India

Authored by – Moksha Bhat, Managing Partner at AP & Partners, And co-authored by – Udit Kapoor, Associate, AP & Partner Introduction Over the past decade, India has become a major start-up hub and now has the third largest number of unicorns—companies valued over USD 1 billion. This growth has been spurred in large measure by foreign capital, particularly venture capital and private equity investors. To access this capital, many Indian start-ups adopted a “flip” structure—incorporating offshore holding companies (commonly in jurisdictions like the US or Singapore) to facilitate fundraising, align with investor preferences, and enable listings on global exchanges such as NASDAQ.  These structures typically involve a non-operating foreign holding company owning a wholly owned Indian subsidiary that houses the operational business. However, this trend is now reversing. Many Indian-origin start-ups are now “reverse flipping” back to India—restructuring so that investors and founders hold shares directly in the Indian company. The primary drivers include stronger domestic capital markets, deepening pools of domestic risk capital, and an increasing number of successful Indian IPOs. Reverse flips – considerations The optimal structure for a reverse flip depends on multiple factors, including tax efficiency, deal timeline, regulatory complexity, and the jurisdictions involved. Common approaches include: Inbound Mergers: a foreign holding company merges with an Indian company, with the Indian entity surviving. Share Swaps/Exchanges: Shareholders of the offshore company directly acquire shares in the Indian company in exchange for their existing holdings. While inbound mergers can be structured to be tax-neutral under Indian law, they can be time-consuming (taking up to a year), unless the fast track route is available. Share swaps may be faster but could trigger capital gains tax depending on treaty relief availability and valuation differentials. Mergers In India, an inbound merger of a foreign company with an Indian company is governed by the provisions of: The (Indian) Companies Act, 2013 (“Companies Act”) and the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016; and The (Indian) Foreign Exchange Management Act, 1999 (“FEMA”) and the rules framed under it, mainly the Foreign Exchange Management (Cross-Border Merger) Regulations, 2018 (“FEMA Merger Regulations”). In brief, the process in India to implement a merger can either require the approval of (a) National Company Law Tribunal (“NCLT Route”), a specialised tribunal set up under the Companies Act for issues relating to Indian companies, or (b) the Central Government of India through Regional Directors (“Fast Track Route”). NCLT Route The merger through NCLT Route is usually a more drawn-out process, involving the following steps: The parties to the merger approach NCLT with a “scheme of arrangement” which sets out the manner in which the reorganisation would be implemented. NCLT calls meetings of shareholders and creditors to approve the scheme with the prescribed voting thresholds. These meetings can be waived if written consents are obtained from the prescribed number of shareholders and creditors. The scheme is then notified to various government authorities and to the public through a public notice process. NCLT approves the final merger order after resolving objections (if any), and the order is filed with the Registrar of Companies. A foreign company may merge with an Indian company after both obtain approval from the Reserve Bank of India (“RBI”). Some mergers may qualify under the deemed approval framework (discussed below). Fast Track Route For certain eligible companies, the Fast Track Route is also available where the merger scheme is considered and approved by the Central Government without the need to approach the NCLT. This Fast Track Route has relatively lower compliance requirements and can be undertaken in a shorter time frame. The Fast Track Route can be used for the inbound merger of a foreign company with an Indian company provided that the Indian company is a wholly owned subsidiary of the foreign company. Navigating Indian capital controls Indian exchange control regulations add an additional layer of complexity to be navigated for such reverse flip transactions. As background, the FEMA sets out the framework for foreign investment into India. This includes matters such as pricing guidelines that apply to such transactions, sectoral caps, investment conditions, and reporting requirements. Cross-border mergers transactions are viewed as capital account transactions under the FEMA. Such transactions require prior approval of the RBI unless specifically permitted under the FEMA or the regulations framed under it. Under the FEMA Merger Regulations, cross-border transactions are categorised as either falling under the automatic route, that is, transactions that can be undertaken without the approval of the RBI, or under the approval route, that is, transactions that require prior approval of the RBI. Inbound mergers of foreign companies with Indian companies are deemed to be approved by the RBI subject to certain specified conditions including: Issue or transfer of securities by the resultant Indian company to non-residents must comply with FEMA provisions, including sectoral caps, pricing guidelines, entry routes, and reporting requirements. Off-shore borrowings and guarantees taken over by the Indian company must be brought in with