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Clarification

DORE RAJ (Student) (32 Points)

10 November 2009

Hi...

Pls some one clarify what procedure to be followed for transfer of share from non resident to non resident.

What are the guidelines need to be followed and apporval from FIPB?

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7 Replies

CA Dhiraj Ramchandani (CA, M. com) (10823 Points)
Replied 10 November 2009

Hey... if someone knows.. than tell me tooo..

How to transfer from NON RESIDENT TO NON RESIDENT

Rectify the Q Raj....

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Ajay Mishra (Company Secretary) (74337 Points)
Replied 10 November 2009

Please read Point no 22 of master circular attached herewith for your reference.

Regards

Attached File : 12 master circular foreign investment in india 2009.pdf downloaded: 255 times

DORE RAJ (Student) (32 Points)
Replied 10 November 2009

Hi, Ajay..

wel i read the Master Circular..Point No. 22 it goes on giving explanation on transfer of " " from Resident to Non resident or Frm Non Resident to Resident.

well i am lookin farword on the situtation on transfer frm Non resident to Non resident!! does this required FIPB apparoval and wht risk if nt approved n wht is the benefits if approved.

pls clarify

DORE RAJ (Student) (32 Points)
Replied 10 November 2009

Until 1992, transfer of shares of a company registered in India made by a person resident outside India to another person also resident outside India was required to be confirmed by Reserve Bank in terms of Section 19(5) of FERA 1973. After the amendment to FERA 1973 made in January 1993, no such confirmation of Reserve Bank is required to be obtained for transfer of shares (as also bonds or debentures) between two non-residents. The non-resident transferee, however, requires permission under Section 29(1)(b) of FERA 1973 for purchase of the shares or the Indian company for registering the transfer in favour of another non-resident under Section 19(4) of FERA 1973. Such transfers will, therefore, not be registered by the Indian company unless the non-resident purchaser has obtained the necessary permission under Section 29 ibid (Also see paragraph 10A.5).

wht wuld be the FEMA Implications?

Kumar (Legal Consultant) (358 Points)
Replied 11 November 2009

Dear Raj,

Very good question indeed.

According to me it is advisable that the incumbent shareholder (Non-Resident)who is stepping into the shoes of the earlier shareholder(Non-Resident) holding the shares of the Indian Company must not falls under the perviews of Press Note 1 of 2005 Series read alongwith Press Note 3 of 2005 Series.

If above Press Notes are not attracted then automatic route for transfer is permissible under FEMA/FDI scheme otherwise follow the route of Government Approval i.e FIPB.

Regards,

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DORE RAJ (Student) (32 Points)
Replied 11 November 2009

@ Mr, Kumar, Legal Consultant

Please refer to Section 19 of FERA which specificaly talks abt non resident to non resident, and refere to Section 6 (3) talks abt transaction abt resident to" _ "and Non resident to "__". under section 6, for these kind of transaction u need to follow certain procedure, bt my query is wht abt Non resident to non resident?? Does in section 6 (3) Non resident to "__" filed to Non resident to Non resident, bcoz its exhaustive and nt restrictive.

DORE RAJ (Student) (32 Points)
Replied 12 November 2009

Hi....

in the series of dicussion we had at this forum on transfer of shares from person resident outside india to another person resident outside india. i hav emerged at the conclusion that goin by notification Nov 13 2007. FEMA.170/2007-RB that there is no requirment to take approval from FIPB bt only RBI permission. subsequently there are notification on the same issue in 2008, i.e. FEB 22 2008. FEMA.175/2008-RB and Aug 22 2008. FEMA. 178/2008-RB.

So sombody pls clarify that does there is ne change from subsequent notification with effect to FIPB approval?? otherwise arrcoding to my understandin there is no need to take any approval from FIPB.

Thanking Everybody!!