How can an NRI legally transfer shares or assets of a family business in India?

How an NRI Can Legally Transfer Shares or Assets of a Family Business in India

An NRI (Non-Resident Indian) can legally transfer shares or assets in a family business in India by following a well-defined process. Here’s a step-by-step guide:

Steps for Transferring Shares or Assets

Review Company Documents
Check the Articles of Association (AOA) to ensure there are no restrictions on the transfer of shares.
Notice of Transfer
Inform the company’s directors about the intention to transfer shares.
Shareholder Approval
If required by the AOA, offer the shares to existing shareholders for purchase.
Execute Form SH-4
Complete and file the official SH-4 form, which is the prescribed format for share transfers.
Pay Stamp Duty
Ensure that stamp duty is paid on the share transfer, calculated based on the value of the shares.
Witness Signatures
Have all signatures on the transfer deed witnessed by an unrelated third party.
Submit Documents
Submit the completed transfer deed and share certificates to the company within 60 days of the transfer.
Board Resolution
Obtain the company’s board resolution to formally approve the transfer.

Example

An NRI from the USA successfully transferred shares in his family’s textile business in Mumbai. He followed all necessary steps, ensuring proper legal compliance throughout the process.

Additional Considerations

FEMA Compliance: The transfer must comply with the Foreign Exchange Management Act (FEMA), including obtaining RBI approval if funds are being repatriated.
Tax Implications: Be mindful of taxes such as capital gains, income tax, and withholding taxes during the transfer process.
Legal Documentation: Ensure all required documents, such as transfer deeds and power of attorney, are correctly executed.
Professional Guidance: Consulting legal and tax professionals specializing in NRI matters is essential for a smooth and compliant transfer process.

Conclusion

For NRIs, transferring shares or assets in India is a straightforward process when the correct legal procedures are followed.

About LawCrust Legal Consulting
At LawCrust Legal Consulting, we specialize in assisting NRIs with share transfers, asset management, and legal compliance in India. Let our experts guide you through the process seamlessly.

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