E-Paper
Transfer of shares/Bonds/Debentures
10A.4 In terms of Section 19(5) of FERA 1973, no transfer of shares/bonds/debentures of a company registered in India made by a person resident outside India to another person resident in India will be valid unless the transfer is confirmed by Reserve Bank on an application made to it by the transferor or the transferee.
10A.4 In terms of Section 19(5) of FERA 1973, no transfer of shares/bonds/debentures of a company registered in India made by a person resident outside India to another person resident in India will be valid unless the transfer is confirmed by Reserve Bank on an application made to it by the transferor or the transferee.
Reserve Bank has, however, exempted transfer of shares, bonds or debentures of Indian companies held by persons of Indian nationality/origin(NRIs) on both repatriation and non-repatriation basis to residents as also transfer of shares, bonds or debentures by way of gift from the purview of Section 19(5) through issue of Notifications under Section 19(6) of the Act, subject to fulfilment of certain conditions.
Responsibility of Companies Registering Transfer of Shares/Securities in favour of NRIs
10A.5 In terms of clause (a) of Section 19(4) of FERA 1973 no person can enter transfer of securities in any register or book in which securities are registered or inscribed, if he has any ground to suspect that the transfer involves a contravention of the provisions of Section 19, i.e. issue,transfer or creation of interest in any security to/in favour of a person resident outside India.
Clause (b) of this Section prohibits the registration of the foreign address of the holder of a security except by way of substitution for any such address in the same country or for which permission has been granted by Reserve Bank.
Before registering any transfer of shares/securities in the names of non-residents, companies concerned must obtain permission of Reserve Bank except where such permission has already been obtained by transferor/transferee.
NOTE: See paragraphs 10C.30 and 10C.31 regarding general permission granted to Indian companies for recording overseas address consequent on change of status of the security holder from resident to non-resident or for conversion of holdings into joint holdings between residents/non-residents.
Safe Custody of Shares/Securities
10A.6 Authorised dealers and financial institutions extending custodial services may hold in their safe custody, shares and securities issued/transferred to non-residents and also release the shares/securities from non-resident safe custody account for purposes like recording change of name, sale, etc., provided the relative purchase/sale/transfer is covered by the general or special permission of Reserve Bank.
General rule for Remittance of Dividend/Interest/Sale proceeds of Securities
10A.7 As a general rule, the dividend, interest and other income on shares/securities and sale proceeds of shares and securities originally purchased out of funds held in the investor's Ordinary Non-resident Rupee(NRO) accounts as also those acquired subject to the condition that they will not carry the right of repatriation are required to be credited to the investor's NRO account.
In other cases, authorised dealers may remit the net amount of dividend, interest, sale
proceeds etc. after deducting Indian taxes at applicable rates or credit them to the investor's NRE/FCNR accounts to the extent permitted by Reserve Bank [see paragraphs 10B.6, 10B.7 and 10C.24].
