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

Rahul, who lived abroad for years and held shares in an Indian company then, has since become a resident in India. Priya, resident in India, inherited Indian securities from her father who was resident in India and has now moved abroad to settle permanently. Under section 6 of FEMA, 1999, which statement matches the Act regarding persons resident outside India holding Indian securities?

Under section 6(5), a person resident outside India may hold, own, transfer or invest in Indian currency, security or immovable property if it was acquired, held or owned when he was resident in India, or was inherited from a person who was resident in India.

  1. AA person resident outside India may hold, own, transfer or invest in Indian security if it was acquired, held or owned when he was resident in India or inherited from a person resident in IndiaCorrect
  2. BA person resident outside India may never hold Indian securities
  3. CSuch a person may hold Indian securities only with Reserve Bank approval for each transfer
  4. DOnly inherited securities are covered, not securities acquired while resident in India

Explanation

Section 6(5) allows a person resident outside India to hold, own, transfer or invest in Indian currency, security or immovable property if acquired, held or owned when resident in India, or inherited from a person resident in India. Option D wrongly drops the acquired-while-resident limb.

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