Wednesday, September 10, 2014

NEW PRICING GUIDELINES FOR ISSUE AND TRANSFER OF SHARES UNDER FDI REGULATIONS


New Pricing Guidelines for Issue and Transfer of Shares under FDI Regulations

Reserve Bank of India has vide its circular no. RBI/2014-15/129 A. P. (DIR Series) Circular No. 4 has revised the pricing guidelines for issuance and transfer of shares. Here is the new and old guidelines.



S. No
Issue of Transfer of Shares
Existing Guidelines
Revised Guidelines
1
Issue of Shares
Issue of Shares to non-residents
Issue of Shares to non-residents


Price of shares issued to persons resident outside India under this Schedule, shall not be less than
Price of shares issued to persons resident outside India under this Schedule, shall not be less than


(a) the price worked out in accordance with the SEBI guidelines, as applicable, where the shares of the company is listed on any recognised stock exchange in India;
No Change in existing clause (a)


(b) the fair valuation of shares done by a SEBI registered Category - I Merchant Banker or a Chartered Accountant as per the discounted free cash flow method, where the shares of the company is not listed on any recognised stock exchange in India ; and
b) the fair valuation of shares done as per any internationally accepted pricing methodology for valuation of shares on arm’s length basis, duly certified by a Chartered Accountant or a SEBI registered Merchant Banker where the shares of the company are not listed on any recognised stock exchange in India


(c) the price as applicable to transfer of shares from resident to non-resident as per the pricing guidelines laid down by the Reserve Bank from time to time, where the issue of shares is on preferential allotment.
This provision is omitted
2
Transfer of Shares
Transfer by Resident to Non-resident (i.e. to foreign national, NRI, FII and incorporated non-resident entity other than erstwhile OCB)
Transfer by Resident to Non-resident (i.e. to foreign national, NRI, FII, QFI, RFPI and incorporated non-resident entity other than erstwhile OCB)


(a) where shares of an Indian company are listed on a recognized stock exchange in India, the price of shares transferred by way of sale shall not be less than the price at which a preferential allotment of shares can be made under the SEBI Guidelines, as applicable, provided that the same is determined for such duration as specified therein, preceding the relevant date, which shall be the date of purchase or sale of shares. 
No Change in the existing clause (a)


(b) where the shares of an Indian company are not listed on a recognized stock exchange in India, the transfer of shares shall be at a price not less than the fair value to be determined by a SEBI registered Category – I - Merchant Banker or a Chartered Accountant as per the discounted free cash flow method.
(b) where the shares of an Indian company are not listed on a recognized stock exchange in India, the transfer of shares shall be at a price not less than the fair value worked out as per any internationally accepted pricing methodology for valuation of shares on arm’s length basis which should be duly certified by a Chartered Accountant or a SEBI registered Merchant Banker.


The price per share arrived at should be certified by a SEBI registered Category-I-Merchant Banker / Chartered Accountant.

3
Transfer of Shares
Transfer by Non-resident (i.e. by incorporated non-resident entity, erstwhile OCB, foreign national, NRI and FII) to Resident
Transfer by Non-resident (i.e. by incorporated non-resident entity, erstwhile OCB, foreign national, NRI, FII, QFI and RFPI) to Resident


Price of shares transferred by way of sale, by non-resident to resident shall not be more than the minimum price at which the transfer of shares can be made from a resident to a non-resident as given in para 2 above
  1. No Change in the existing clause



Related Articles

0 comments: