Transfer of shares of indian entity to a foreign entity - agricultural land
Jatinder Singh
(Querist) 11 December 2012
This query is : Resolved
To the experts,
An Indian company (which holds some agricultural land) wants to transfer its entire shareholding to a foreign entity. This is otherwise possible since the company is engaged in a business where 100% FDI is permitted.
The concern is with respect to holding agricultural land. Would that be a bar in any manner keeping in mind that no FDI is permitted in the agricultural sector. Please advise urgently.
Raj Kumar Makkad
(Expert) 11 December 2012
Transfer of business and transfer of agricultural land are two different and distinct issues. As 100% FDI is permitted in the business wherein you are dealing but no foreign company is entitled to purchase agricultural land in India so better to retain the right of ownership in agricultural land with your company and provide the land on lease of ra longer period to that company.
Jatinder Singh
(Querist) 02 January 2013
Mr. Makkad,
If I am correct, the transfer of 100% shareholding by itself would also lead to transfer of the land since the land is vested in the company, so how would that work out? Since its indirectly leading to acquisition of the land by the foreign entity, would the transfer of business be barred?
Can one retain the rights in the land and then transfer the remaining rights to another entity? Would that amount to a transfer of business?
Raj Kumar Makkad
(Expert) 02 January 2013
I have not suggested you to transfer the ownership rather have suggested to provide the land on lease for a specific period which do not imply the transfer of land.
