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

Mr. Iyer, an NRI, inherits shares of an Indian company from his father, who was resident in India. Under section 6 of FEMA, what is the position of Mr. Iyer, a person resident outside India, regarding these shares?

Mr. Iyer may hold, own, transfer or invest in the inherited shares. Section 6(5) of FEMA permits a person resident outside India to do so with Indian security inherited from a person who was resident in India.

  1. AHe may hold, own, transfer or invest in them because they were inherited from a person who was resident in IndiaCorrect
  2. BHe must sell them within the period fixed by the Reserve Bank
  3. CHe may hold them but cannot transfer them
  4. DHe needs the Central Government's prior approval to hold them

Explanation

Section 6(5) allows a person resident outside India to hold, own, transfer or invest in Indian currency, security or immovable property if it was acquired or held when he was resident in India, or inherited from a person resident in India. Options B, C and D add restrictions not found in that provision.

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