NBFC Acquisition

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NBFC Acquisition

The Non-Banking Financial Companies (Approval of Acquisition or Transfer of Control) Directions, 2015 (hereinafter referred to as ‘Directions’) was revised by RBI on July 9, 2015 stating that every non-banking financial company whether accepting deposits or not will be covered within the scope of the above directions. The directions are more stringent as compared to the notification issued by the RBI in May 26,2014.

Documents /points To Be Covered In NBFC Business Plan:

  • Information and documents with respect to proposed Promoters and Directors
  • Due Diligence Report of the Companies
  • Source of Funds for acquisition
  • Financial Statements for last Three Years
  • Statutory documents of the Company
  • Such other details as may be required.

Features Of NBFC Acquisition

  • Increase in profitability
  • Boosting the revenue
  • Wider market reach
  • Product/ Service diversification
  • Business growth
  • Cost Reduction

Frequently Asked Questions

It means

  • a) any takeover or acquisition of control of an NBFC, which may or may not result in change of management,
  • b) any change in the shareholding of an NBFC, including progressive increases over time, which would result in acquisition/ transfer of shareholding of 26 per cent or more of the paid-up equity capital of the NBFC,
  • c) any change in the management of the NBFC which would result in change in more than 30 per cent of the directors, excluding independent directors.

Non-Banking Financial Companies (Approval of Acquisition or Transfer of Control) Directions, 2015’ shall be applicable to every non-banking financial company whether accepting deposits or not, except Primary Dealers.

(i)NBFCs shall submit an application, in the company letter head, for obtaining prior approval of the Bank, along with the following documents:

  • a) Information about the proposed directors/ shareholders as per the Annex;
  • b) Sources of funds of the proposed shareholders acquiring the shares in the NBFC;
  • c) Declaration by the proposed directors/ shareholders that they are not associated with any unincorporated body that is accepting deposits;
  • d) Declaration by the proposed directors/ shareholders that they are not associated with any company, the application for Certificate of Registration (CoR) of which has been rejected by the Reserve Bank;
  • e) Declaration by the proposed directors/ shareholders that there is no criminal case, including for offence under section 138 of the Negotiable Instruments Act, against them; and
  • f) Bankers’ Report on the proposed directors/ shareholders.

(ii) Applications in this regard may be submitted to the Regional Office of the Department of Non-Banking Supervision in whose jurisdiction the Registered Office of the NBFC is located.

"Control" shall have the same meaning as is assigned to it under clause (e) of sub-regulation (1) of regulation 2 of Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.

Before effecting the sale of, or transfer of the ownership by sale of shares, or transfer of control, whether with or without sale of shares, a public notice of atleast 30 days shall be given shall be given by the NBFCs and also by the other party or jointly by the parties concerned, after obtaining the prior permission of the Reserve Bank. It shall indicate the intention to sell or transfer ownership/control, the particulars of transferee and the reasons for such sale or transfer of ownership/control.

HOW COMPLIANCE CALENDAR LLP CAN HELP YOU?

Prior permission of RBI is required for acquisition/takeover of any NBFC for which proper application is to be made to RBI. Proper Procedure is to be followed after getting RBI Approval such as Memorandum of Understanding between both the parties, Newspaper Advertisement, Drafting of various agreements etc. We at Compliance Calendar LLP has a team of professionals who can provide you proper consultation and guidance for NBFC Takeover/Acquisition in an efficient, hassle free a timely manner. If you are looking to acquire Non-Banking Financial Company (NBFC), you are welcome to connect with us at info@ccoffice.in or call us at +91-9988424211 to book your one-time free consultation and we will be more than happy to help you out.