TMI BlogTransfer of capital instruments of an Indian company by or to a person resident outside IndiaX X X X Extracts X X X X X X X X Extracts X X X X ..... 1 [ (1) A person resident outside India, not being a non-resident Indian or an overseas citizen of India or an erstwhile overseas corporate body may transfer by way of sale or gift the capital instruments of an Indian company or units held by him to any person resident outside India; Explanation: It shall also include transfer of capital instruments of an Indian company pursuant to liquidation, merger, de-merger and amalgamation of entities/ companies incorporated or registered outside India Provided that (i) prior Government approval shall be obtained for any transfer in case the company is engaged in a sector which requires Government approval. (ii) where the person resident outside India is an FPI and the acquisition of cap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ggregate or sectoral limit on account of such acquisition for the period between the acquisition and sale, provided the sale is within the prescribed time, shall not be reckoned as a contravention under these Regulations. ] (3) A person resident outside India, holding capital instruments of an Indian company or units in accordance with these Regulations may transfer the same to a person resident in India by way of sale/ gift or may sell the same on a recognised stock exchange in India in the manner prescribed by Securities and Exchange Board of India; Provided that (i) the transfer by way of sale shall be in compliance with and subject to the adherence to pricing guidelines, documentation and reporting requirements for such transf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roval of the Reserve Bank, in the manner prescribed, and subject to the following conditions: (a) The donee is eligible to hold such a security under relevant schedules of these Regulations; (b) The gift does not exceed 5 percent of the paid up capital of the Indian company/ each series of debentures/ each mutual fund scheme; Explanation: The 5 percent will be on cumulative basis by a single person to another single person (c) The applicable sectoral cap in the Indian company is not breached; (d) The donor and the donee shall be relatives within the meaning in section 2(77) of the Companies Act, 2013; (e) The value of security to be transferred by the donor together with any security transferred to any person residing ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid by the buyer on a deferred basis within a period not exceeding eighteen months from the date of the transfer agreement; or (b) can be settled through an escrow arrangement between the buyer and the seller for a period not exceeding eighteen months from the date of the transfer agreement; or (c) can be indemnified by the seller for a period not exceeding eighteen months from the date of the payment of the full consideration, if the total consideration has been paid by the buyer to the seller. Provided the total consideration finally paid for the shares shall be compliant with the applicable pricing guidelines. (10) In case of transfer of capital instruments between a person resident in India and a person resident outside Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l be in accordance with these Regulations and directions issued by the Reserve Bank; (iii) the Statutory Auditor has certified that the borrowing company will utilise/ has utilised the proceeds of the external commercial borrowing for the permitted enduse/s only; (iv) no person shall pledge any such share unless a no-objection has been obtained from an Authorised Dealer bank that the above conditions have been complied with. (b) Any person resident outside India holding capital instruments in an Indian company or units of an investment vehicle may pledge the capital instruments or units, as the case may be: (i) in favour of a bank in India to secure the credit facilities being extended to such Indian company for bona fide purpos ..... X X X X Extracts X X X X X X X X Extracts X X X X
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