A.P. (DIR Series) Circular No. 49, dated 4-5-2010 — Notification No. FEMA 205/2010-RB dated 7-4-2010 — Foreign Direct Investment (FDI) in India — Transfer of shares/Preference shares/Convertible debentures by way of sale — Revised pricing guidelines.

Part C : RBI/FEMA

44 A.P. (DIR Series) Circular No. 49, dated 4-5-2010 —
Notification No. FEMA 205/2010-RB dated 7-4-2010 — Foreign Direct Investment
(FDI) in India — Transfer of shares/Preference shares/Convertible debentures by
way of sale — Revised pricing guidelines.

This Circular contains the revised the guidelines for
transfer of equity shares from a resident to a non-resident and from a
non-resident to a resident. The guidelines are applicable to transfer of shares
of an Indian company in all sectors. The said guidelines are as under :

(a) Where shares of an Indian company are listed on a
recognised 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.

(b) Where the shares of an Indian company are not listed on a
recognised 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.

The price per share arrived at should be certified by a SEBI
registered Category-I Merchant Banker /Chartered Accountant. Also, when the
transfer is from a non-resident to a resident, the price of shares transferred
by way of sale, must not be more than the minimum price at which the transfer of
shares can be made from a resident to a non-resident.