Companies (Share Capital and Debentures) Amendment Rules

Companies (Share Capital and Debentures) Amendment Rules, 2022

The Ministry of Corporate Affairs vides its Notification No. G.S.R. 335(E) dtd. 04th May 2022 has notified Companies (Share Capital and Debentures) Amendment Rules, 2022 to amend the existing Companies (Share Capital and Debentures) Rules, 2014. The amendment pertains to the insertion of a declaration in form SH-4 (form for transfer of shares) with regards to whether the transferee is required to obtain Government approval under the Foreign Exchange Management (Non-debt Instruments) Rules, 2019. These rules may be called the Companies (Share Capital and Debentures) Amendment Rules, 2022.

“In the Companies (Share Capital and Debentures) Rules, 2014, in the Annexure, in Form No.SH-4, before the Enclosures, the following declaration shall be inserted, namely.-

“Declaration:

The transferee is not required to obtain the Government approval under the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 prior to the transfer of shares;

Or

The transferee is required to obtain the Government approval under the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 prior to the transfer of shares, and the same has been obtained and is enclosed herewith.”

By this amendment, MCA has made it mandatory to give the declaration that, Foreign Exchange Management (Non-debt Instruments) Rules, 2019 notified under the FEMA act 1999 by Reserve Bank of India has been complied with for transfer of shares and Companies before approving the transfer of shares and giving effect to share transfers must ensure compliance of the same.