GIFT OF SHARES BY INDIAN RESIDENT TO NRI , GIFT OF SHARES BY NRI TO ANOTHER NRI OUTSIDE INDIA, GIFT BY NON-RESIDENT TO ANOTHER NON-RESIDENT OUTSIDE INDIA, GIFT OF SHARES BY A NON-RESIDENT TO RESIDENT INDIAN

GIFT OF SHARES BY INDIAN RESIDENT TO NRI , GIFT OF SHARES BY NRI TO ANOTHER NRI OUTSIDE INDIA, GIFT BY NON-RESIDENT TO ANOTHER NON-RESIDENT OUTSIDE INDIA, GIFT OF SHARES BY A NON-RESIDENT TO RESIDENT INDIAN

Transfer of any capital instrument, by way of gift by a person resident in India to a person resident outside India. prior approval of Reserve Bank for approval for transfer of capital instruments by way of gift is needed.

Documents to be submitted by a person resident in India for transfer of shares to a person resident outside India by way of gift
i. Name and address of the transferor (donor) and the transferee (donee).
ii. Relationship between the transferor and the transferee.
iii. Reasons for making the gift.
iv. In case of Government dated securities and treasury bills and bonds, a certificate issued by a Chartered Accountant on the market value of such security.
v. In case of units of domestic mutual funds and units of Money Market Mutual Funds, a certificate from the issuer on the Net Asset Value of such security.
vi. In case of shares and convertible debentures, a certificate from a Chartered Accountant on the value of such securities according to the guidelines issued by Securities & Exchange Board of India or DCF method for listed companies and unlisted companies, respectively.
vii. Certificate from the concerned Indian company certifying that the proposed transfer of shares/ convertible debentures by way of gift from resident to the non-resident shall not breach the applicable sectoral cap/ FDI limit in the company and that the proposed number of shares/convertible debentures to be held by the non-resident transferee shall not exceed 5 per cent of the paid up capital of the company.
viii. An undertaking from the resident transferor that the value of security to be transferred together with any security already transferred by the transferor, as gift, to any person residing outside India does not exceed the rupee equivalent of USD 50,000  during a financial year.

* RBI‘s A.P. (DIR Series) Circular No. 14 Dated 15.09.2011

Reserve Bank considers the following factors while processing such applications:

(a) The proposed transferee (donee) is eligible to hold such capital instruments under Schedules 1, 4 and 5 of Notification No. FEMA 20/2000-RB dated May 3, 2000, as amended from time to time.

(b) The gift does not exceed 5 per cent of the paid-up capital of the Indian company/each series of debentures/each mutual fund scheme.

(c) The applicable sectoral cap limit in the Indian company is not breached.
General permission has been granted to non-residents/NRIs for acquisition of shares by way of transfer subject to the following:

(a) A person resident outside India (other than NRI and erstwhile OCB) may transfer by way of sale or gift, the shares or convertible debentures to any person resident outside India (including NRIs).

(b) NRIs may transfer by way of sale or gift the shares or convertible debentures held by them to another NRI.

(c) A person resident outside India can transfer any security to a person resident in India by way of gift.