FEMA regulations within two years; no repayment remittance is allowed during this period. The Indian company may acquire, hold, and transfer overseas assets per FEMA. If not permitted, such assets must be sold within two years of NCLT sanction. A foreign currency bank account can be opened for incidental transactions related to the merger, valid for two years post-NCLT approval. All FEMA-related non-compliances or violations prior to the merger must be resolved. Valuation of the foreign company must be done by recognised valuers in the relevant jurisdiction, following internationally accepted principles. If a merger does not comply with the above conditions, an RBI approval would be required for such a merger. Other considerations There are other issues that need to be evaluated when considering a reverse flip transaction, including: Presence of investor from certain jurisdictions: If an investor or beneficial owner is based in a country that shares a land border with India such as China, RBI approval is required. This must be reviewed before finalising a reverse flip. Issues under listing regulations: If the reverse flip is aimed at an IPO in India, listing regulations like minimum shareholding periods, valuations, and disclosure requirements must be checked in advance. Sectoral approvals: Businesses in regulated sectors like financial services may need additional regulatory approvals or need to inform authorities due to a change in ownership or control after the merger. Conclusion The recent surge in reverse flips underscores greater availability of risk capital and the growing maturity of Indian capital markets. In response, Indian regulators have taken steps to streamline inbound merger processes. However, this remains a relatively new and evolving area. The government should look to encourage this trend and evolve a single window clearance framework to make it easier to re-domicile companies to India. At the same time, founders and investors should carefully evaluate legal, tax, regulatory, and commercial considerations before proceeding with any reverse flip transaction.

New Delhi: Chandhiok & Mahajan is pleased to announce the promotion of seven exceptional attorneys across various levels within the firm. We are proud to share the following promotions: Shreya Gupta has been promoted to Counsel, Lead – Data Privacy Arveena Sharma has been promoted to Counsel, Restructuring & Insolvency Aakash Kumbhat has been elevated to Managing Associate Suchitra Dey (Corporate), Harshita Malik, Shivangi Bajpai (Disputes), and Karan Vir Khosla (Restructuring & Insolvency) have been promoted to Senior Associate These promotions reflect the dedication, excellence, and consistent contributions of our team members. Each of them embodies the firm’s values and continues to play a key role in driving our growth and delivering outstanding client service. Shreya Gupta advises organizations on global data privacy compliance. She navigates complex regulatory frameworks and helps clients implement commercially viable solutions aligned with international legal obligations. Her business-oriented approach has shaped the firm’s data privacy practice. Arveena Sharma regularly advises resolution applicants, creditors, and corporate debtors in high-value insolvency and liquidation proceedings before the NCLT, NCLAT, High Courts, and the Supreme Court of India. She also handles corporate restructuring, schemes of arrangement, and disputes related to oppression and mismanagement. She delivers strategic, client-focused advice tailored to commercial realities. Aakash Kumbhat advises clients on behavioural and merger control matters in competition law. He regularly appears before the Competition Commission of India, NCLAT, High Courts, and the Supreme Court, and supports clients through complex regulatory processes. Suchitra Dey advises on fundraising and M&A transactions across sectors including insurance, retail, fintech, manufacturing, and cryptocurrency. She supports clients on commercial contracts, cross-border investments, SEBI regulations, and day-to-day legal matters. Shivangi Bajpai manages civil, commercial, and regulatory disputes, including arbitrations in sectors such as infrastructure, energy, telecom, real estate, and financial services. She advises on dispute strategy and third-party funding and regularly appears before courts and tribunals. Harshita Malik focuses on commercial litigation and arbitration, particularly in construction arbitration, insolvency, shareholder disputes, and regulatory matters. She represents clients across sectors including telecom, infrastructure, renewable energy, FMCG, and banking, and brings a strategic, detail-oriented approach to every matter. Karan Vir Khosla represents clients before the NCLT, NCLAT, and the Supreme Court of India. He works extensively on matters under the Insolvency and Bankruptcy Code, including CIRP and liquidation proceedings. Pooja Mahajan, Managing Partner at Chandhiok & Mahajan, stated: “We are excited to celebrate the achievements of our colleagues through these well-earned promotions. I extend my warmest congratulations to each of them. Their dedication, expertise, and passion for excellence continue to inspire us. We are proud to have them as part of our team and look forward to supporting their continued growth and success.” These promotions underscore the strength of our team and reinforce our commitment to nurturing talent and delivering excellence to our clients.

