INDIA: Draft rules on takeovers of non-banking financial companies

Tuesday April 7 2015

The Reserve Bank of India has proposed draft regulations on acquisition and transfer of control in non-banking financial companies.

The draft rules propose that the prior written permission of the Reserve Bank shall be required for:

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 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.

The NFBC shall be required to seek the approval rather than the acquiring shareholder.

The draft regulation details the information requirements that must be satisfied, as well as public notice requirements.

The consultation is open until 15th April 2015.