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CS Executive · Economic, Commercial and Intellectual Property Laws · Foreign Direct Investments - Regulations and Policy

Anand, a person resident outside India, inherited shares of an Indian company from his late uncle, who was resident in India. Anand wishes to hold and later transfer those shares. What is the position under section 6 of FEMA, 1999?

Anand may hold, own, transfer or invest in the shares. Section 6(5) of FEMA permits a person resident outside India to do so with Indian securities inherited from a person who was resident in India. No forced sale period or transfer bar appears in that provision.

  1. AHe may hold, own, transfer or invest in them, as they were inherited from a person resident in IndiaCorrect
  2. BHe must sell them within one year to an authorised person
  3. CHe may hold them but can never transfer them
  4. DHe needs the uncle's executor to be resident outside India

Explanation

Section 6(5) allows a person resident outside India to hold, own, transfer or invest in Indian currency, security or immovable property in India if it was acquired, held or owned when he was resident in India or inherited from a person who was resident in India. The text imposes no one-year sale requirement or bar on transfer.

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