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
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Issue of Transfer of Shares
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Existing Guidelines
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Revised Guidelines
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1
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Issue of Shares
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Issue of
Shares to non-residents
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Issue of
Shares to non-residents
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Price
of shares issued to persons resident outside India under this Schedule, shall
not be less than
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Price
of shares issued to persons resident outside India under this Schedule, shall
not be less than
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(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;
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No Change in existing clause (a)
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(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
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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
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(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.
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This provision is omitted
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2
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Transfer of Shares
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Transfer by Resident to Non-resident (i.e. to foreign
national, NRI, FII and incorporated non-resident entity other than erstwhile
OCB)
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Transfer by Resident to Non-resident (i.e. to foreign
national, NRI, FII, QFI, RFPI and incorporated non-resident entity other than
erstwhile OCB)
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(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.
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No Change in the existing clause (a)
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(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.
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(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.
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The
price per share arrived at should be certified by a SEBI registered
Category-I-Merchant Banker / Chartered Accountant.
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3
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Transfer of Shares
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Transfer by Non-resident (i.e. by incorporated non-resident entity,
erstwhile OCB, foreign national, NRI and FII) to Resident
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Transfer by Non-resident (i.e. by incorporated non-resident entity,
erstwhile OCB, foreign national, NRI, FII, QFI and RFPI) to Resident
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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
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