{"id":122286,"date":"2026-01-09T09:59:55","date_gmt":"2026-01-09T09:59:55","guid":{"rendered":"https:\/\/my.legal500.com\/guides\/?post_type=comparative_guide&#038;p=122286"},"modified":"2026-01-09T09:59:55","modified_gmt":"2026-01-09T09:59:55","slug":"india-acquisition-finance","status":"publish","type":"comparative_guide","link":"https:\/\/my.legal500.com\/guides\/chapter\/india-acquisition-finance\/","title":{"rendered":"India: Acquisition Finance"},"content":{"rendered":"","protected":false},"template":"","class_list":["post-122286","comparative_guide","type-comparative_guide","status-publish","hentry","guides-acquisition-finance","jurisdictions-india"],"acf":[],"appp":{"post_list":{"below_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">AZB &#038; Partners<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2019\/12\/AZB-Partners.jpg\"\/><\/span><\/div>"},"post_detail":{"above_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">AZB &#038; Partners<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2019\/12\/AZB-Partners.jpg\"\/><\/span><\/div>","below_title":"<span class=\"guide-intro\">This country specific Q&amp;A provides an overview of Acquisition Finance laws and regulations applicable in India<\/span><div class=\"guide-content\"><div class=\"filter\">\r\n\r\n\t\t\t\t<input type=\"text\" placeholder=\"Search questions and answers...\" class=\"filter-container__search-field\">\r\n\t\t\t<\/div>\r\n\r\n\t\t\t\r\n\r\n\r\n\t\t\t<ol class=\"custom-counter\">\r\n\r\n\t\t\t\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the trends impacting acquisition finance in your jurisdiction and what have been the effects of those trends? Please consider the impact of recent economic cycles, Covid-19, developments relating to sanctions, and any environmental, social, and governance (\u201cESG\u201d) issues.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>India continues to experience steady growth in both domestic and cross-border mergers and acquisitions (M&amp;A). This sustained deal momentum\u2014driven by extensive digitisation, positive investor sentiment and expanding domestic consumption\u2014has translated into robust demand for acquisition financing. Ongoing consolidation across healthcare, renewable energy, artificial intelligence, information technology and financial services is further increasing financing needs for both strategic acquirers and financial sponsors.<\/p>\n<p>Broader macroeconomic and geopolitical dynamics are also shaping the financing landscape. Heightened global uncertainty, from U.S. tariff measures to wider geopolitical tension, has introduced supplychain volatility and tightened international liquidity, prompting more cautious risk assessment and pricing in cross-border deals. Despite this, India\u2019s strong fundamentals continue to provide stability.<\/p>\n<p>ESG factors are increasingly integral to financing decisions. Banks and global capital providers are applying stricter environmental and governance standards to deal structures, with closer scrutiny of higher-impact sectors, including energy, manufacturing and infrastructure. Borrowers with strong ESG disclosures and credible sustainability frameworks can access capital on more competitive terms, while transactions with higher-risk ESG profiles face more rigorous diligence and potential pricing penalties.<\/p>\n<p>India\u2019s evolving legal and regulatory framework, including a strengthened insolvency regime, Goods and Services Tax (GST) implementation, digitisation across financial services and ongoing Foreign Direct Investment (FDI) policy development, continues to foster a more efficient, investor-friendly market. While external headwinds persist, India\u2019s resilient domestic backdrop, supportive regulatory trajectory and improved access to onshore and offshore liquidity should keep acquisition financing robust in the near to medium term.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Please advise of any recent legal, tax, regulatory or other developments (including any reforms) that will impact foreign or domestic lenders (both bank and non-bank lenders) in the acquisition finance market in your jurisdiction.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The Reserve Bank of India (RBI) has released draft amendments to the legal framework (Draft ECB Directions) governing external commercial borrowings by Indian entities (ECBs) which seem to indicate a colossal shift in a historic policy followed by RBI in prohibiting Indian entities from utilising ECBs for domestic acquisitions. The Draft ECB Directions prohibit the use of ECBs for transacting in listed \/ unlisted securities but exclude \u201cmerger, amalgamation, arrangement, or acquisition in accordance with the Companies Act, 2013 (as amended from time to time), Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (as amended from time to time) and Insolvency and Bankruptcy Code, 2016 (as amended from time to time)\u201d. The proposed amendments are currently in draft form and it remains to be seen whether (and to what extent) RBI will expressly permit ECBs to be utilised for domestic acquisitions.