11 March 2024
A Private Ltd is an Indian company of which 99.99 % shares are owned by a Singapore company name CS Pte Ltd, CS Pte Ltd wish to sell its entire holding in Indian company to its parents company GS Pte Ltd which is also registered in Singapore. Please advise the detailed procedure to be followed to achieve this transfer
11 July 2024
To achieve the transfer of shares from CS Pte Ltd (Singapore) to GS Pte Ltd (Singapore) in the Indian Private Limited company, the following steps and procedures need to be followed:
### Procedure for Transfer of Shares:
1. **Board Resolution by CS Pte Ltd:** - CS Pte Ltd (current shareholder) needs to convene a board meeting and pass a resolution approving the transfer of its entire shareholding in the Indian Private Limited company to GS Pte Ltd. - The resolution should specify the number of shares to be transferred, the consideration (if any), and authorize a representative to execute the necessary documents.
2. **Share Purchase Agreement:** - Draft a Share Purchase Agreement (SPA) between CS Pte Ltd (seller) and GS Pte Ltd (buyer) outlining the terms and conditions of the share transfer. - Include details such as the purchase price, payment terms, representations and warranties, and any conditions precedent or subsequent to the transfer.
3. **Due Diligence:** - Conduct due diligence to verify the shareholding structure, compliance with regulatory requirements, and any restrictions on transfer of shares as per Indian laws and the company's Articles of Association.
4. **Approval by GS Pte Ltd:** - GS Pte Ltd (buyer) should approve the acquisition of shares through a board resolution or any other required internal approval process as per Singapore laws and regulations.
5. **Obtain No Objection Certificate (NOC):** - Obtain a No Objection Certificate (NOC) from the Reserve Bank of India (RBI) or comply with the Foreign Exchange Management Act (FEMA) regulations if applicable for transfer of shares involving foreign entities.
6. **Execution of Share Transfer Deed:** - Execute a share transfer deed or endorse the share certificates in favor of GS Pte Ltd by CS Pte Ltd. - The deed should be stamped as per the Stamp Duty Act applicable in the state where the company is registered in India.
7. **File Required Forms with ROC:** - Prepare and file necessary forms with the Registrar of Companies (ROC) in India. The forms typically include Form MGT-14 for approval of the resolution by the shareholders and Form SH-4 for transfer of shares. - Attach relevant documents such as the SPA, board resolutions, share transfer deed, NOC (if applicable), and proof of payment of stamp duty.
8. **Update Shareholding and Register:** - Update the shareholding records of the Indian Private Limited company reflecting GS Pte Ltd as the new shareholder. - Maintain proper records of the share transfer for compliance and future reference.
9. **Compliance and Reporting:** - Ensure compliance with all regulatory requirements and reporting obligations under Indian and Singapore laws. - File any necessary disclosures or reports with authorities as required.
### Additional Considerations:
- **Legal Counsel:** Engage legal professionals in both India and Singapore to ensure compliance with laws and regulations governing cross-border share transfers. - **Tax Implications:** Assess tax implications in both jurisdictions, including capital gains tax, transfer pricing regulations, and withholding tax obligations. - **Post-Transaction Steps:** Address any post-transaction matters such as updating statutory filings, notifying stakeholders, and updating corporate governance documents.
By following these steps and seeking appropriate professional advice, CS Pte Ltd can effectively transfer its entire shareholding in the Indian Private Limited company to GS Pte Ltd. Each step should be meticulously followed to ensure smooth and compliant transfer of shares between the two Singaporean entities.
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