Direct Tax
Consulting
ESG Advisory
Indirect Tax
Growth Advisory
Internal Audit
BFSI Audit
Industry Audit
Valuation
RBI Services
SEBI Services
IRDA Registration
AML Advisory
IBC Services
NBFC Compliance
IRDA Compliance
Finance & Accounts
Payroll Compliance Services
HR Outsourcing
LPO
Fractional CFO
General Legal
Corporate Law
Debt Recovery
Select Your Location
RBI is putting strict regulations on NBFCs. Since NBFC deals with financial activities it is essential to ensure the fit and proper character of the management of NBFCs. Therefore, RBI had issued guidelines to deal with the change in control or management of the NBFCs. In this article, we will discuss the Change in Shareholding Pattern of NBFC.
RBI had issued the Non-Banking Financial Companies (Approval of Acquisition or Transfer of Control) Directions, 2014 (2014 Directors), requiring NBFCs to seek prior approval from the RBI prior to effecting any change in control or management of the NBFC.
The above directions are applicable to every NBFC whether accepting public deposits or not, but does not include primary dealers.
As per the definition, “control” includes the right to appoint majority of the directors or to control the management or policy decisions exercisable by a person or persons acting individually or in concert, directly or indirectly, including by virtue of their shareholding or management rights or shareholders agreements or voting agreements or in any other manner.
Thus, to summarise, any direct or indirect change in the company resulting in the change of the following would amount to change in control:
Prior written permission of the RBI shall be required in the following circumstances:
However, in the second instance, even though the shareholder is acquiring only 16%, but in aggregate its shareholding is reaching the threshold; hence, a prior approval of the RBI would be required for the acquisition of 16% of paid up equity capital.
Read our article:NBFC: Things to know before Incorporating this Financial Institution
The insurance industry is on the edge of a transformative era. As we enter 2024, technological...
The Indian Cybercrime Coordination Centre reported a rise in digital financial fraud, which has...
During its 203rd meeting on 25th November 2023, the Securities and Exchange Board of India (SEB...
If you want to expand your portfolio beyond standard stocks and bonds, Alternative Investment F...
NBFCs in India encounter significant challenges related to the compounded effects of outstandin...
Are you human?: 1 + 9 =
Easy Payment Options Available No Spam. No Sharing. 100% Confidentiality
Non-convertible Debentures or NCDs are a popular method of raising funds for the NBFCs. The majority of borrowers i...
06 Jan, 2021
The Finance Minister of India has directed commercial banks to hold a meet for NBFCs to credit loans to NBFCs. The...
16 Nov, 2020