<\/p>\n<p>The RBI has also issued the RBI (Commercial Banks \u2013 Capital Market Exposure) Directions, 2025 (Draft Capital Market Exposure Directions) which propose to open a new channel for acquisition financing by enabling commercial banks in India to participate directly in funding acquisitions by Indian corporates. The Draft Capital Market Exposure Directions do impose certain limitations on such acquisition financing such as capping the amount that banks can lend to 70% of acquisition consideration, limiting the proposed borrowers to Indian listed corporate entities (or special purpose vehicles incorporated by them) and restricting such financing for strategic (control) acquisitions only.<\/p>\n<p>Each of these represent a significant shift and a major step forward for India\u2019s acquisition financing landscape. By relaxing restrictions, the draft guidelines expand the range of funding sources available to eligible acquirers, who have traditionally relied on non-banking financial companies (NBFCs), foreign portfolio investors (FPIs), private credit funds, and alternative investment funds (AIFs). This not only increases the variety of financing options, but is also expected to foster greater competition, ultimately providing borrowers with access to acquisition capital at more competitive and cost-effective rates.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Please highlight any specific high level issues or concerns in your jurisdiction that should be considered in respect of structuring or documenting a typical acquisition financing.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Although the RBI has released the Draft Capital Market Exposure Directions, they have not yet been finalised. Therefore, as of now, Indian banks are generally not permitted to provide acquisition financing where an Indian company acquires another Indian company. As a result, domestic acquisitions are typically funded by NBFCs, FPIs or AIFs. This financing can be secured by a charge over the assets of the borrower entity (including a pledge over the shares of the target) and, unless the target is a public company, a charge over the target\u2019s assets as well.<\/p>\n<p>Where the acquirer is a foreign-owned or controlled company (FOCC) incorporated in India, Indian lenders cannot provide acquisition financing. Such companies may raise ECB for business acquisitions, however, while the RBI has issued the Draft ECB Directions, given that these have not been finalised yet, ECB proceeds cannot presently be used for equity investments in India. In practice, the principal source of acquisition financing for FOCCs is foreign portfolio investors subscribing to non-convertible debentures (NCDs). Such NCDs can be secured by a charge over the assets of the issuer entity (including a pledge over the shares of the target) and, unless the target is a public company, a charge over the target\u2019s assets as well.<\/p>\n<p>For an offshore acquirer, Indian lenders are not permitted to finance the acquisition, so international banks and foreign financial institutions or funds typically provide the funding. The acquirer usually establishes a special purpose vehicle outside India, which raises financing and acquires the shares of the Indian target through foreign direct investment (FDI SPV). Due to Indian exchange control restrictions, this financing cannot be secured by a pledge of the target\u2019s shares, a charge over the target\u2019s assets or guarantees from the target. Instead, lenders typically take security over the FDI SPV\u2019s assets and shares, often supplemented by a non-disposal undertaking with respect to the target shares held by the FDI SPV.<\/p>\n<p>Where an Indian acquirer is acquiring an offshore target, it may raise financing domestically from banks, financial institutions, and other lenders, subject to applicable conditions. In addition, the acquirer may obtain external commercial borrowings from recognised overseas lenders to fund the offshore acquisition, in compliance with the Indian regulatory framework governing ECBs. The creation of security and provision of guarantees is generally permitted, subject to regulatory conditions, particularly where the acquisition is financed through ECBs.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">In your jurisdiction, due to current market conditions, are there any emerging documentary features or practices or existing documentary provisions\/features which borrowers or lenders are adjusting or innovating their interpretation of, or documentary approach to?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>For the issuance of listed NCDs, the Securities and Exchange Board of India (SEBI) has introduced the requirement for the issuer and the debenture trustee to execute the trust deed in a format specified by SEBI. Although modifications to this format are allowed, any changes must be disclosed to the stock exchange as part of the offer documents. While the format of the debenture trust deed is yet to be notified, SEBI has introduced the necessary amendments to the relevant guidelines governing NCD issuance.