{"id":18590,"date":"2020-10-29T17:07:24","date_gmt":"2020-10-29T11:37:24","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=18590"},"modified":"2020-10-30T18:29:37","modified_gmt":"2020-10-30T12:59:37","slug":"everything-you-need-to-know-about-takeover-of-nbfc","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/everything-you-need-to-know-about-takeover-of-nbfc\/","title":{"rendered":"Everything you Need to Know about NBFC Takeover"},"content":{"rendered":"\n<p class=\"has-drop-cap\">The takeover of NBFC means the purchase of NBFC by another organization, which can only exist if both the acquirer and the target are operating under the provisions of the Companies Act. In this writeup, we will cover everything about <a href=\"https:\/\/corpbiz.io\/nbfc-takeover\"><strong>NBFC Takeover<\/strong><\/a>, so let get started.<\/p>\n\n\n\n<p>In the past few years, takeovers and mergers\nhave become more inevitable than ever. It has emerged as a viable option for\nbusinesses seeking expansion. The efficacy of the takeover process made the\nReserve Bank give emphasis to the incorporation of the NBFCs takeover.<\/p>\n\n\n\n<p>The takeover of NBFC can be a fruitful proposition for those organizations grappling to register an NBFC of their own. The RBI lays down the procedures and rules for the NBFCs takeover.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/everything-you-need-to-know-about-takeover-of-nbfc\/#What_are_the_types_of_NBFC_takeover_in_India\" >What are the types of NBFC takeover in India?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/everything-you-need-to-know-about-takeover-of-nbfc\/#Points_worth_remembering_related_to_the_Takeover_of_NBFC\" >Points worth remembering related to the Takeover of NBFC<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/everything-you-need-to-know-about-takeover-of-nbfc\/#Benefits_related_to_the_Takeover_of_NBFCs\" >Benefits related to the Takeover of NBFCs<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/everything-you-need-to-know-about-takeover-of-nbfc\/#When_the_RBI_Approval_for_NBFC_Takeover_is_needed\" >When the RBI Approval for NBFC Takeover is needed?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/everything-you-need-to-know-about-takeover-of-nbfc\/#When_the_RBI_Approval_for_NBFC_Takeover_is_NOT_needed\" >When the RBI Approval for NBFC Takeover is NOT needed?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/corpbiz.io\/learning\/everything-you-need-to-know-about-takeover-of-nbfc\/#Application_Documents_to_Avail_RBIs_Approval\" >Application &amp; Documents to Avail RBI\u2019s Approval<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/corpbiz.io\/learning\/everything-you-need-to-know-about-takeover-of-nbfc\/#Post-RBIs_Approval_Formalities_for_NBFC_takeover\" >Post-RBI\u2019s Approval Formalities&nbsp;for NBFC takeover<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/corpbiz.io\/learning\/everything-you-need-to-know-about-takeover-of-nbfc\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_are_the_types_of_NBFC_takeover_in_India\"><\/span>What are the types of NBFC takeover in India?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><em><strong>Following approaches are commonly used in the business arena for NBFC Takeover. Those are as follows:-<\/strong><\/em><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Friendly\nTakeover&nbsp;<\/h3>\n\n\n\n<p>A friendly takeover usually takes place\nwith the mutual consent of both parties. In this form of takeover, the acquirer\nbuys out the target company after obtaining its permission through the legal\nprocess.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Hostile\nTakeover<\/h3>\n\n\n\n<p>In the event of a hostile takeover, an acquire looks to purchase the target entity through a covert strategy. This form of takeover usually takes place when a company strives to acquires the target organization without the permission of the Board of Directors of the target company.&nbsp;&nbsp;<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><img decoding=\"async\" width=\"660\" height=\"482\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/10\/image-110.png\" alt=\"Hostile Takeover\" class=\"wp-image-18591\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/10\/image-110.png 660w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/10\/image-110-300x219.png 300w\" sizes=\"(max-width: 660px) 100vw, 660px\" \/><\/figure><\/div>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/pros-cons-and-procedure-of-nbfc-takeover\/\">NBFC Takeover: Know the Pros and Cons, Procedure and RBI Guidelines<\/a><\/mark><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Points_worth_remembering_related_to_the_Takeover_of_NBFC\"><\/span>Points worth remembering related to the Takeover of NBFC<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><em><strong>Before you dive into acquisition formalities to takeover an NBFC, make sure to keep the following pointers in mind.<\/strong><\/em><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Due\nDiligence&nbsp;<\/h3>\n\n\n\n<p>Before you acquired an entity, make sure to\nhave a check on the company\u2019s background. You must also outline a detailed\nchecklist associated with the process of acquisition to envisage the company\ngoals &amp; look out how the acquisition will benefit the company to meet the\ngoals.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Probe\nthe Suitability<\/h3>\n\n\n\n<p>An acquirer must verify the list of an eligible individual for takeover prior to offering takeover to any entity. During the process, the company shall narrow down the list by picking up the right candidates to serve the purpose of acquisition.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Examine\nthe Financial Standing<\/h3>\n\n\n\n<p>You must examine the financial standing of the company through a deliberate approach. Obtain an accurate estimation of the cost required to acquire the company. Also, pay attention to the cash flows and figure out the most appropriate model for financing the takeover.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Benefits_related_to_the_Takeover_of_NBFCs\"><\/span>Benefits related to the Takeover of NBFCs<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><em><strong>The takeover of NBFCs reserves the given benefits, which are as follows:-<\/strong><\/em><\/p>\n\n\n\n<ul><li>It escalates the profitability of the company.&nbsp;<\/li><li>Lower down the competition.&nbsp;<\/li><li>It can ramp up revenue and sales.&nbsp;<\/li><li>It enables the expansion of the distribution market.