Introduction
Non-Banking Financial Company (NBFC) is an organization enlisted under the Companies Act, 1956/2013 occupied with the matter of advances and advances, Asset financing, venture offer, debenture, or other attractive protections of a like sort, renting, recruit buy and protection business. NBFC gives working capital advance and credit offices and interest in properties. It is helpful for exchanging currency advertise instruments. KEY POINTS ABOUT MERGER • A Merger is an arrangement to join together or consolidate two existing organizations into one new organization. • A merger is a corporate technique of consolidating at least two distinctive NBFC organizations into a solitary organization so as to improve the budgetary and operational qualities of the two associations. • Acquiring organization is a solitary existing organization that buys most of the value portions of at least one organization. • Acquired organizations are those organizations that give up most of their value offers to a getting organization. Merger Example 1. Organization 'A' will buy most of the value shares (proprietorship shares) of Company 'B'. 2. Organization 'A' will assume control over the benefits and liabilities of the Company 'B'. 3. The investors of the Company 'B' will be given the portions of Company 'A'. 4. Organization an Acquiring Company. 5. Organization B Acquired Company. 6. Organization An (After Merger) Retains the Name of Acquiring Company. Advantages 1. Economies of scale – Increase the advance size of the NBFC, which can decrease the administrator cost too. 2. Mergers of NBFC can assist them with growing and contend with Govt. and the MNC Banks and later can push ahead with a Bank License. 3. The NBFC merger permits the acquirer to maintain a strategic distance from a large number of the exorbitant and tedious parts of advantage buys, programming improvement, for example, the task of the leases and mass deals notices. 4. Achieved tax-exempt for the two gatherings. 5. The merger of NBFC can assist with rivalling the Banks. 6. Increment in Market share. 7. Increment Goodwill and Reduce NPA. Disadvantages 1. The enormous size of NBFC Business may make difficulties inactivity the board. 2. It makes trouble inside the representative base of every association. 3. It might build a measure of NPA and working Risk. 4. The executive's issues. 5. Directors need to conclude who will be in control after they unite. Procedure Stage 1: Sign the MOU and get an endorsement from the Board of Directors. Stage 2: Seek Consent from Bank worried about the proposed merger/amalgamation. Stage 3: Prepare KYC Documents of Directors and Companies. Stage 4: Business Plan and Projection. Stage 5: Seek RBI Approval for the proposed Merger of NBFCs. Stage 6: Issue Public notification after RBI Approval. The last Step File an Application to National Company Law Tribunal under Section 230-233 of Companies Act, 2013 looking for the request for mergers or amalgamations with different organizations or NBFCs.
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