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Has there been a prevalence of \u201cequity bidding\u201d in acquisition financing (i.e., signing the acquisition agreement prior to securing financing) with the expectation of securing financing shortly thereafter? If in the US, would Xerox language be included in the acquisition agreement?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>While there has been a prevalence of \u201cequity bidding\u201d in acquisition financing in India, lender\u2019s primary concern continues to be certainty of funds and deal closing. Therefore, acquirers aim to align their financing arrangement and negotiate key financing terms as far as possible before signing the acquisition agreement to ensure that the gap between the financing and the acquisition is minimised. Selling shareholders would also typically expect to see financing commitments of the acquirers being in place on or prior to the acquisition date.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any notable trends in the use of certain financing structures (e.g., private credit vs syndicated vs high yield vs holdco vs mezzanine vs preferred, etc.) in your jurisdiction for acquisition financings?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Private credit has long been the primary source of domestic acquisition financing in India, offering greater flexibility compared to banks, particularly with fewer restrictions on how funds can be used. The infrastructure sector has been the leading driver of private credit deals, making up about 17% of transactions in the first half of 2025. Real estate and healthcare sectors follow with 13% and 10% of deal volume, respectively, while other emerging sectors include industrial products, renewable energy, and technology. Most private credit is provided through rupee-denominated NCDs placed with domestic AIFs or FPIs. These instruments are typically senior secured with amortising or bullet maturities, and often include make-whole clauses and sponsor-style covenants.<\/p>\n<p>To support this growing sector, SEBI has introduced a co-investment framework, allowing Category I and II AIFs to offer co-investment opportunities to accredited investors through dedicated schemes. These regulatory changes are designed to protect AIF investors while ensuring flexibility in structuring and participating in co-investments, further enhancing the private credit landscape.<\/p>\n<p>Holdco financing has gained popularity as a way to layer additional leverage where the operating company\u2019s covenants, financial assistance rules or exchange control limits constrain on-balance sheet borrowing. Such facilities are structurally subordinated and usually unsecured at the operating company level, with payment-in-kind (PIK) elements to alleviate early post-acquisition cash flow pressures. Private credit funds are active in structuring such deals, offsetting the subordination risk with tight negative covenants, share pledges (where legally feasible), and, in some cases, cash sweep provisions triggered by specific milestones.<\/p>\n<p>&nbsp;<\/p>\n<p>Although PIK loans are not common in India, they are typically structured as NCDs when the borrower is an Indian acquirer. NBFCs may also offer PIK loans. However, since the RBI requires banks to charge interest monthly, Indian banks cannot provide PIK loans.<\/p>\n<p>Mezzanine financing is less common but is gaining traction, especially in private equity-backed deals where companies need to bridge the gap between senior debt and equity. Mezzanine finance is generally raised in the form of compulsorily convertible preference shares, optionally or partially convertible preference shares, compulsorily convertible debentures or optionally or partially convertible debentures. However, if the mezzanine finance is provided by an offshore entity, optionally or partially convertible preference shares or optionally convertible debentures are treated as ECB and must comply with the ECB guidelines.<\/p>\n<p>Bridge loans, which are typically short-term loans raised to bridge the gap until final acquisition financing is secured, are often sourced from NBFCs. ECBs, however, cannot be structured as bridge loans due to their minimum average maturity period requirement. Additionally, NCDs with a maturity period of less than one year are subject to RBI guidelines and are not commonly used in acquisition financing.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Has the use of technology (e.g., e-signatures, digital platforms for syndication, document automation, AI, etc.) impacted the documentation or execution of acquisition financings?