<\/li><li>&nbsp;It can broaden the scale of the economy&nbsp;<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"When_the_RBI_Approval_for_NBFC_Takeover_is_needed\"><\/span>When the RBI Approval for NBFC Takeover is needed? <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><em><strong>The RBI has drafted some norms for the NBFCs takeover which are as follow:-<\/strong><\/em><\/p>\n\n\n\n<ul><li>An NBFC seeks <strong><em>RBI\u2019s<\/em><\/strong><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/Reserve_Bank_of_India\"><strong><em>[1]<\/em><\/strong><\/a><\/sup> approval if there is any alteration in the management.&nbsp;<\/li><li>The acquisition of the listed NBFC seeks the approval of the Reserve      Bank.&nbsp;<\/li><li>Reserve Bank permission is also needed in the event when there is any alteration in the management, which will result in more than thirty percent of the director.&nbsp;<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"When_the_RBI_Approval_for_NBFC_Takeover_is_NOT_needed\"><\/span>When the RBI Approval for NBFC Takeover is NOT needed? <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><em><strong>The reserve bank\u2019s permission is not required in the following circumstances:-<\/strong><\/em><\/p>\n\n\n\n<ul><li>Shareholders of the company surpass\nbeyond twenty-six percent due to share reduction in the capital or buyback of\nshares. It can only be implied after availing permission from the relevant\njudicial court.&nbsp;<\/li><li>There is an alteration in\nmanagement by thirty percent including the independent director or by the\nrotation of directors included in the board.&nbsp;<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Application_Documents_to_Avail_RBIs_Approval\"><\/span>Application &amp; Documents to Avail RBI\u2019s Approval<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><em><strong>In the case where the RBI\u2019s approval is mandatory before the Takeover, the following particulars must be enclosed in the application:-<\/strong><\/em><\/p>\n\n\n\n<ul><li>Detail regarding the directors and proposed shareholders.&nbsp;<\/li><li>Detail related to the source of funds to be used by shareholders for obtaining shares in NBFC;<\/li><li>Bank report related to the directors and proposed shareholders;<\/li><li>Declaration showing no linkage of your company with other entity that has refused the certificate of registration by Reserve Bank; and<\/li><li>A statement related to the offensive background and non-conviction u\/s 138 of the negotiable instrument act by all shareholders and proposed directors.&nbsp;<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Post-RBIs_Approval_Formalities_for_NBFC_takeover\"><\/span>Post-RBI\u2019s Approval Formalities&nbsp;for NBFC takeover<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><em><strong>After obtaining the Reserve bank\u2019s permission follow these steps:-<\/strong><\/em><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Promulgate\na Public Notice&nbsp;<\/h3>\n\n\n\n<p>The first steps demand the promulgation of\npublic notice. The Public notice should be made publicly available to the\ngeneral masses in two regional languages i.e. English &amp; vernacular\nlanguage. The notice should be communicated with the general public after\nthirty days of the RBI\u2019s approval.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Formal\nAgreement<\/h3>\n\n\n\n<p>This is the second stage in the process\nwhere an acquirer is required to enter into a formal agreement with the target\ncompany to ensure complete possession of the shares and transfer of management.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Promulgate\nanother Public Notice<\/h3>\n\n\n\n<p>When the company reaches near the\ncompletion of thirty days timeline of agreeing, a second notice ought to be\nmade available to the general public. Needless to mention that the said notice\nshould be published in recommend languages as the first one.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Transfer\nof Assets<\/h3>\n\n\n\n<p>Soon after the RBI\u2019s approval, the asset\ntransfer will take place without any legal hassles.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>As mentioned earlier, the NBFC takeover is\ngenerally taking place for expanding the existing footprint of the company or\nto increase the customer reach. The reserve bank has taken certain measures to\nreduce the complexity regarding the procedure of NBFCs takeover. Taking the\ndominance of NBFC in the market today, the RBI has simplified the compliances\nand legal prerequisites for the process.&nbsp;<\/p>\n\n\n\n<p>Call <a href=\"https:\/\/corpbiz.io\/\"><strong>CorpBiz\u2019s<\/strong><\/a> today if you need professional-grade help for <a href=\"https:\/\/corpbiz.io\/nbfc-registration\"><strong>NBFC registration<\/strong><\/a>. Our experienced and proactive experts can guide you through extremely irritating paperwork and tedious process with a holistic approach.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/procedure-for-appeal-against-cancellation-of-nbfc-registration-by-rbi\/\">Procedure for Appeal against Cancellation of NBFC Registration by RBI<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The takeover of NBFC means the purchase of NBFC by another organization, which can only exist if both the acquirer and the target are operating under the provisions of the Companies Act. In this writeup, we will cover everything about NBFC Takeover, so let get started. In the past few years, takeovers and mergers have [&hellip;]<\/p>\n","protected":false},"author":22,"featured_media":18707,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[91],"tags":[207],"acf":{"service_id":"60"},"authorName":"Pankaj Tyagi","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2022\/01\/MicrosoftTeams-image-42.jpg","authorDescription":"Pankaj has a diverse experience of writing research papers, blog, and articles during his college time. Earlier, he was working as a tax consultant in a financial firm, but his interest in writing drives him to pursue a career in the writing field.","postViews":3867,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/18590"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/22"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=18590"}],"version-history":[{"count":10,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/18590\/revisions"}],"predecessor-version":[{"id":18641,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/18590\/revisions\/18641"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/18707"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=18590"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=18590"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=18590"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}