Transfer of shares (under fema act, 1999)

This query is : Resolved

CS Somnath Kagade, BcomCSLLB (Querist)
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01 August 2011 Query: – Transfer of Share from one share holder-foreign Entity (which is a hareholder of 100% Foreign Holding Company (Incorporated and Registered under Companies Act, 1956)) to another foreign entity (Which is also a group company of Holding Company)

Fact of the Case:-
We 100% Foreign Holding Company which is Incorporated & Registered under the Indian Companies, 1956. There are Two Shareholders in our Company those who are Foreign Entity (Company’s) in a nature nd existed (outside country).
One of the shareholders (Foreign entity- Company) wants to transfer its shares to another foreign entity - Company which is also group company of Main holding Company).
In account of the aforesaid, we would like to know What is the procedure and Compliances to be made to get it done in proper manner under FEMA Act, 1999 and How RBI will come into picture to comply the same.

Please solicite your views

Waiting for your best reply.

Thanks in advance,.

CS Somnath KK
Company Secretary
Pune.

CA. Anuj Gupta

CA. Anuj Gupta (Expert)
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02 August 2011 There is no procedure or requirement under FEMA for the same, however there shall be income tax liability on the Indian shares so transferred .The person buying the shares should ensure that TDS should be deducted on the capital gains arising out of such sale of shares.

Anuj
+91-9810106211
femaquery@gmail.com

CS Somnath Kagade, BcomCSLLB

CS Somnath Kagade, BcomCSLLB (Querist)
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05 August 2011 Thanks a lot Anuj Sir.........

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Sudhag

Sudhag (Expert)
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29 September 2011 As long as long as transferee and transferor company belong to same country there is no requirement/intimation to RBI but if the shares are transferred from one country holder to another country holder in that case the information will get captured in new form Annual return of foreign liabilities and foreign Assets.