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The Information Technology Act, 2000 (IT Act) recognises digital signatures, provided they meet certain reliability criteria and use techniques as notified in the IT Act. \u202fParties may obtain secure digital signatures with a digital signature certificate issued by a licensed authority of the IT Act and rules. Such a digital signature is considered a secure electronic record under the IT Act and the Evidence Act, 1872. Parties commonly execute non-disclosure agreements, engagement letters, commitment papers, intercreditor agreements and many facility\/debenture documents electronically, provided stamping and any registration requirements are met.<\/p>\n<p>Beyond signature mechanics, the workflow of syndicating and closing an acquisition financing transaction is now majorly digital. Secure data rooms and deal\u2011management platforms are used to coordinate and facilitate transactions.<\/p>\n<p>AI tools, combined with human supervision, are being used in drafting and review. AI is typically employed for tasks like identifying issues, checking for consistency or populating routine content across multiple documents.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the legal and regulatory requirements for banks and non-banks to be authorised to provide financing to, and to benefit from security provided by, entities established in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Banks and non-banks must comply with the following requirements to be authorised to provide financing to Indian entities:<\/p>\n<p><strong>Banks<\/strong><\/p>\n<p>Banks in India must obtain a licence issued by the RBI under the Banking Regulation Act, 1949 (BR Act) and comply with applicable guidelines issued by the RBI.<\/p>\n<p>Foreign entities seeking to carry out banking activities in India via wholly-owned subsidiary (WOS) must satisfy the RBI that the banking activities would be carried out in the public\u2019s interest, that the government or law of the country in which the foreign bank would be incorporated would not discriminate against banking companies from India, and that the banking company would comply with the applicable provisions of the BR Act. Foreign banks may also open branches in India subject to such branches obtaining a licence and having the prescribed amount of capital in India.<\/p>\n<p><strong>NBFCs<\/strong><\/p>\n<p>NBFCs in India must obtain a certificate of registration issued by the RBI under the Reserve Bank of India Act, 1934 and meet the prescribed minimum net owned fund requirements.<\/p>\n<p><strong>AIFs<\/strong><\/p>\n<p>AIFs must obtain a certificate of registration from the SEBI in accordance with SEBI (Alternative Investment Funds) Regulations, 2012.<\/p>\n<p><strong>FPIs<\/strong><\/p>\n<p>In order to extend debt by subscribing to listed or unlisted NCDs issued by Indian companies as an FPI, an applicant must obtain a certificate from the SEBI, in the manner specified in the SEBI (Foreign Portfolio Investors) Regulations, 2019 (FPI Regulations).<\/p>\n<p><strong>Foreign Lenders<\/strong><\/p>\n<p>Other foreign lenders can make loans to an Indian company under the ECB regime. ECB can only be extended by \u201crecognised lenders\u201d, i.e., residents of an FATF or IOSCO-compliant country, multilateral and financial institutions in regions where India is a member country and individuals who are foreign equity holders of a company. In addition, foreign branches or subsidiaries of Indian banks are permitted as recognised lenders only of foreign currency ECBs (except foreign-currency convertible bonds and foreign-currency exchangeable bonds) Such eligible foreign lenders providing ECBs to an Indian borrower are not subject to any local licensing or registration requirements.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any laws or regulations which govern the advance of loan proceeds into, or the repayment of principal, interest or fees from, your jurisdiction in a foreign currency?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>India is an exchange-controlled economy and the\u202fadvancement of loan proceeds into India\u202fand the\u202frepayment of principal, interest or fees from, in a foreign currency are strictly governed by the framework under the\u202fForeign Exchange Management Act, 1999 (FEMA)\u202fand regulations issued by the\u202fRBI.<\/p>\n<p>The ECB framework allows foreign lenders to extend foreign currency-denominated loans provided that they comply with the all-in cost ceiling and other prescribed conditions on end-use, minimum average maturity and security creation.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any laws or regulations which limit the ability of foreign entities to acquire assets in your jurisdiction or for lenders to finance the acquisition of assets in your jurisdiction? Please include any restrictions on the use of proceeds.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Foreign investment into Indian entities is governed by the FDI policy. The FDI policy permits such investments through two routes: the automatic route and the approval route. Sectors under the automatic route can attract foreign investment without government approval, whereas sectors under the approval route require prior government approval. Foreign investment is entirely prohibited in certain sectors, such as gambling, lotteries and tobacco production.