appointment of NRI as Director in a Pvt Ltdco ownedbyfather

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

23 February 2010 kindly advise if i an sell 40% of my pvt cos. shares to my son who is NRI what formalities are required keeping view the rules and regulations..of RBI.ROC etc

2.what is the p. a. min amount of Soft ware export that requires registeration with STPI
3 .being very small unit how do i submit SOFTEX forms to RBI

Querist : Anonymous

Querist : Anonymous (Querist)

12 May 2010 CAN NRI HOLD 80% SHARES IN PVYT LTD CO.

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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14 July 2024 Certainly, let's address each of your questions regarding the appointment of an NRI as a Director, selling shares to an NRI, software export registration with STPI, and submission of SOFTEX forms to RBI:

### 1. Appointment of NRI as Director and Selling Shares

- **Appointment of NRI as Director:** According to the Companies Act, 2013, an NRI (Non-Resident Indian) can be appointed as a Director in a Private Limited Company. There are no restrictions on the appointment of NRIs as Directors in Indian companies.

- **Selling Shares to NRI:** When selling shares of a Private Limited Company to an NRI, certain regulations and procedures must be followed:
- **RBI Approval:** As per Foreign Exchange Management Act (FEMA) regulations, prior approval from the Reserve Bank of India (RBI) may be required for the transfer of shares from resident to non-resident, including NRIs.
- **Valuation:** Shares must be sold at a price not lower than the fair market value determined as per RBI guidelines.
- **Reporting:** File necessary forms with the RBI and adhere to reporting requirements for share transfers involving NRIs.

### 2. Minimum Software Export Amount for STPI Registration

- **STPI Registration:** Software Technology Parks of India (STPI) registration is required for companies engaged in software export services. The specific threshold for registration varies based on the location and type of operations. Generally, if your software export activities exceed Rs. 50 lakhs per year, registration with STPI is mandatory.

### 3. Submission of SOFTEX Forms to RBI

- **SOFTEX Forms:** SOFTEX forms are used for reporting software exports to the RBI. As a small unit, you can submit SOFTEX forms electronically through authorized dealers (usually banks) who will forward them to the RBI. You should maintain records of all software export transactions for audit and compliance purposes.

### 4. NRI Shareholding in Pvt Ltd Company

- **Shareholding Limit:** According to the Companies Act, NRIs can hold up to 100% of the shares in a Private Limited Company. There is no restriction on NRIs holding 80% shares; they can hold majority or even full ownership depending on the company’s structure and compliance with FEMA regulations.

### Conclusion

- **Compliance:** Ensure compliance with RBI regulations for share transfers involving NRIs, STPI registration requirements for software exports, and proper submission of SOFTEX forms for reporting to RBI.
- **Legal Advice:** For precise guidance tailored to your specific circumstances, including detailed procedures and documentation required, consider consulting with a legal advisor or chartered accountant specializing in corporate law and international transactions.

By following these guidelines and seeking professional advice where necessary, you can navigate the regulatory landscape effectively while incorporating an NRI as a Director and selling shares to them in your Private Limited Company.

Best regards,

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