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transfer of shares to NRI

CS Ekta (Company Secretary) (309 Points)

13 January 2010

Dear Friends

The shares of an unlisted company were transferred from a resident to a NRI. The address of transferee provided in the transfer form is of India. Even the remittance of sale consideration is made out of the normal bank account of the transferee maintained in India.

In a nutshell all the formalities regarding transfer is completed as needs to be done in case of transfer between two resident individuals.

What can be consequences in this case as the Company has already record the transfer in its books?

Secondly please confirm that whether the pricing guideline is also applicable in case of transfer of shares by resident to NRI?

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21 Replies

Aman Jain (Company Secretary in Practice) (165 Points)
Replied 14 January 2010

Dear Ekta,

You cann't measure the Status of a person with the address.

Transfer of shares of an indian company from resident to NRI is not come under automatic route.

so plz check the relevant guidelines.

--
with warm regards,

Aman Kumar Jain

AMAN JAIN & ASSOCIATES,
COMPANY SECRETARIES
NEW DELHI
Mob. No. +91.97174.900.58
+91.93137.82.760

CS Ekta (Company Secretary) (309 Points)
Replied 14 January 2010

Dear Mr. Jain

Transfer of shares by a person resident in India to person resident outside India and vice versa require general permission from RBI (except in financial sector)

.Requirement for prior approval of RBI has done away with.

Aman Jain (Company Secretary in Practice) (165 Points)
Replied 14 January 2010

acha,

according to me not

dear

then if you don't mind then plz provide me relevant circular or regulation beause according to me not.

CS Ekta (Company Secretary) (309 Points)
Replied 14 January 2010

Refer the attached file

Attached File : 49 master circular foreign investment in india.pdf downloaded: 328 times

CS Ekta (Company Secretary) (309 Points)
Replied 14 January 2010

file on transfer of shares

Aman Jain (Company Secretary in Practice) (165 Points)
Replied 14 January 2010

Dear Ekta,

what page 11 say? that general permission but subject to following and refer annexure 3 plz check annexure 3

CS Ekta (Company Secretary) (309 Points)
Replied 14 January 2010

File on transfer attached

Attached File : 42 transfer of shares fema.pdf downloaded: 276 times

Aman Jain (Company Secretary in Practice) (165 Points)
Replied 14 January 2010

Dear Ekta,

yes u r right, i made me confuse in pricing guidelines.

sorry for bothering u.

Aman Jain (Company Secretary in Practice) (165 Points)
Replied 15 January 2010

Dear Ekta,

if see your original query:

(1) then FC-TRS should be filled.

(2) company can't registar the transfer without AD bank Certificate.

other views are solicited.

CS Ekta (Company Secretary) (309 Points)
Replied 15 January 2010

Dear Mr Jain

I know about the formalities to be complied with.

Going back to my original query, the problem is that transfer has already been recorded in the books as well the transfer is shown in the Annual Return filed with ROC.

Now I want to know is there any remedy for this?

Aman Jain (Company Secretary in Practice) (165 Points)
Replied 15 January 2010

Dear Ekta,

remedy on what basis? only do adjustments...

file FC-TRS take certificate and then record the transfer & revise the Annual Return.

CS. Ashish Shah (Service) (175 Points)
Replied 03 February 2010

Dear Ekta,

If the transfer has taken place in previous year, then you only need to file Form FC-TRS (backdated) with RBI and there is no need to change Annual return or any thing else as you have already filed Annual Return with MCA and I presume the same had been approved.

So if the position what had been reflected in Annual Return of that year is true, then nothing to worry about. Just look for the RBI things, I advice to meet once somebody in RBI. They are really helping the people.

Regards,

Cs. Ashish Shah

CA.SKR (CA; CS-Final (One Group); DISA (ICAI); Insolvency Professional) (442 Points)
Replied 03 February 2010

Dear Ekta,

In my opinion, RBI approval is not required in this case since the investment is made by NRI out of his normal bank (NRO) a/c in India in INR on non- repatriable basis. Had it been on repatriable basis out of NRE a/c or direct investment in foreign currency, RBI approval would have been required.

Thanks,

CA. Satendar Kumar

CS. Ashish Shah (Service) (175 Points)
Replied 05 February 2010

Dear Ca. Satendar Kumarji,

I agree with you that there is no requirement for the RBI or FIPB approval. But we need to file Form FC-TRS to inform the RBI about the transactions. In case of Automatic Route, we need not to take approval from RBI at the time of transactions, however, we need to inform RBI about the transaction which has taken place. Like in the Companies Act, we are filing Form 23 after GM, if there is any special resolution passed.

With Regards,

Cs. Ashish Shah