A query wrt share transfers outside India.

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CA.Tarun Maheshwari (Querist)
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17 November 2009 Dear Experts

I have a query. I am having a client which is an Indian private limited company. In this company, one shareholder (Who was a director also) belongs to Dubai. Now that shareholder has resigned from the directorship and all of his shares has to be transferred to another person of Dubai. Now, I want to know some legal implications how this transfer has to be done. Is it necessary that some consideration must be given to the old shareholder by the new shareholder. If the transfer is carried out with some consideration then it will be in Dubai currency, i.e Dirham. Will it make any difference from RBI or ROC angle. Do we need to intimate these things to ROC accept at the time of annual return. Please tell me if any other legal point is involved in this matter. Thanks in Advance.

Ankur Garg

Ankur Garg (Expert)
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17 November 2009 Hello Tarun,

As Mr. A is transferring his shares to Mr. B so appropriate consideration should be moved to the old shareholder by the new shareholder. Company is under obligation to register the transfer if evthing is fine.

Specific intimation to ROC is not required at the time of transfer. Yes RBI and FEMA should be involved in youe case. I would suggest you to give a reading to latest master circular of RBI for transfer of share from one NRI to another NRI.

Regards

Regards

CA.Tarun Maheshwari

CA.Tarun Maheshwari (Querist)
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17 November 2009 Dear Ankur, thanks for your valuable reply. Can u pls send me the circular number of RBI as you mentioned. Also, pls tell me whether shares can be transferred as a gift or not if both are NRI and hence, gift tax liability under Income tax act shall also not be applicable to them.

Ankur Garg

Ankur Garg (Expert)
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17 November 2009 Please download the latest Master Circular in force about Foreign Investment in India from the link given below:

https://www.caclubindia.com/share_files/files_display.asp?files_id=15033

Please read point 21 (Transfer of shares and convertible debentures) at page no. 11 of master circular.

Regards

Ankur Garg

Ankur Garg (Expert)
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17 November 2009 Tarun, i am completely out of touch about tax provisions like gift etc.

I am not sure about the mixing of gift tax liability under Income tax with rbi and fema.

I think u should go for some professional help. Later on i am sure you can do it yourself.

CA.Tarun Maheshwari

CA.Tarun Maheshwari (Querist)
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17 November 2009 Yeah Ankur. Thanks a lot for ur valuable suggestions and the RBI Master circular you provided. Its really a good help for me. Thanks once again.

Ankur Garg

Ankur Garg (Expert)
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17 November 2009 You are welcome.

Take some time and go through the master circular completely. It contain some mind blasting and interesting knowledgable things and you can really excel in your practice if you have good undestanding of master circular contents.

However this is my opinion.

Regards

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