(i) Reserve Bank vide Notification No.F.E.R.A.206/99-RB dated 31st July 1999 has granted general permission to Non-Residents to acquire shares from other Non-Residents (except from NRIs/PIOs and OCBs). NRIs/PIOs and OCBs are permitted to acquire shares from other NRIs/PIOs/OCBs. The rights of transferee/purchaser in respect of shares so acquired, shall be subject to same restrictions and conditions as were applicable to the transferor/seller of the shares. In terms of the above-mentioned Notification, permission has also been granted to a company incorporated in India and/or a depository defined in clause (2) of sub-section 1 of Section 2 of Depository Act, 1996 to enter in its register or books in which securities are registered or inscribed an address outside India of a holder of any securities consequent upon acquisition of such securities by non-residents as permitted above.
It is clarified that the notification No.F.E.R.A.206/99-RB dated 31st July 1999 does not permit transfer of shares from NRIs/PIOs/OCBs to foreign nationals/companies incorporated outside India. In such cases, the transferee may approach the Secretariat for Industrial Assistance (SIA), Ministry of Industry, Government of India, New Delhi for necessary permission. Subsequently an application in Form FNC-7 along with SIAs permission may be made to Reserve Bank of India, Exchange Control Department, (Foreign Investment Division), Central Office, Mumbai for necessary permission under Foreign Exchange Regulation Act, 1973.

Note: See paragraph 11A.12 for details regarding exemption granted to foreign nationals of Indian origin permanently resident in India.

(ii) Reserve Bank vide its Notification No.F.E.R.A.207/99-RB dated 31st July 1999, has granted general permission to a person resident outside India or a company incorporated outside India to acquire shares from the shareholders who had acquired such shares as signatories to the Memorandum and Articles of Association provided (i) the Indian company is permitted to become a 100% owned subsidiary and (ii) the total number of shares so acquired does not exceed 500 and (iii) the face value of the shares to be transferred is less than 0.1% (one tenth of one per cent) of the paid-up capital. The company whose shares are so released and/or a depository have also been granted general permission to enter an address outside India in their books in respect of such shares.

(iii) Shares held by foreign companies/foreign nationals as on 1.1.1974 were required to be declared to Reserve Bank. Licences were issued by Reserve Bank granting permission to hold such shares declared specifying the eligibility or otherwise of the holder for repatriation of the capital and income earned thereon (See paragraph 10A 2).