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CS Executive · Economic, Commercial and Intellectual Property Laws · Overseas Direct Investment

Ravi, a person resident in India, inherited shares of a foreign company from his uncle, who was resident outside India. Ravi now wishes to hold and transfer those shares. Under the Foreign Exchange Management Act, 1999, what is the position?

Ravi may hold, own, transfer or invest in the foreign shares, because the Act allows a person resident in India to do so with foreign security inherited from a person resident outside India. No sale deadline or Adjudicating Authority permission is required under that provision.

  1. AHe may hold, own, transfer or invest in them because they were inherited from a person resident outside IndiaCorrect
  2. BHe must sell them within one year of inheriting them
  3. CHe may hold them but cannot transfer them under any circumstances
  4. DHe needs prior permission from the Adjudicating Authority

Explanation

Section 6(4) provides that a person resident in India may hold, own, transfer or invest in foreign security if it was acquired, held or owned when he was resident outside India or inherited from a person resident outside India. The Act sets no one-year sale requirement, so that option is wrong.

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