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- Valuation of shares: – Price of share shall be decided on the basis of valuation of Shares by a Chartered Accountant or/a SEBI registered Merchant Banker.
- Sale consideration (net of taxes) must be remitted outside India through an authorized dealer (AD) bank.
- Transfer of shares must be reported in Form FC-TRS to RBI through an AD bank within 60 days of receipt/remittance of sale consideration. The onus of submission of the said Form FC-TRS is on the transferor / transferee resident in India.
- Documents are required to be submitted to the AD bank along with the Form FC-TRS:
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- Consent letters signed by the transferor and the transferee, or their duly appointed agent, indicating the details of transfer.
- Where the consent letter is signed by an agent, the power of attorney authorizing the agent to purchase/sell shares by the transferor / transferee.
- Share purchase agreement.
- The shareholding pattern of the investee company before and after transfer of shares showing equity participation of residents and non-residents category-wise.
- If the transferor is an NRI, the copies of RBI approvals evidencing the shares held by them on repatriation/non-repatriation basis. The sale proceeds shall be credited to non-resident (external) rupee account / non-resident ordinary rupee account, as applicable.
- Valuation certificate.
- Undertaking from the transferee to the effect that the pricing guidelines have been adhered to.
- No objection/ tax clearance certificate from the Income Tax Authority/ Chartered Account.
- FIRC/Outward remittance certificate and KYC to be attached at the specified attachment.
- Additional documents in respect of sale of shares by a person resident outside India
- Post submitting form on FIRMS portal, AD bank scrutinizes each and every application and it may send the form for re-submission if any documents/information is incorrect or missing.
- Sanction letter/Certificate issued by AD Bank: AD Bank provides you with a sanction letter or certificate if all the documents and information are satisfactory to them. This is a documentary evidence which states that FDI compliances are duly taken care off by the applicant.
Requirement under the Companies Act, 2013 for Transfer of Shares from Non-residents to Residents-
- Execution of securities transfer form (“STF”) i.e. SH-4 will need to be executed by transferor and transferee and submitted to company within two months of its execution.
- Stamp duty @ 0.25% on the value of the shares (i.e. consideration or the fair value, whichever is higher) will need to be paid in Indian rupees.
- The transferee / his agent must submit to the company a certificate in the Form FC-TRS endorsed by the AD bank that the payment has been made by the transferee.
- On receipt of the said certificate, the company may record the transfer in its books.