Regulation 9 - Transfer of shares and convertible debentures of an Indian company by a person resident outside India - Foreign Exchange Management (Transfer or Issue Of Security By A Person Resident Outside India) Regulations, 2000

These rules have been superseded vide New Regulations New Regulations of 2017 9. Transfer of 12 [ shares or convertible debentures or warrants of an Indian company or units of an Investment Vehicle ] by a person resident outside India :- (1) Subject to the provisions of sub-regulation (2), a person resident outside India holding the 13 [shares or convertible debentures or warrants of an Indian company or units of an Investment Vehicle] in accordance with these Regulations, may transfer the 9 [shares or convertible debentures or warrants of an Indian company or units of an Investment Vehicle] so held by him, in compliance with the conditions specified in the relevant Schedule of these regulations. 3 [Further, subject to minimum lock-in period of one year or minimum lock-in period as prescribed under Annex-B of Schedule 1 whichever is higher, a person resident outside India holding the 7 [shares or convertible debentures or warrants ] of an Indian company containing an optionality clause in accordance with these Regulations and exercising the option/right, may exit without any assured return, subject to the following conditions: (i) In case of listed company, at the 4 [market price prevailing on the floor of the recognised stock exchanges]; 5 [(ii) In case of equity shares, preference 8 [shares or convertible debentures or warrants] of unlisted company, at a price not exceeding that arrived at as per any internationally accepted pricing methodology for valuation of shares on arm s length basis, duly certified by a Chartered Accountant or a SEBI registered Merchant Banker. The guiding principle would be that the non-resident investor is not guaranteed any assured exit price at the time of making such investment/agreements and shall exit at the price prevailing at the time of exit, subject to lock-in period requirement.]] 1 [(2) (i) A person resident outside India, not being a non- resident Indian or an overseas corporate body, may transfer by way of sale or gift, the 10 [ shares or convertible debentures or warrants of an Indian company or units of an Investment Vehicle] held by him or it to any person resident outside India; (ii) A non-resident Indian [****] may transfer by way of sale or gift, the 11 [shares or convertible debentures or warrants of an Indian company or units of an Investment Vehicle] held by him or it to another non-resident Indian [****] only; 2 [***] (iii) A person resident outside India holding the shares or convertible debentures of an Indian company in accordance with these Regulations, (a) may transfer the same to a person resident in India by way of gift; (b) may sell the same on a recognized Stock Exchange in India through a registered broker.] *********** Note : 1. Has been substituted vide Notification No. 094/2003 dated 18/6/2003 2. Deleted vide Notification No. FEMA 229/2012-RB, Dated 23-4-2012 , before it was read as:- Provided that the person to whom the shares are being transferred, in terms of clause (i) and (ii), has obtained prior permission of Central Government to acquire the shares if he has previous venture or tie up in India through investment in shares or debentures or a technical collaboration or a trade mark agreement or investment by whatever name called in the same field or allied field in which the Indian company whose shares are being transferred is engaged. Provided further that the restriction in clauses (i) and (ii) shall not apply to the transfer of shares to International financial institutions such as Asian Development Bank(ADB), International Finance Corporation(IFC), Commonwealth Development Corporation (CDC), Deutsche Entwicklungs Gescelscchaft (DEG) and transfer of shares of an Indian company engaged in Information Technology sector. 3. Inserted vide NOTIFICATION 294/2013-RB dated November 12, 2013 4. Substituted vide Notification No. FEMA.306/2014 RB dated May 23, 2014 , before it was read as , market price determined on the floor of the recognised stock exchanges 5. Substituted vide Notification No. FEMA.306/2014 RB dated May 23, 2014 , before it was read as, (ii) In case of equity shares of unlisted company, at a price not exceeding that arrived on the basis of Return on Equity (RoE) as per latest audited balance sheet. Any agreement permitting return linked to equity as above shall not be treated as violation of FDI policy. Explanation - RoE shall mean Profit After Tax / Net Worth; Net worth would include all free reserves and paid up capital. (iii) In case of Preference shares or debentures, at a price worked out as per any internationally accepted pricing methodology at the time of exit, duly certified by a Chartered Accountant or a SEBI registered Merchant Banker. The guiding principle would be that the non-resident investor is not guaranteed any assured exit price at the time of making such investment/agreements and shall exit at the price prevailing at the time of exit, subject to lock in period requirement. 6. Substituted vide Notification No. FEMA. 308/2014-RB, dated June 30, 2014 , before it was read as, shares and convertible debentures 7. Substituted vide Notification No. FEMA. 308/2014-RB, dated June 30, 2014 , before it was read as, shares or debentures 8. Substituted vide Notification No. FEMA. 308/2014-RB, dated June 30, 2014 , before it was read as, shares or convertible debentures 9. Substituted vide Not. 355/2015-RB - Dated 16-11-2015 before it was read as, 7 [shares or convertible debentures or warrants] 10. Substituted vide Not. 355/2015-RB - Dated 16-11-2015 before it was read as, 8 [shares or convertible debentures or warrants] 11. Substituted vide Not. 355/2015-RB - Dated 16-11-2015 before it was read as, 8 [shares or convertible debentures or warrants] 12. Substituted vide Not. 355/2015-RB - Dated 16-11-2015 before it was read as, 6 [shares or convertible debentures or warrants] of an Indian company 13. Substituted vide Not. 355/2015-RB - Dated 16-11-2015 before it was read as, 7 [shares or convertible debentures or warrants] of an Indian company