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

Mr. Rahul Verma, an NRI who was earlier resident in India, holds shares of an Indian company acquired when he was resident in India. He now wants to transfer them while resident outside India. Under FEMA, what is the position?

A person resident outside India may hold, own, transfer or invest in Indian securities that he acquired or held while resident in India. So Rahul can keep and transfer his shares; becoming non-resident does not strip his ownership or transfer right.

  1. AA person resident outside India may hold, own, transfer or invest in Indian security acquired when he was resident in IndiaCorrect
  2. BHe must first sell the shares to the Reserve Bank
  3. CHe loses ownership of the shares on becoming non-resident
  4. DHe can hold them but can never transfer them

Explanation

Section 6(5) allows a person resident outside India to hold, own, transfer or invest in Indian currency, security or immovable property acquired, held or owned when resident in India, or inherited from a resident. The option saying he cannot transfer them contradicts the words 'transfer or invest'.

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