Save Rs 499 on a 2-Year Ad-Free CAclubindia Pro Membership. Subscribe Now!

Internal trnfr of shares at cost between two group entities

Others 271 views 1 replies

Priyanka

AVP

21 Points Posted on 17 November 2017

Dear All,

I am posting a query here for the first time and hope to receive help from you all!

X and Y are two group entities outside India in Maurtius. Both X and Y entities are part of Zgroup. Can Internal share transfer at cost between these two group entities outside India have to be reported to RBI?

The transfer is at cost and no monies will change hands. There is no new infusion of funds into the company or any money coming into India. This is completely an offshore non-resident transaction in Mauritius and the company had to just provide consent to transfer the shares from one group entity to another under the permitted transfers clause of the shareholders agreement.

Does this transaction requires repoting to RBI in India if the same is done via a Bank in India? Would this transaction of share transfer require opening of Custodial account? Need your help and also if you can substantiate the answer with the supporting regulations.

Replies (1)

Guest

if X & Y both are part of Z group., Z must be having a majority holding in both these companies., and if there is a transfer of shares between these two companies X & Y, there might be a change in shareholding pattern. so reporting to RBI would be required, and yes custodial account would be required.. i suggest you to refer RBI guidelines pertaining to this point.