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There are certain instances when a foreign investor in India would want to exit. If there is no particular rate of return on their investment, then a foreign investor can exit the country. Another reason for exit options is when there are demand and supply fluctuations in the market; then the exit options can be used by a foreign investor.
If there is an adequate rate of return on the investment, then the investor will continue to pursue business in the country. In such instances, exit options by foreign investors would not take place. There are several restrictions imposed by the RBI and FEMA before they exit.
However, specific requirements have to be met by the foreign investor before proceeding with the exit option. These exit options are available to investors who invest in equity and capital instruments. Before proceeding with the exit, an investor has an opportunity to sell the capital instrument or equity. Investors cannot do this immediately after investing in the country. There is a minimum period of lock-in for business operations for a foreign investor before they may choose the exit.
The RBI has taken steps to relax the options available for investors to exit from the country. However, exit options are necessary for the following reasons:
Apart from the above points, exit options are required by a country as this would open doors to new investment opportunities in the country. Exit options by investors can be used after the lock-in period.
The following are regulatory authorities regarding exit options by foreign investors:
In order to be eligible, the foreign investor should be present in India and have the following:
Also, Read: Foreign Investment in India and its Regulatory Framework.
Step 1- Registration for Business User:
Step 2- Logging into FORMS website.
Step 3- Logging into Single Master Form (SMF).
Step 4- Select the Return type- Form FC-TRS.
Step 5- Common Investment Details in the Form.
Step 6- Fill the Common Details on the Website.
Step 7- Fill in the information regarding particulars of transfer, such as the type of capital instrument that is going to be transferred.
Step 8- Fill in the remittance details- however; this will not be applicable if this is a gift. Remittance details- Mode of payment, name of AD Bank, Address of AD bank, Amount remitted/received, whether the remitter is different from the foreign investor.
Step 9- Shareholding Pattern
Step 10- Submitting the Form
For transfer by way of Gift:
For transfer by way of sale:
Read, Also: Foreign Investment in Indiain Capital Instruments.
Varun Hariharan has completed the Legal Practice Course from BPP Law School, Manchester. He has a Masters in Commercial and Corporate Law from the Queen Mary University of London and LLB Honours from Bangor University, UK. He specialises in law related to corporate, artificial intelligence and technology law.
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