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What types of transfer of existing shares from non-residents to residents or residents to non-residents are allowed?

The term ‘transfer’ is defined under FEMA as including “sale, purchase, acquisition, mortgage, pledge, gift, a loan or any other form of transfer of right, possession or lien” {Section 2 (ze) of FEMA, 1999}.

The following share transfers are allowed without the prior approval of the Reserve Bank of India;

  • Transfer of shares from a Non-Resident to Resident under the FDI scheme where the pricing guidelines under FEMA, 1999 are not met.
  • Transfer of shares from Resident to Non-Resident.
  • Transfer of shares/ fully and mandatorily convertible debentures by way of Gift.

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