<\/p>\n<p>Foreign investments in India largely have to comply with sectoral caps, conditions prescribed for investing in a given sector (such as minimum capitalisation), pricing guidelines and reporting conditions.<\/p>\n<p>The FDI policy was revised in 2020, making it mandatory to seek government approval for any direct or indirect investments where the investor or beneficial owner of such investment is based in a country that shares a land border with India.<\/p>\n<p>Proceeds raised by Indian companies through issuance of NCDs to FPIs have end-use restrictions (namely, investment in real estate businesses, capital markets and purchases of land) if the NCDs are not listed on a recognised stock exchange in India.<\/p>\n<p>ECB proceeds cannot be used for real estate activities, equity investment, investment in capital markets and on-lending to entities for the above activities.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What does the security package typically consist of in acquisition financing transactions in your jurisdiction and are there any additional security assets available to lenders?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p><span class=\"TextRun SCXW26663091 BCX8\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"none\"><span class=\"NormalTextRun SCXW26663091 BCX8\">Refer to our response at #3 above<\/span><span class=\"NormalTextRun SCXW26663091 BCX8\">.<\/span><\/span><span class=\"EOP SCXW26663091 BCX8\" data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559685&quot;:720,&quot;335559740&quot;:276}\">\u00a0<\/span><\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does the law of your jurisdiction permit (i) floating charges or any other universal security interest and (ii) security over future assets or for future obligations?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes, Indian law permits a floating charge over all present and future movable assets of a company. In the event of default, this floating charge may crystallise into a fixed charge.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Do security documents have to (by law) include a cap on liabilities? If so, how is this usually calculated\/agreed?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>No, the security documents do not have to include a cap on liabilities.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the formalities for taking and perfecting security in your jurisdiction and the associated costs and timing? If these requirements are different for different asset classes, please outline the main points to note for each of these briefly.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p><strong>Registration with the registrar of companies (ROC) for all asset classes<\/strong><\/p>\n<p>All charges created by an Indian company must be registered with the ROC within 30 days of its creation, in compliance with the CA 2013. An unregistered charge will not be taken into account by the liquidator appointed under the CA 2013 or the Insolvency and Bankruptcy Code (IBC) or by any other creditor.<\/p>\n<p><strong>Registration with sub-registrar for mortgages<\/strong><\/p>\n<p>Certain types of mortgages are required to be compulsorily registered with the jurisdictional sub-registrar within prescribed timelines. A compulsorily registrable mortgage document which is not registered is ineffective and invalid and cannot be received as evidence of a transaction affecting a property.<\/p>\n<p><strong>Registration with the Central Registry of Securitization Asset Reconstruction and Security Interest of India (CERSAI) for charge over immovable, movable, intangible properties and assignment of receivables:<\/strong><\/p>\n<p>In order to gain the benefit of enforcement under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI), lenders are required to file details of charges on the CERSAI portal.<\/p>\n<p><strong>Registration with the Information Utility<\/strong><\/p>\n<p>While not mandatory, it is advisable for lenders to register themselves with the Information Utility established under the IBC. A record of default obtained from the Information Utility can be used to evidence financial debt under the IBC for the purposes of initiating a CIRP.<\/p>\n<p><strong>Filing of forms with the depository participant for pledge over dematerialised shares<\/strong><\/p>\n<p>For the creation of a pledge over dematerialised shares, the pledge is required to be marked in the depository system with the depository participant by filing of requisite forms prescribed by Indian depositories.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any limitations, restrictions or prohibitions on downstream, upstream and cross-stream guarantees in your jurisdiction? Please also provide a brief description of any potential mitigants or solutions to these limitations, restrictions or prohibitions.