Direct Tax Services
Select Your Location
The takeover of NBFC (Non-Banking Financial Company) means the purchase of NBFC by another company. The takeover can only be undertaken if both the target and the acquirer are registered under the Companies Act.
Table of Contents
In the recent past, mergers and takeovers have become more usual than before. It has played a pivotal role in the expansion of the business. The efficiency of the takeover process made the RBI emphasize on the incorporation of the takeover of NBFCs.
The takeover of NBFC can prove to be beneficial for those companies that fail to register an NBFC of their own. The Reserve Bank of India lays down the regulations and procedures for the takeover of NBFCs.
There are two types of acquiring a target company-
A friendly takeover is based on mutual consent between companies. During this form of acquisition, the acquirer company offers the target company to be acquired, and the latter willingly accepts the offer.
In case of a hostile takeover, an acquiring company looks to purchase the target company secretly. This form of takeover happens when an entity attempts to take control of the firm without the consent or co-operation of the target company’s board of directors.
Before you opt for the takeover of NBFC, the following points must be considered:
Before you purchase a company, conduct extensive research, and do background verification. A checklist must be made of the aspects which require to be analyzed. Make corporate goals and consider whether the target company would be able to meet the goals.
An acquirer must check the list of befitting candidates for takeover before offering acquisition to any company. During the process, a company shall shortlist the candidate who is fit to their business and suffices the central objective of the acquirer.
You must carefully evaluate the financial reputation of the company that you want to acquire. Calculate the maximum amount payable for takeover, cash flows, and finalize the best mode to finance the takeover.
The takeover of NBFCs has the following benefits:
The Reserve Bank of India has laid down the following norms which must be followed by NBFCs:
The RBI’s approval is not required when:
In case where prior approval is required from the RBI, the following details must be included in your application:
After obtaining the RBI’s approval follow these steps:
Publish a public notice
The first step involves the publication of public notice. The public notice must be published in two regional languages. One language should be English, and the other should be vernacular language. The notice must be published after 30 days of RBI approval.
The second step involves entering into a formal agreement with the target company to purchase share/transfer of management/ transfer of shares or such interest for NBFC takeover.
Publish a second public notice
When the company comes close to complete 30 days of entering into the stated agreement, a second public notice is to be published. Just like the first notice, the second notice also must be in two regional languages. One in English and the other in vernacular language.
Transfer of Assets
When the scheme is approved by the RBI without any objections, the transfer of assets will take place.
Read our article:The Takeover of NBFC – NBFC Takeover Procedure
Ashish M. Shaji has done his graduation in law (BA. LLB) from CCS University. He has keen interests in doing extensive research and writing on legal subjects especially on corporate law. He is a creative thinker and has a great interest in exploring legal subjects.
The Reserve Bank of India, in its press release dated June 8, 2023, issued Statement on Develop...
RBI released a developmental and regulatory policy statement on June 8, 2023. The objective of...
Financial Institutions called Asset Reconstruction Companies ("ARCs") reconstruct and securitis...
Any person booked for an offence under the Criminal Procedure Code (CrPc) / the Code would be r...
The Reserve Bank of India regulates Non-Banking Financial Companies in India, and they are subj...
The Reserve Bank of India regulates Non-banking Financial Companies in accordance with the RBI...
Incorporation of a Limited Liability Company (LLC) is an attractive choice for small business o...
The Reserve Bank of India (the Bank) issued Non-Banking Financial Companies Acceptance of Publi...
A few years ago, investing in traditional investment categories like shares, bonds, real estate...
Compared to other organisations, the corporate governance of Non-Banking Financial Companies is...
Are you human?: 7 + 2 =
Easy Payment Options Available No Spam. No Sharing. 100% Confidentiality
NBFC is a Non-Banking Financial Institution, which is registered under the Companies Act, 2013. NBFC is regulated a...
31 Dec, 2020
What Are Nbfcs? The Reserve Bank of India defines a Non-Banking Financial Company (NBFC) as: A company registered u...
16 Apr, 2020
Red Herring Top 100 Asia enlists outstanding entrepreneurs and promising companies. It selects the award winners from approximately 2000 privately financed companies each year in the Asia. Since 1996, Red Herring has kept tabs on these up-and-comers. Red Herring editors were among the first to recognize that companies such as Google, Facebook, Kakao, Alibaba, Twitter, Rakuten, Salesforce.com, Xiaomi and YouTube would change the way we live and work.
Researchers have found out that organization using new technologies in their accounting and tax have better productivity as compared to those using the traditional methods. Complying with the recent technological trends in the accounting industry, Enterslice was formed to focus on the emerging start up companies and bring innovation in their traditional Chartered Accountants & Legal profession services, disrupt traditional Chartered Accountants practice mechanism & Lawyers.
Stay updated with all the latest legal updates. Just enter your email address and subscribe for free!
Chat on Whatsapp
Hey I'm Suman. Let's Talk!