The situation is as follows: the shares of a public limited company are 100% owned by non-resident companies. The non-resident shareholders are all part of the same group, which is now implementing an internal restructuration. One of the shareholders will incorporate a new non-resident entity and contribute to its share capital in kind with the shares of the Indian public limited.
Question: how to organize under the CA 2013 the transfer of shares by one shareholder to another against shares of a newly incorporated entity? Would it be treated like a normal share transfer in India (in which case, what to put as consideration on the share transfer form?) ?
03 February 2018
The shares of the Indian company will be given as share application money to the new non resident entity. This transfer will happen between one non resident to another non resident. Thus FEMA will not be involved. In the books of Indian company now the shares will be held by another non resident. If you are talking about the entry to be passed in the books of the non resident shareholder, then the valuation of shares of both the companies can be done and the value can be shown as the share transfer consideration.
06 February 2018
Thank you for your answer! Actually my question was rather about the entry/documentation to be made for the Indian company: since it is not a transfer per se, the SH4 form does not seem relevant but I imagine there has to be some kind of form to be prepared and executed to document the assignment of the shares from one member to another...
07 February 2018
The transfer will be executed through the share transfer deed and will be recorded in the register of shareholders of the Indian Company. The share certificate will accordingly be amended. At the time of filing the Annual Return of the company this change will be reflected .
CAclubindia
