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Abhay Nevagi & Associates

Deferred payment of consideration in share transfer transaction is now allowed

In a welcome move, as per Notification No.FEMA.368/2016-RB dated 20-May-2016 the Reserve Bank of India has now allowed payment of consideration in of share transfer/purchase transaction between resident buyer and a non-resident seller or vice-versa on deferred basis. Deferred consideration shall not be more than 25% of total consideration and need to be paid within a period not exceeding 18 months from the date of share transfer agreement. Transferor and transferee may enter into escrow arrangement for such deferred consideration.