Latest RBI Regulation of NBFC Takeover in India

 RBI Regulation NBFC Takeover India

The takeover will mostly go over the target firm's documentation, and once the acquirer approves the acquisition of the stated NBFC, an MOU will be inked with some token money. As specified by the purchaser, KYC documents, a business plan, and a three-year projection will be developed in relation to incoming directors. In this essay, we shall discuss the RBI's NBFC takeover regulations.

Giving of documents that have been prepared to be submitted to the RBI where the company's registered office is located. Coordinating with the RBI and responding to all takeover-related questions.

Following that, receiving an RBI approval letter to publish a public notice in two newspapers for 30 days, as per RBI requirements, describing the management change and seeking any objections.

The requirement to acquire RBI permission before acquiring or transferring control of a non-banking financial company (NBFCs)

The Reserve Bank of India's Prior Approval Requirement

For the time being, prior written permission from the Reserve Bank will be necessary.

·         Any NBFC takeover or acquisition of control, that might or might not result in a change of management;

·         Any change in shareholding pattern that results in the acquisition/transfer of 26 percent or more of the NBFC's paid-up equity capital & prior approval is required; however, prior approval is not required in the case of any shareholding pattern that falls below 26 percent and is due to a buyback of shares/reduction of share capital with the consent of the competent court. Similar events must, however, be reported to the reserve bank within one month of their occurrence.

·         Any change in the NBFC's organisation that would result in a change in more than 30% of the NBFC's assets.

Prior approval would not be necessary for those directors who are re-elected by rotation on retirement.

Financial Companies Acceptance of Public Deposits (Reserve inform the Reserve Bank required in Non-Banking Bank) Directions, 1998, Non-Systemically Significant

Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2015, and Systemically Important Non-Banking Financial (Non-Deposit Accepting Holding) Companies Prudential Norms (Reserve Bank) Directions, 2015 will continue to apply to

Prior Approval Request Form

Applications in this regard can be made to the Department of Non-Banking Supervision's Regional Office in the jurisdiction where the NBFC's Registered Office is located.

The requirement of Prior Public Notice about change in Control/Management

• Public notice of at least 30 days shall be given before effecting the sale of, or transfer of the ownership by the sale of shares, or transfer of control, whether with or without the sale of shares. Such public notice shall be given by the NBFCs & also by the other party or jointly by the parties concerned, after obtaining the prior permission of the Reserve Bank of India.
• The public notice will specify the intention to sell or transfer ownership/ control, the particulars of transferee & the reasons for such sale or transfer of ownership/ control. The notice will be published in at least one leading national & in one leading local (covering the place of registered office) vernacular newspaper.
• The directions contained above are applicable with immediate effect, i.e., the same will apply on any takeover or acquisition of control, any change in the shareholding or any change in the management occurring after the date of this circular.

Application of other laws not barred

The provisions of these Directions shall be in addition to, & not in derogation of the provisions of any other laws, rules, regulations or directions, for the time being in force.

Repeal & Saving

Non-Banking Financial Companies (Approval of Acquisition or Transfer of Control) Directions, 2014 dated May 26, 2014, shall stand repealed. Notwithstanding such repeal, any action taken, purported to have been taken or initiated under the directions hereby repealed shall continue to be governed by the provisions of the said directions.

 

Information about Corporate Promoter

Sr. No.	Particulars Required	Response
1.	Name
2.	Business Address
3.	E-mail address/ Telephone number
4.	PAN Number under Income Tax Act
5.	Name & contact details of compliance officer
6.	Line of business
7.	The details of their major shareholders (more than 10%) & line of activity, if corporates
8.	Names of the principal bankers/ overseas bankers *
9.	Name/s of the regulators (RBI, SEBI, IRDA, PFRDA, NHB or any other foreign regulator)
10.	Names of Firms in the Group as defined in the Prudential Norms Directions
11.	Names of the firms in the Group that are NBFCs
12.	Specify the names of companies in the group which have been prohibited from accepting deposits/ prosecuted by RBI?
13.	Detail of trial, if any, pending or begun or resultant in a conviction in the past in contradiction of the corporation for violation of economic laws & regulations
14.	Cases, if any, where the corporate, is in default or have been in default in the last 5 years in respect of credit facilities obtained from any entity or bank
15.	Whether the business has been subject to any investigation at the example of the Government Department or Agency
16.	Has the Corporate at any time been found guilty of violations of rules/ regulations/ legislative requirements by Customs/ Excise/ Income Tax// Foreign Exchange/ Other Revenue Authorities, if so, give particulars
17.	Is the promoter corporate/ majority shareholder of the promoter business, if a business, ever applied to RBI for CoR which has been rejected

 Annex

Information about the proposed promoters/ directors/ shareholders of the Company

Sr. No.	Particulars Required	Response
1.	Name
2.	Designation	Chairman/ Managing Director/ Director/ Chief Executive Officer
3.	Nationality
4.	Age (to be substantiated with the date of birth)
5.	Business Address
6.	Residential Address
7.	E-mail address/ Telephone number
8.	PAN Number under Income Tax Act
9.	Director Identification Number (DIN)
10.	Social security number/Passport No.*
11.	Educational/professional qualifications
12.	Professional Achievement relevant to the job
13.	The line of business or vocation
14.	Any other information relevant to the Company
15.	Name/s of other companies in which the person has held the post of Chairman/ Managing Director/ Director/ Chief Executive Officer
16.	Name/s of the regulators (RBI, SEBI, IRDA, PFRDA, NHB or any other foreign regulator) of the entities mentioned in which the persons hold directorships
17.	Names of the NBFC, if any, with whom the individual is related as Promoter, MD or Director comprising a Residuary NBFC, which has been forbidden from accepting deposits/ prosecuted by RBI?
18.	Details of the tribunal, if any, pending or commenced or resultant in a conviction in the past in contradiction of the person or against any of the entities he is associated with for violation of economic laws & regulations
19.	Cases, if any, where the person or relatives of the person or the companies in which the person is associated with, are in default or have been in evasion in the last five years in related of credit services acquired from any entity or bank
20.	If the person is a member of a professional association/ body, details of the disciplinary action, if any, pending or commenced or resulting in conviction in the past against him/ her or whether he/ she has been banned from the entry of any professional occupation at any time
21.	Whether the person attracts any of the disqualification envisaged under Section 164 of the Companies Act, 2013
22.	Has the individual or any of the companies, he/ she is associated with, been subject to any investigation at the instance of the Government Department or Agency
23.	Has the person at any time been found guilty of violations of rules/ regulations/ legislative requirements by Customs/ Excise/ Income Tax// Foreign Exchange/ Other Revenue Authorities, if so, give particulars
24.	Involvement in the business of NBFC (number of years)
25.	Equity shareholding in the company No. of shares Face value Percentage of total paid up equity share capital of the company
26.	Name/s of the companies, firms & proprietary concerns in which the person holds substantial interest
27.	Names of the principal bankers to the concerns at 26 above
28.	Names of the overseas bankers *
29.	Whether the number of directorships held by the person exceeds the limits prescribed under Section 165 of the Companies Act, 2013
* For foreign promoters/ directors/ shareholders Note: Separate form should be submitted in respect of each of the proposed promoters/ directors/ shareholders