FCGPR – E01 – Transfer of shares from Resident to Non-Resident

Welcome to this series on Foreign Direct Investments brought to you by Wazzeer. Heard stories of different kinds of FDI’s made in India, this is based on one such story. Ajay who always knew that he would start a healthcare business in India decided to pursue MBA from Wharton School of Business. During his journey in Wharton, Ajay made some new friends, and of them, there were quite a number of foreign friends too. Ajay after graduation, came back to India to set up his business in India. On his way to raise an initial round of funds, reached out to his foreign friends regarding the same.  Ajay, though he had some idea on how FDI works, to be on the safer side, he reached out to Wazzeer. Describing a part of Ajay’s requirement, let’s dive into Episode 1 – Transfer of shares from resident’s to Nonresident’s.

There are basically two options to transfer shares from resident to Non-Resident:
A. Transfer by way of sale:
  1. A person resident in India may transfer to a person resident outside India any share/convertible debenture of an Indian Company whose activities fall under the Automatic Route for FDI subject to the Sectorial Limits, by way of sale subject to complying with pricing guidelines, documentation and reporting requirements for such transfers, as may be specified by the Reserve Bank of India, from time to time.
  2. Which is not possible if, Indian Company is in financial service sectors like banking and nonbanking companies regulated by the Reserve Bank, insurance companies regulated by Insurance Regulatory and Development Authority (IRDA) and other companies regulated by any other financial regulator, as the case may be).
  3. Which is not possible if, the transfer falls within the provisions of SEBI Regulations, 1997.


B. Transfer by way of gift:
  1. A person resident in India who proposes to transfer to a person resident outside India [other than erstwhile OCBs] any security, by way of gift, shall make an application to the Central Office of the Foreign Exchange Department, Reserve Bank of India furnishing the following information, namely:
    1. Name and address of the transferor and the proposed transferee
    2. Relationship between the transferor and the proposed transferee
    3. Reasons for making the gift


In case the transfer does not fit into any of the above, either the transferor (resident) or the transferee (non-resident) can make an application for the Reserve Bank's permission for the transfer. The application has to be accompanied with the following documents:
  1. A copy of FIPB approval (if required).
  2. Consent letter from transferor and transferee clearly indicating the number of shares, the name of the investee Company and the price at which the transfer is proposed to be affected.
  3. The present/post transfer shareholding pattern of the Indian investee company showing the equity participation by residents and non-residents category-wise.
  4. Copies of the Reserve Bank of India's approvals/acknowledged copies of FCGPR evidencing the existing holdings of the non-residents.
  5. If the sellers/transferors are NRIs / OCBs, the copies of the Reserve Bank of India's approvals evidencing the shares held by them on repatriation / non-repatriation basis.
  6. Open Offer document filed with SEBI if the acquisition of shares by a nonresident is under SEBI Takeover Regulations.
  7. Fair Valuation Certificate from Chartered Accountant indicating the value of shares as per the following guideline.
  8. In the case of unlisted shares, the fair value is worked out as per the erstwhile Controller of Capital Issue/s.
  9. For listed shares, the price worked out is not less than the higher of average weekly high and low quotations for 6 months and an average of daily high and low quotation or two weeks preceding 30 days prior to the date of making application to FIPB.


We at Wazzeer have helped businesses in various sectors to get an end to end legal, accounting, and secretarial works delivered smoothly without hassle. We would be very excited to help you kick your business and thereafter too. So let’s connect -> “Get your Wazzeer”




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Lous Ronald
Lous Ronald
3 years ago

I am sure this article on share transfer would be useful for Foreign entrepreneurs in dealing with Funding Compliance. Good job.

3 years ago

Good to read article on Share Transfer and Foreign Funding.

3 years ago

Nicely written. Useful for Indian founders having foreign investors.

Mehta ji
Mehta ji
3 years ago

Very interesting article on FCGPR. Thanks, guys.