Share transfer to nri

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Querist : Anonymous

Querist : Anonymous (Querist)

09 July 2012 Dear Experts,

What is the procedure to transfer majority shares of a private IT Company to NRI (not a foreigner). what are the forms required to submit with RBI/ Under FEMA or any other Law in Force?

Thanks in Advance

Ajay Mishra

Ajay Mishra (Expert)
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09 July 2012 Hi

Reporting of transfer of shares between residents and non-residents and vice versa is to be done in Form FC-TRS. The Form FC-TRS should be submitted to the AD Category-I bank, within 60 days from the date of receipt of the amount of consideration. The onus of submission of the Form FC-TRS within the given timeframe would be on the transferor / transferee, resident in India. The AD Category-I bank, would forward the same to its link office. The link office would consolidate the Forms and submit a monthly report to the Reserve Bank4.
For the purpose the Authorized Dealers may designate branches to specifically handle such transactions. These branches could be staffed with adequately trained staff for this purpose to ensure that the transactions are put through smoothly. The ADs may also designate a nodal office to coordinate the work at these branches and also ensure the reporting of these transactions to the Reserve Bank.
When the transfer is on private arrangement basis, on settlement of the transactions, the transferee/his duly appointed agent should approach the investee company to record the transfer in their books along with the certificate in the Form FC-TRS from the AD branch that the remittances have been received by the transferor/payment has been made by the transferee. On receipt of the certificate from the AD, the company may record the transfer in its books.

For more details read Master Circular issued by DIPP on FDI.

Regards

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