If the transaction to buy out the Target NBFC is similar to any of the above situations, then you need to apply to RBI for prior approval. And your application, along with a cover letter on the letterhead of the company, needs to be accompanied by the following documents :

• ✔   Details about the proposed Directors/shareholders/members & their ID proof, Address proof.
• ✔   Education, Qualifications, and Experience certificate of the proposed Directors.
• ✔   Origins, from where the amount has been received, by the proposed shareholders which is to be used for acquiring shares in the target NBFC.
• ✔   Statement by the proposed Directors/shareholders declaring that they are not associated with any entity which was denied a “Certificate of Registration” by the RBI.
• ✔   Declaration of not having a criminal background and/or Non-conviction u/s 138 of the “Negotiable Instruments Act” by all the proposed Directors/shareholders.
• ✔   Statement by all the proposed Directors/shareholders/members declaring their Non-association with any entity accepting deposits,
• ✔   Clean Banker’s Report on proposed Directors/ shareholders.

Once you have the approval from RBI to buy the Target NBFC, a public notice is to be given in one leading national newspaper and one leading local newspaper, at least 30-days before this transaction (of transfer or purchase of shares, which is to take place).

RBI requirements are:

Public notice is to be issued at least 30-days before the actual purchase of, or transfer of the ownership by sale of shares, or transfer of control (whether with or without the sale of shares) takes place. The publication needs to be done, by both the Acquirer Company as well as the Target NBFC. And also by all other parties concerned. They have to option to issue the notice together. After obtaining the prior permission of RBI. The proposal of transferring or selling ownership or control, the particulars of the Target NBFC, and the reasons for such transfer or sale of ownership or control, must be indicated clearly in the public notice. The notice shall be published in at least one leading national daily newspaper and at least one leading daily newspaper in the vernacular language of the place of registered office.

By buying an existing NBFC rather than getting a new one registered, you save on time. You can use this time to enhance the work of the previous entity. Though, both processes, of getting a new one registered or buying an existing one involve similar steps. Still, the preparation time is quite less if you buy an existing one. Or you may take an NBFC on rent. This prevents those problems that any new entity faces while setting up a business, making it known to the associates, etc.

A few of the advantages of purchasing an NBFC have been given here:

• ✔   Competition is reduced.
• ✔   The rise in sales/revenue.
• ✔   Profitability increases.
• ✔   Customer Base and Distribution Network increases.
• ✔   Economies of scale.

NBFC sector, their transactions, any entry or exit into this sector is stringently regulated by RBI. All compliances of RBI must be duly fulfilled. Therefore, it is advised to take the help of skilled professionals who are in the know. Someone well aware of the processes, the requirements, and all provisions of RBI. And that skilled professional is what you shall get with “LegalRaasta”. We assure 100% assistance at every step of the journey. From fulfilling all RBI requirements, accounting, and reporting during the deal to meeting the RBI compliances afterward. All the processes are done in strict secrecy. We have listed NBFCs which are available for sale on our site, so you can choose according to your preference, goals, and budget. We also help with mergers, take-overs, and collaborations. We also make available NBFCs on rent in the area of your choice. The process with us would start with a detailed telephonic consultation. We ask a few questions. To enable us to get an insight into your requirements and goals and offer you the most suitable organization. Next, together, we go through all the compliances, legal requirements, forms to be filed, information/paperwork to be completed, as required by RBI. If you are intending to buy NBFC online in India, you can now sit back and concentrate on your business while "LegalRaasta" starts the process of compliances, examination, due diligence, creation of MoU, Share Transfer Agreements, etc. Of course, we’ll update you on every step we take.

Our services, related to NBFCs are:

• ✔   Renting NBFCs
• ✔   Takeovers
• ✔   Mergers/Demergers
• ✔   Business Re-structuring
• ✔   Contract Drafting
• ✔   Approval for Management Change from RBI
• ✔   Designing Financial Services
• ✔   Marketing Digital Loan Products
• ✔   Meeting RBI Compliance
• ✔   Internal Audit Services

Before the process of buying an NBFC with RBI begins, it is better to make sure the following checks are performed:

• ✔   Verify that only legally valid documents are being submitted to the RBI and/or other authorities.
• ✔   Review all previous records, such as liability (if any). Starting from the beginning years of the Target NBFC or at least the financial statements of the last 3-years.
• ✔   Check if any cases are pending against the company, any legal proceedings taken-up against it, etc. And all other such details that may influence the decision of acquiring this NBFC.
• ✔   Examine all the registration certificates, such as PAN, GST, Certificate of Incorporation, and all other certifications availed during the existence of the company.
• ✔   Check KYC of the Directors, promoters, investors presently associated with the NBFC.
• ✔   After verifying all this information, you also need to sign a formal “MoU” agreement, along with a certain token amount, as mutually agreed. This binds both the Acquirer and the Target to stick to the terms, conditions, and time-lines specified in it.

During the purchase of an NBFC, the final step is to discharge the Share Purchase Agreement. This agreement is signed by both, the buyer and the seller, after the public notice of buying has been issued. The assets of the seller or the Target NBFC are discharged in the balance sheet and liabilities are paid off. So the Acquirer Company receives only a clean balance sheet. The amount is calculated on the basis of the net worth of the Target NBFC as of the date of the takeover. RBI has also provided directions that are to be followed while determining the net worth. This is the final step in the official handover of the management and the assets/liabilities from the Target Company to the Acquirer Company. In case any consideration is remaining, it shall be paid off within 31 days of the public notice in the newspaper, as per RBI. Or as mutually agreed by all the parties.