Buyback from Non Resident - FC-TRS required???
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Mahesh Joshi
Mar 15, 2011, 7:35:56 AM3/15/11
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Dear Friends
Initially I had assumed that once FC-GPR is registered we can buyback shares from Non Resident Shareholders without any sort of further FEMA compliance. However after reading a single line from Master Circular its seems that there's more to it than seems.
Point No. 21(i)(g) of Master Circular on Foreign Investment in India. It reads:
The above General Permission also covers............ as well as transfer of shares by a non-resident to an Indian company under buyback and / or capital reduction scheme of the company.
So its quiet clear that buyback from Non Resident is considered by RBI as transfer of shares by Non-Resident to Resident and hence we would need to comply as if a transfer is taking place (viz. filing FC-TRS, valuation norms among others).
I request members who have actually dealt with such situation to share their experience.
CS Mahesh Joshi
Initially I had assumed that once FC-GPR is registered we can buyback shares from Non Resident Shareholders without any sort of further FEMA compliance. However after reading a single line from Master Circular its seems that there's more to it than seems.
Point No. 21(i)(g) of Master Circular on Foreign Investment in India. It reads:
The above General Permission also covers............ as well as transfer of shares by a non-resident to an Indian company under buyback and / or capital reduction scheme of the company.
So its quiet clear that buyback from Non Resident is considered by RBI as transfer of shares by Non-Resident to Resident and hence we would need to comply as if a transfer is taking place (viz. filing FC-TRS, valuation norms among others).
I request members who have actually dealt with such situation to share their experience.
CS Mahesh Joshi
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