RBI relaxes FEMA norms for share transfers to non-residents

The Reserve Bank of India (RBI) has relaxed Foreign Exchange Management (FEMA) Regulations for transfer of equity shares by resident Indians to non-residents under the foreign direct investment (FDI) scheme.

Accordingly, RBI's prior approval would not be required for such transfers that do not conform to RBI's pricing guidelines, provided the original and resultant investments are in line with the extant FDI policy and FEMA regulations.

The transfers should also be in line with sectoral caps, conditionalities (such as minimum capitalisation), reporting requirements, documentation etc, RBI said in a notification today.

The pricing of the transaction should be compliant with all relevant SEBI regulations and guidelines governing IPO, book building, block deals, delisting, exit, open offer or substantial acquisition, buy-back etc, RBI said in its notification.

RBI said its prior permission would also not be necessary where the company whose shares are being transferred is engaged in any financial service:

Provided that approvals are obtained from the respective financial sector regulators as well as transferor and transferee entities and such approvals are reported to authorised dealer banks; and