Procedure for transfer of shares betn foreign persons

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vishwas gajanan chandhaikar (Querist)
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17 April 2012 Dear All,

We have Company in which foreign persons are directors.

Now they want to transfer their shares. Transaction is happening between them.

My Question is
1. What is the procedure for transfer of shares between foreign persons.

2. If money does not come to india and transfer happens outside. But the company is the indian Company.

How we have to do the transfer?

Thanks
Vishwas

Ajay Mishra

Ajay Mishra (Expert)
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19 April 2012
Hi,

It is possible, before transfer the transferee will take Central Government or RBI approval and send the approval letter with other documents to company for register the shares in new name in Register of Members of the Company.

Transfer of shares and convertible debentures, by way of Sale, between a person resident outside India:

Regulation 9 of Foreign Exchange Management (Transfer or Issue of Security by Persons Resident outside India) Regulations, 2000 deal with such transfer. As per this, a person resident outside India holding the shares or debentures of an Indian company in accordance with these Regulations, may transfer the shares or debentures so held by him, in compliance with the conditions specified in these regulations. The following conditions are hereunder:

(a) A person resident outside India (other than NRI and OCB) intended to transfer by way of sale, shares or convertible debentures held by him to any person resident outside India make an application to .Central Government for prior approval.
(b) Prior approval of Central Government is required if
(i) He has previous venture or tie up in India through investment in shares or debentures
(ii) Technical Collaboration
(iii) Trade Mark Agreement
(iv) Investment in same field or allied field in which the Indian company is engaged.
(c) In other case no need to take Prior approval of Central Government.

(d) A non resident of India (NRI) or an Overseas Corporate Body (OCB) may transfer, by way of sale, shares or convertible debentures held by him to any person resident outside India without Government approval and will be covered under automatic route.

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vishwas gajanan chandhaikar

vishwas gajanan chandhaikar (Querist)
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19 April 2012 Dear Sir,

Thanks for reply.

But, on such transfer, How would Non resident pay stamp duty?

Though he has to pay stamp duty according to Indian stamp act. But how we have to show money came in india for payment of stamp duty?

and Is there any need to take permission of RBI?

Ajay Mishra

Ajay Mishra (Expert)
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19 April 2012 Hi

The authorised dealer of such parties will take the approval from RBI.

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