Earlier Non-Banking Financial Companies (NBFCs) had been directed to give three months’ prior public notice of the intention to sell or transfer ownership whether by way of sale of shares or transfer of control without sale of shares in a leading national newspaper and another leading vernacular newspaper. However it was subsequently observed that an amalgamation / merger of an NBFC with another NBFC or a non-financial company would also tantamount to change in management.
With a view to relaxation of the norms in relation to furnishing such public notice by NBFCs prior to any change in control or management, certain amendments were effected by the Reserve Bank of India (RBI) vide its Circular dated 24th January 2006 pursuant to which, upon a merger, amalgamation, change in the management or control of an NBFC being effected by sale or transfer of ownership, prior public notice of only 30 days would be required to be given by such NBFC.
By a circular issued by the RBI on 27th October 2006, such prior public notice of 30 days shall be given by the NBFC and also by the transferor or the transferee or jointly by the parties concerned.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
