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RBI amends NBFC takeover norms

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The Reserve Bank of India (RBI) amended the norms for acquisition or transfer of ownership for non-banking finance companies (NBFCs), the central bank said in a notification.
It said that any takeover or acquisition of control of an NBFC, which may or may not change management, would require prior written approval from RBI. Prior nod would also be needed in cases where there is acquisition or transfer of more than 26% shareholding in the NBFC’s paid-up equity capital.
In a notification on 26 May, 2014, RBI had asked NBFCs to get written permission in case of acquisition or transfer of more than 10% shareholding in the NBFC.
“Prior approval would, however, not be required in case of any shareholding going beyond 26% due to buyback of shares/ reduction in capital where it has approval of a competent court,” the latest RBI notification said.
In case of any change in management where more than 30% of the directors on the board are changed, the NBFC would be required to get written approval from the RBI beforehand. However, in case where directors get re-elected on retirement by rotation, such approvals will not be required, RBI said.
Moreover, any change in management would need to involve a public notice before at least 30 days of any such announcement, which shall be printed in at least one leading national and one leading local vernacular newspaper. Such a notice will be given out by the NBFC as well as the other party involved, after receiving appropriate RBI approvals. This notice would consist of the reason for such a change in management and specifics of both parties.
HT Mint, New Delhi, 10th July 2015

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