident outside India under Foreign Exchange Management (Transfer or Issue of Security by Persons Resident Outside India) Regulations, 2000 involved following parties:
(i) Seller (resident/non-resident)
(ii) Buyer (resident/non-resident)
(iii) Duly authorised agent of the seller and/or buyer
(iv) Authorised Dealer (AD) branch, and
(v) Indian Company, for recording the transfer of ownership in its books.
TRASFERS COVERED UNDER REGULATION
Under Foreign Exchange Management (Transfer or Issue of Security by Persons Resident Outside India) Regulations, 2000 (notification No.FEMA 20/2000-RB dated May 3, 2000), following kind of transfer of securities will be taken in to account:
1. Transfer of shares or convertible debentures of an Indian Company by a person resident outside India.
2. Transfer of shares or convertible debentures of an Indian Company from a Person Resident in India to a Person resident outside India.
3. Transfer of shares or convertible debentures of an Indian Company from a Person Resident Outside India to a Person Resident in India.
In this article, I am trying to give you a simplified procedure of transfer of shares or convertible debentures of an India Company, which was earlier issued in compliance with Foreign Exchange Management Act, 1999 and Rules and Regulations made there under. The procedure for transfer of shares between a person resident outside India and a person resident in India and vice versa.
The parties involved in transfer of shares or convertible debentures should be comply the terms and condition as stipulated in FEMA and Regulations made there under subject to direction given by RBI time to time regarding pricing, documentation, payment/receipt and remittance in respect thereof.
Regards
RULES AND REGULATIONS
As per Regulation 3 of Foreign Exchange Management (Transfer or Issue of Security by Persons Resident Outside India) Regulations, 2000, save as otherwise provided in the Act, or rules or regulations made there under, no person resident outside India shall transfer or issue any security without the approval of RBI. In simple term, any transfer by person resident outside India against the rules and regulation made for transfer of capital and without the approval of RBI will not be considered by the Company for giving effect of such transfer and making entry in Register of members.
Regulation 9 of Foreign Exchange Management (Transfer or Issue of Security by Persons Resident Outside India) Regulations, 2000 deal with transfer by way of sale of shares and convertible debentures held by a person resident in India to any person resident outside India subject to the permission of Central Government .
Regulation 10 of Foreign Exchange Management (Transfer or Issue of Security by Persons Resident Outside India) Regulations, 2000 requires prior permission of Reserve Bank of India (RBI) in case of transfer of shares by way or sale or gift between a person resident in India and a person resident outside India in accordance with the provisions provided in the Act, or rules or regulations made there under.
Section 108 of the Companies Act, 1956 deal with transfer of securities issued. It says a company whether public or private, shall not register transfer of shares in or debentures of the company unless a proper instrument of transfer duly stamped and executed by or on behalf of the transferor and transferee has been delivered to the company along with the certificate relating to shares or debentures.
CAPITAL
As per Regulation 2(ii) of Foreign Exchange Management (Transfer or Issue of Security by Persons Resident outside India) Regulations, 2000 Capital means equity shares, preference shares, convertible preference shares and convertible debentures.
PARTIES INVOLVED IN THE TRANSACTION
Transfer of securities of Indian Company by a person resident outside India under Foreign Exchange Management (Transfer or Issue of Security by Persons Resident Outside India) Regulations, 2000 involved following parties:
(i) Seller (resident/non-resident)
(ii) Buyer (resident/non-resident)
(iii) Duly authorised agent of the seller and/or buyer
(iv) Authorised Dealer (AD) branch, and
(v) Indian Company, for recording the transfer of ownership in its books.
TRASFERS COVERED UNDER REGULATION
Under Foreign Exchange Management (Transfer or Issue of Security by Persons Resident Outside India) Regulations, 2000 (notification No.FEMA 20/2000-RB dated May 3, 2000), following kind of transfer of securities will be taken in to account:
1. Transfer of shares or convertible debentures of an Indian Company by a person resident outside India.
2. Transfer of shares or convertible debentures of an Indian Company from a Person Resident in India to a Person resident outside India.
3. Transfer of shares or convertible debentures of an Indian Company from a Person Resident Outside India to a Person Resident in India.
In this article, I am trying to give you a simplified procedure of transfer of shares or convertible debentures of an India Company, which was earlier issued in compliance with Foreign Exchange Management Act, 1999 and Rules and Regulations made there under. The procedure for transfer of shares between a person resident outside India and a person resident in India and vice versa.
The parties involved in transfer of shares or convertible debentures should be comply the terms and condition as stipulated in FEMA and Regulations made there under subject to direction given by RBI time to time regarding pricing, documentation, payment/receipt and remittance in respect thereof.
Regards
20 April 2012
The experts have given you the full text of the provisions and apply accordingly.
21 April 2012
Ajay
Thanks for your advice!
But I am asking about NRI & PIO transfree.
As per FEMA Act & Regulations General Permission has been granted for following transactions subject to FDI Sectoral policy:
1) Transfer by Resident to Non-Resident
2) Transfer by Non-Resident to Resident
3) Transfer by Non-Resident to Non-Resident
Here I am concerned about Transfer of Shares of an Indian Private Company by Resident to Non Resident Indian and Person of Indian Origin.
Please reply.
Thanks for your advice!
But I am asking about NRI & PIO transfree.
As per FEMA Act & Regulations General Permission has been granted for following transactions subject to FDI Sectoral policy:
1) Transfer by Resident to Non-Resident
2) Transfer by Non-Resident to Resident
3) Transfer by Non-Resident to Non-Resident
Here I am concerned about Transfer of Shares of an Indian Private Company by Resident to Non Resident Indian and Person of Indian Origin.
Please reply.
21 April 2012
Hi
If you reading Regulation 3, 9 10 and 11, there is no division as you said, the same procedure will apply to all foreign investors.
If you read Regulation 3 of Foreign Exchange Management (Transfer or Issue of Security by Persons Resident Outside India) Regulations, 2000, it says, save as otherwise provided in the Act, or rules or regulations made there under, no person resident outside India shall transfer or issue any security without the approval of RBI. In simple term, any transfer by person resident outside India against the rules and regulation made for transfer of capital and without the approval of RBI will not be considered by the Company for giving effect of such transfer and making entry in Register of members.
I only share my knowledge.
Regards
If you reading Regulation 3, 9 10 and 11, there is no division as you said, the same procedure will apply to all foreign investors.
If you read Regulation 3 of Foreign Exchange Management (Transfer or Issue of Security by Persons Resident Outside India) Regulations, 2000, it says, save as otherwise provided in the Act, or rules or regulations made there under, no person resident outside India shall transfer or issue any security without the approval of RBI. In simple term, any transfer by person resident outside India against the rules and regulation made for transfer of capital and without the approval of RBI will not be considered by the Company for giving effect of such transfer and making entry in Register of members.
I only share my knowledge.
Regards
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