Direct Tax
Consulting
ESG Advisory
Indirect Tax
Growth Advisory
Internal Audit
BFSI Audit
Industry Audit
Valuation
RBI Services
SEBI Services
IRDA Registration
AML Advisory
IBC Services
Recovery of Shares
NBFC Compliance
IRDA Compliance
Finance & Accounts
Payroll Compliance Services
HR Outsourcing
LPO
Fractional CFO
General Legal
Corporate Law
Debt Recovery
Select Your Location
Indian companies’ issues equity shares; compulsorily & fully convertible debentures and fully, compulsorily convertible preference shares based on pricing guidelines norms prescribed under Foreign Exchange Management (Transfer or Issue of Security to a Person Resident outside India) Regulations, 2000[1] (“FEMA Regulations”).
To regulate foreign investment, the RBI had amended the FEMA Regulations 2000 in 2017 under FEMA and published it on 7 November 2017.
In the article, we will discuss RBI’s changes with respect to price guidelines under FEMA Regulations.
RBI’s direction states the pricing guidelines for various form or number of ways to price capital instrument. The pricing guidelines can be summarized as follows.
At whatever time, the Indian company issues a capital instrument, then the price must not be less than:
The pricing guidelines under FEMA Regulations are not applicable for any investment in capital instruments by non-resident in India on the non repatriation basis.
Further, the pricing guidelines shall not be applicable on:
However, a Chartered Accountant’s certificate is must to the effect that the SEBI guidelines have been complied with and has to be attached with Form FC-TRS filed with the AD Bank.
On overall remarks of pricing guidelines on Shares, either on subscription or acquisition though partly or fully paid up or convertible or not the shares price needs to be valued according to RBI pricing guidelines as amended from time to time. At any cost, the transfer of share needs to be valued before issue/transfer to any person resident outside India to comply with the regulation on extant FEMA and FDI policy.
The revision in the pricing guidelines under FEMA Regulations was needed to have a better monitoring the transfer of shares to the person residing outside India. The price at which the companies are issuing shares, debentures must not be less than the price determined in accordance with various provisions under SEBI & FEMA regulations.
Read our article:FEMA Guidelines for Export of Goods and Services (Amendment) Regulations, 2021
Did you or anybody in your family invest in Axis Bank Limited shares during the 1990s or early...
The Pharmaceutical industry is India's top gross domestic product (GDP) contributor. The market...
In the evolving international trade space, ensuring supply chain security and compliance with t...
Investment in shares of big public sector companies such as Coal India Limited (CIL) provides l...
The Securities and Exchange Board of India (SEBI) issued a circular on May 2, 2025, simplifying...
Are you human?: 1 + 8 =
Easy Payment Options Available No Spam. No Sharing. 100% Confidentiality
NBFC have to comply with the domestic laws to operate in the financial sector. While borrowing foreign loans, an NB...
06 Jan, 2021
.In India, transfer of shares between two residents of India involves payment of consideration. It is given by the...
01 Jun, 2024