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Share transfer from indian co. to nri company on zero value

Rahul Kumar (Sr Finance) (39 Points)

29 April 2013

Hi Expert,

I need a advice from you and what will be the procedure for this.

Can we transfer the share from a Indian Resident Company to Non Resident Company on Zero value, if yes then what's the procedure for the same.

Thanks

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P C Agrawal (Registered independent director Past Chairman of Aurangabad Chapter of ICSI Practicing Company Secretary at Aurangabad) (8229 Points)
Replied 21 May 2013

It will not be covered under automatic route and hence you will have to take approval of RBI for the same. Rule 5 of Schedule-I to Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations 2000 reads as under:

Issue price

5. Price of shares issued to persons resident outside India under this Schedule, shall not be less than :—

(a) the price worked out in accordance with the SEBI guidelines, as applicable, where the shares of the company is listed on any recognized stock exchange in India;

(b) the fair valuation of shares done by a SEBI registered Category-I Merchant Banker or a Chartered Accountant as per the discounted free cash flow method, where the shares of the company is not listed on any recognized stock exchange in India; and

(c) the price as applicable to transfer of shares from resident to non-resident as per the pricing guidelines laid down by the Reserve Bank from time to time, where the issue of shares is on preferential allotment.

Thanks