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p><strong>CA, 2013<\/strong><\/p>\n<p>A company in India may provide downstream, upstream or cross-stream guarantees in connection with financing availed by companies in India, subject to the following conditions:-<\/p>\n<ul>\n<li>The company\u2019s constitutional documents should permit the same.<\/li>\n<li>The Company must obtain the consent of its directors.<\/li>\n<li>In the event that such guarantee is to be provided by a company in connection with a loan taken by a \u201cperson in whom any director of the company is interested\u201d, such company shall comply with the following additional conditions:-<\/li>\n<\/ul>\n<p>i. Special resolution shall be passed by the shareholders;<\/p>\n<p>ii. The loan shall be utilised by the borrower for its principal business activities<\/p>\n<p>However, the above conditions do not apply if the guarantee is being provided by (a) a holding company in respect of: (i) loans to its WOS; (ii) loan to subsidiaries from a bank or financial institution; and (b) a company in its ordinary course of business for repayment of any loan, provided that the interest charged on such loans is not less than the prevailing rate for government securities with a tenor closest to the tenor of the loan.<\/p>\n<ul>\n<li>A company is not permitted to provide a guarantee exceeding 60% of its paid-up share capital, free reserves and securities premium account or 100% of its free reserves and securities premium account, whichever is more, without obtaining the consent of its shareholders.<\/li>\n<\/ul>\n<p>However, the above conditions do not apply if the guarantee is being provided by (a) a holding company for a loan to its WOS; or (b) banking companies, insurance companies, housing finance companies in the ordinary course of business; (c) a company engaged in the business of financing of companies or of providing infrastructural facilities.<\/p>\n<p><strong>FEMA<\/strong><\/p>\n<ul>\n<li>An upstream guarantee by an Indian company for financing availed by an offshore parent\/holding company is not expressly permitted under FEMA and hence, requires prior RBI approval.<\/li>\n<li>A downstream guarantee by an Indian company for financing availed by an offshore subsidiary or step-down subsidiary is permitted subject to compliance with prescribed conditions under the framework in relation to overseas investment issued by the RBI (OI Guidelines)<\/li>\n<\/ul>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any other notable costs, consents or restrictions associated with providing security for, or guaranteeing, acquisition financing in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Please refer to our responses at #3 and #11 above and #17 below.<\/p>\n<p>For corporate guarantees, a goods and services tax at the rate of 1% of the guarantee amount (if no fee is charged) or on the actual fee (when one exists) is payable.<\/p>\n<p>Any entity which is an assessee under the (Indian) Tax Act, 1961 or is required to obtain registration under central or state GST laws is required to obtain the prior consent of the relevant assessing officer\/authority prior to creating a charge on any of its assets if there are any outstanding tax demands or proceedings.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is it possible for a company to give financial assistance (by entering into a guarantee, providing security in respect of acquisition debt or providing any other form of financial assistance) to another company within the group for the purpose of acquiring shares in (i) itself, (ii) a sister company and\/or (iii) a parent company? If there are restrictions on  granting financial assistance, please specify the extent to which such restrictions will affect the amount that can be guaranteed and\/or secured.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Under the CA 2013, a public company in India is prohibited from providing any financial assistance by way of loans, guarantees, security or other means for the purchase of its own shares or those of its holding company. This prohibition does not apply to a private company.<\/p>\n<p>Please refer to our response at #15 above; the same conditions apply to providing security as well.<\/p>\n<p>The FEMA also restricts Indian targets from granting security, guarantees or financial assistance for the acquisition of their own shares by offshore investors for loans received from foreign lenders.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">If there are any financial assistance issues in your jurisdiction, is there a procedure available that will have the effect of making the proposed financial assistance possible (and if so, please briefly describe the procedure and how long it will take)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The CA 2013 includes limited exemptions to the prohibition on financial assistance by a public company for the purchase of its own shares or those of its holding company.