The Reserve Bank of India has on 20 May, 2016, notified the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Seventh Amendment) Regulations, 2016 (Amendment Regulations) pursuant to which:
(i) a purchaser in a cross border share transfer is permitted to make payment of up to 25 per cent of the total consideration on a deferred basis within a period not exceeding 18 months from the date of the share transfer agreement;
(ii) an escrow arrangement may be made between the purchaser and seller for an amount not more than twenty five per cent of the total consideration for a period not exceeding 18 months from the date of the share transfer agreement;
(iii) if the total consideration is paid by the purchaser, then the seller may furnish an indemnity for an amount not more than twenty five per cent of the total consideration for a period not exceeding 18 months from the date of the payment of the full consideration; and
(iv) the total consideration finally paid for the shares must be compliant with the applicable pricing guidelines.
The Amendment Regulations may be accessed at:
https://rbi.org.in/Scripts/BS_FemaNotifications.aspx?Id=10431