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Transfer of share of an india company by one NR to anotherNR

CA Pradeep Kumar Rajput (CA/CS/CMA) (4460 Points)

09 December 2010

Dear Sir
Can Anyone Please help me with the situation

"A is the non resident shareholder of an indian company he transfer his share to another person namely B who is also a non resident" the company is not a listed company......

Questions: 1)what is the requirements that should be complied with?
2)whether indian transfer deed is to be executed?
3) what are various communication is to be made to the various authorities i.g. ROC, SEBI?
4) what are the steps for such transfer and is there is any provision india companies law?
5) what will be the various issues if B is the Resident?

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4 Replies

Monali (Company Secretary) (34 Points)
Replied 06 January 2011

Hi Pradeep!

Reply to your Qs :

1)what is the requirements that should be complied with?

Transfer by way of sale

- A non-resident Indian (NRI) may transfer by way of sale, the shares/convertible debentures held by him to another NRI only.
- Any person resident outside India may sell share/convertible debenture acquired in accordance with FEMA Regulations, on a recognized Stock Exchange in India through a registered broker.

Transfer by way of Gift:
- A non-resident Indian (NRI) may transfer by way of gift, the shares/convertible debentures held by him to another NRI only.

2) whether indian transfer deed is to be executed?

if in physical mode, yes transfer deed needs to be executed. the current market price is to be taken into consideration ofr stamp duty.
Any person resident outside India may transfer share/convertible debenture to a person resident in India by way of gift.

3) what are various communication is to be made to the various authorities i.g. ROC, SEBI?

For unlisted co, no communication to sebi is required. For ROC in case of revalidation of trf deed Form 7C needs to be filed.

5) what will be the various issues if B is the Resident?

Form FC TRS needs to be submitted with RBI through AD. Please refer Master Circular on FDI for this.

Regards,

Monali

Company Secretary

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Aman Jain (Company Secretary in Practice) (165 Points)
Replied 06 January 2011

Dear Ms. Monali,

I am afraid, I think Mr. Rajput say about non resident and not about NRI.

Mr. Rajput

Plz clarify its Non Resident Indian or Non Resident because if this transaction relates from Non Resident to Non Resident then answer will be all together different.

with warm regards,

Aman Kumar Jain

LL.B., M.Com, ACS

AMAN JAIN & ASSOCIATES,
COMPANY SECRETARIES
B-15, SECOND FLOOR,
LAJPAT NAGAR-I,
NEW DELHI-110024
Mob. No. +91.97174.900.58
+91.93137.82.760

CA Pradeep Kumar Rajput (CA/CS/CMA) (4460 Points)
Replied 07 January 2011

Dear Ms. Monali and Mr. Aman Kumar Jain

The Situation is There is a Comapny A...

the Company has shareholders both resident and non resident india...

the non resident india transfer his shares to father of existing indian shareholder and another non resident(not indian)

that non resident(not indian) to earn huge profit transfer his share to another indian......

Kindly advice me ........

Aman Jain (Company Secretary in Practice) (165 Points)
Replied 07 January 2011

Dear Pradeep,

Then Ms. Monali is right.

NRI can transfer its share by way of gift of sale to only NRI or Indian resident not to Person Resident outside India(exclude NRI).

so in your case NRI can transfer its shares to his father (Indian resident) but not other PROI who is not NRI.

with warm regards,

Aman Kumar Jain

LL.B., M.Com, ACS

AMAN JAIN & ASSOCIATES,
COMPANY SECRETARIES
B-15, SECOND FLOOR,
LAJPAT NAGAR-I,
NEW DELHI-110024
Mob. No. +91.97174.900.58
+91.93137.82.760