DEAL UPDATE SNG & Partners represented APS Group and its promoters in a landmark acquisition transaction by SIS Ltd., India’s largest business services company. SIS will acquire 51% in APS upfront and the balance 49% over the next three years, making it the largest buyout in India’s private security industry.  Our team advised APS on all aspects of diligence, structuring, negotiation and execution of the definitive agreements. The acquisition was structured in two tranches: (i) initial 51% stake acquisition at closing, and (ii) deferred acquisition of remaining 49% based on agreed performance-linked milestones, to be completed within three to four years.   The transaction was led by Mr. Aasish Somasi (Associate Partner) and comprised Ms. Ayushi Parnami (Senior Associate), Ms. Aditi Mishra (Associate), Mr. Mohit Goyal (Associate) and Mr. Arjun Khanna (Associate).   Mr. Amit Aggarwal, (Managing Partner - Corporate and Non-Contentious Practice) and Ms. Devyani Dhawan (Of-Counsel) provided strategic inputs during the course of the transaction.   APS Group is a leading Indian private security services provider with a strong nationwide presence in guarding, manpower, and facility solutions. SIS Limited is India’s largest business services company, offering security, cash logistics, and facility management across India and multiple international markets. This phased acquisition combines APS Group’s established expertise in security and facility solutions with SIS’s scale and leadership in business services. Mr. Aasish Somasi Mr. Amit AggarwalMs. Devyani Dhawan 

We are pleased to share that Argus Partners advised UAE-based CE-Invests, the strategic investments platform of Crescent Enterprises, on its Series C investment in Flipspaces, a leading tech-first interior design and build company for commercial spaces operating across India and the USA. The investment formed part of Flipspaces’ Series C fundraise of USD 50 million, which also saw participation from other investors, including Panthera Growth Partners and the SMBC Asia Rising Fund. Flipspaces will utilise the fresh capital to scale its business across India, the USA, and the UAE, deepen supply-chain integration, and further enhance its proprietary technology stack with AI-led interventions. Commenting on the investment, Ghada Abdelkader, Senior Vice President of CE-Invests, stated, “At CE-Invests we look to build enduring partnerships with ambitious businesses that harness transformative global trends to reshape industries. Flipspaces’ ability to scale profitably across India and the USA, while deploying AI and VR to transform a traditional sector, exemplifies the kind of opportunity we are committed to backing. With the UAE as its launchpad for expansion into the wider MENA region, Flipspaces is uniquely positioned to bridge the Asia-UAE-USA innovation corridor. We are proud to support its journey to becoming a category-defining international leader,” Further, Kunal Sharma, Founder & CEO of Flipspaces, added, “This investment is not just a financial boost, it’s a strategic endorsement. Having the backing of CE-Invests reflects strong market confidence in our technology-led model that is transforming the customer experience in interior design and build. Our conviction lies in scaling with both speed and sustainability, driven by a replicable, tech-powered delivery approach that balances innovation with operational and financial discipline,” The team at Argus Partners advising CE-Invests consisted of Abhinav Bhalaik, Vallishree Chandra (Partners) and Kanishk Gambhir, Srishti Sneha, Rohan Lodge, Akshat Khanna, Venkatesh VG (Associates). Read more at: Crescent Enterprises Press Release, Times of India, Dealstreet Asia.