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Change in Management of NBFCs
NBFC is a Non-Banking Financial Company, the principal business of which is:

•    lending money or 
•    investing in shares/stocks/bonds/debentures or 
•    leasing hire purchase, or
•    doing an insurance business, chit business or
•    Receiving deposits under any scheme or arrangement.
Note: NBFC is regulated by Reserve Bank of India.  

Change in management of NBFC happens now and then, due to situations such as resignation, death, retirement or takeover. Hence, RBI has taken steps in view of public interest, to regulate the credit system to improve the financial structure of the country.

Before any change in the management, Reserve Bank specifies the conditions for which prior approval of the bank is required:

•    Any acquisition or takeover of NBFC, resulting in change of management;
•    Any change in the shareholding pattern resulting in acquisition/transfer of 26% or more of the paid-equity capital.
•    More than 30 % change of directors, excluding independent directors.

The above conditions are subject to following exceptions:
•    When there is a change in shareholding, due to the order of competent authority, it is mandatory for a company to inform RBI within 30 days of the occurrence.
•    When the director of the company gets re-elected by rotation, then prior approval is not required.
Further, RBI states that all NBFCs shall intimate regarding the change in management as required by law. The NBFCs should adhere to the below laws:
•    Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 1998,
•    Systematic and Nonsystematic Importance Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2015 Non-Systemically Important;

Change in Management of NBFCs
Where there is any change in management, NBFC is required to submit an application to Reserve Bank of India on the letterhead of the Company, along with the requisite documents:
•    Information about change of proposed directors/ shareholders;
•    Detail of source of fund for acquiring the shares in NBFC of proposed shareholder;
•    The proposed director/shareholder must provide affirmation for non-involvement with any entity for accepting deposits.
•    The proposed director/shareholder must provide an affirmation for non-involvement with any company who had earlier applied for Certificate of Registration and application was rejected;
•    The proposed director/shareholder must provide an affirmation for no criminal case including offense under section 138 of Negotiable Instruments Act
•    Proposed directors/ shareholders banker’s report

Requirement of Public Notice in case of Change in Management
When there is any sale, transfer of ownership, merger or any change in management of NBFC, a public notice shall be given at least 30 days prior. Such public notice shall be given by the concerned NBFC as well as the other party to the transaction.  The notice should be published in 2 newspapers, of which one should be in English language and other in a regional language where the register office of the company is situated. The Notice should clearly specify the intention of such change in management. 

Information to be provided to the Reserve Bank
The proposed directors/shareholders of the company should provide appropriate information in Annexures provided by Reserve Bank of India. This information should be completely and accurately filled. Any incomplete information will be rejected and the approval process may be delayed.

Conclusions
The objective of Reserve bank of India is to attain maximum transparency and efficiency in the workings of the financial market. Due to the rise of NBFCs in financial and credit market, RBI plays a pivotal role assuring the workings are uninterrupted.