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">If there are financial assistance issues in your jurisdiction, is it possible to give guarantees and\/or security for debt that is not pure acquisition debt (e.g. refinancing debt) and if so it is necessary or strongly desirable that the different types of debt be clearly identifiable and\/or segregated (e.g. by tranching)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes, this is possible with clearly identified tranches and\/or segregation of the debt.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does your jurisdiction recognise the concept of a security trustee or security agent for the purposes of holding security, enforcing the rights of the lenders and applying the proceeds of enforcement? If not, is there any other way in which the lenders can claim and share security without each lender individually enforcing its rights (e.g. the concept of parallel debt)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The concept of a security trustee or security agent for the purposes of holding security, enforcing the rights of the lenders and applying the proceeds of enforcement is recognised in India.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does your jurisdiction have significant restrictions on the role of a security agent (e.g. if the security agent in respect of local security or assets is a foreign entity)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>No.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Please provide the main differences and considerations between bank loan financing and high yield bond\/note financing for acquisition purposes in your jurisdiction, and how do they affect the structuring and documentation of the transaction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>As mentioned in our response at #3 above, the utilisation of bank loan financing for acquisition purposes in India is restricted. Loans from \/ bonds issued to non-bank lenders are the main sources of acquisition financing.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Describe the loan transfer mechanisms that exist in your jurisdiction and how the benefit of the associated security package can be transferred.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In accordance with the RBI\u2019s Master Direction \u2013 Reserve Bank of India (Transfer of Loan Exposures) Directions (TLE Directions) and subject to contractual restrictions, loans granted by Indian banks and NBFCs can be transferred, in full or in part, with or without the underlying security. Loans can be transferred in writing by way of novation or assignment or loan participation.<\/p>\n<p>Under Indian law, transfer of ECB exposures along with the underlying security is also permitted, subject to the transfer being to \u201crecognised lenders\u201d and obtaining the consent of the AD Bank. The TLE Directions do not apply to foreign lenders and, therefore, will not apply to the transfer of ECBs.<\/p>\n<p>FPIs can transfer NCDs held by them to other FPIs as well as to Indian purchasers. In the event that the FPI has invested in NCDs under the Voluntary Redemption Route (VRR) and the NCDs are being sold to Indian purchasers, the amounts received by the FPI that correspond to 75% of the limits allocated under the VRR must remain in India.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the rules governing the priority of competing security interests in your jurisdiction? What methods of subordination are used in your jurisdiction and can the priority be contractually varied? Will contractual subordination provisions survive the insolvency of a borrower incorporated in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The priority of claims may be contractually agreed among creditors and the underlying security document should provide the ranking of the claim. The terms of such security documents which prescribe ranking of claims may be enforced as a contractual arrangement.<\/p>\n<p>Under the IBC, during the corporate insolvency resolution process (CIRP), the committee of creditors (COC) may take into account the priority and value of the security interest of a secured creditor. The priority of claims is left to the COC\u2019s commercial wisdom.<\/p>\n<p>In case of liquidation, the IBC prescribes a pre-defined waterfall which dictates the distribution of assets of the corporate debtor. Under this waterfall, while the secured creditors are given priority (subordinate only to insolvency resolution process\/liquidation costs and senior to all unsecured creditors), it does not discriminate among secured creditors. Further, the liquidator is required to disregard any contractual arrangements between creditors who are otherwise ranked equally under the waterfall, if such contractual arrangement disrupts the order of priority set out under the waterfall.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there a concept of \u201cequitable subordination\u201d in your jurisdiction whereby loans provided by a shareholder (as a creditor) to a company incorporated in your jurisdiction are subordinated by law upon insolvency of that company in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>No, shareholder loans are not automatically subordinated in India. However, if such loans are from a \u2018related party\u2019, as defined under the IBC, then such \u2018related party\u2019 does not have representation, participation or voting rights in the COC constituted upon admission of an insolvency application in respect of the company by the jurisdictional National Company Law Tribunal (NCLT) under the IBC. It is common to require shareholders \/ related parties to execute contractual arrangements subordinating such loans.