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CS Executive · Economic, Commercial and Intellectual Property Laws · Law relating to Foreign Exchange Management

Rohan, resident in India, inherited shares of a US company from his uncle, who was resident outside India. Under Section 6 of FEMA, may Rohan hold these shares?

Yes. Section 4 is subject to exceptions, and Section 6(4) lets a resident in India hold, own, transfer or invest in foreign security that was inherited from a person resident outside India, so Rohan may keep the inherited US shares.

  1. ANo, because Section 4 bars all residents from holding foreign securities without exception
  2. BYes, a resident may hold or own foreign security inherited from a person resident outside IndiaCorrect
  3. CYes, but only if he sells them within one year
  4. DNo, unless the Central Government approves each holding

Explanation

Section 4 bars residents from holding foreign security 'save as otherwise provided'. Section 6(4) provides one such exception: a resident may hold, own, transfer or invest in foreign security that was inherited from a person resident outside India. So Rohan may hold the shares.

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