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Transfer of shares by a foreign co to indian resident co

Others 420 views 2 replies

shankaR

Sr Manager(Legal & Compliances)

34 Points Joined September 2011

A company X is having a JV with a state government agency. There are many share holders. Among them, there is a foreign investor Z who is a consortium partner in this JV. It holds Y number of shares, valuing is Rs.3Crores

X company has submitted FCGPR to RBI through AD

JV Company has been making loss and so, X company plans to merge the JV company with some other resident company. Now, Z company’s Y number of shares has to be transferred either to the JV company itself or to X company

Z company’s Y no of shares have to be transferred to the JV company or to X company for a value of USD 1/-

Our queries:

-is it possible to do this transfer and subsequent merger?

-Is the value of USD 1/- acceptable to RBI?

-What are the process/procedure/forms to be filed to RBI, if any?

-what are the compliances to be followed to effect this legally?

Replies (2)

P C Agrawal

Registered independent director Past Ch

8229 Points Joined March 2007

As per RBI regulations, in case of unlisted companies, transfer of shares held by non-residents can be done at a price which is not higher than valuation done on DCF basis by independent CA or a merchant banker. Any price lower than DCF valuation is acceptable. For making payment to the foreign shareholder you have to file FC-TRS with your banker who will report the transaction to RBI.