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does your jurisdiction generally (i) recognise and enforce clauses regarding choice of a foreign law as the governing law of the contract, the submission to a foreign jurisdiction and a waiver of immunity and (ii) enforce foreign judgments?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p><strong>Choice of Foreign Law<\/strong><\/p>\n<p>A contract between an Indian and non-India is permitted to be governed by foreign law, provided that such selection is not made to circumvent the provisions of Indian law. The transaction would still need to comply with certain provisions of Indian law, such as foreign-exchange control regulations and the CA2013.<\/p>\n<p><strong>Submission to Foreign\u202fJurisdiction<\/strong><\/p>\n<p>Parties may submit to a foreign jurisdiction and the foreign court\u2019s judgement may be enforced in India. However, an Indian court may reject the enforcement of the foreign judgement if:<\/p>\n<ol>\n<li>it was not issued by the court of a competent jurisdiction;<\/li>\n<li>it was not issued on the merits of the case;<\/li>\n<li>it appears to have been founded on an incorrect view of international law or a refusal to recognise the laws of India in cases where the latter is applicable;<\/li>\n<li>the processes whereby it was obtained are opposed to natural justice;<\/li>\n<li>the judgement was obtained by fraudulent means; or<\/li>\n<li>it upholds a claim founded on a breach of any Indian law.<\/li>\n<\/ol>\n<p><strong>Waiver of Immunity<\/strong><\/p>\n<p>Immunity on the grounds of sovereignty or other similar grounds is often contractually waived. Such waivers are enforceable only if the relevant statute permits contractual waivers.<\/p>\n<p><strong>Enforcement of Foreign Judgments<\/strong><\/p>\n<p>A judgment by a superior foreign court in a territory recognised as \u201creciprocating territory\u201d is capable of being enforced in India, as if rendered by a relevant Indian court. However, a foreign decree for anything other than payment of money (not being a penalty or fine) is not enforceable as a decree in India. A fresh suit will need to be filed in India where such foreign decree will be considered as factual evidence. To enforce a judgment pronounced by courts of territories not notified as reciprocating territories, a suit can be filed in Indian courts based on the foreign decree or on the original underlying cause of action.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the requirements, procedures, methods and restrictions relating to the enforcement of collateral by secured lenders in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p><strong>Mortgage<\/strong><\/p>\n<p>Enforcement of mortgages must be decided by the civil court having ordinary original jurisdiction. Pursuant to an English mortgage, the mortgagee can attempt to sell the mortgaged property without court intervention if this has been contractually provided under the mortgage deed. SARFAESI allows secured lenders to enforce a mortgage without court intervention.<\/p>\n<p><strong>Hypothecation<\/strong><\/p>\n<p>SARFAESI allows secured lenders to enforce a hypothecation without court intervention. However, in practice, this may be difficult, given that possession of the hypothecated property remains with the security provider.<\/p>\n<p><strong>Pledge<\/strong><\/p>\n<p>Pledgee may enforce the pledge by selling the pledged shares after giving \u201creasonable notice\u201d, although what constitutes this would depend on the facts of each case. A pledge enforcement may be challenged based on the sale price. This can be mitigated by obtaining a valuation report from a reputable valuer.<\/p>\n<p><strong>Guarantee<\/strong><\/p>\n<p>The liability of the principal debtor and the guarantor is co-extensive. Accordingly, the creditor can initiate enforcement directly against the guarantor without any recourse to the principal debtor. Guarantee can be enforced by way of a suit in the court having jurisdiction or where the instrument provides for arbitration, by instituting arbitration proceedings.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the insolvency or other rescue\/reorganisation procedures in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p><strong>IBC <\/strong><\/p>\n<p>The IBC provides for the following procedures:<\/p>\n<p>i. Corporate Insolvency Resolution Process: A resolution professional (RP) is appointed by the NCLT, for the management of the borrower. The RP, in consultation with the COC, invites market participants to submit resolution plans for the purposes of restructuring and revival of the borrower. A resolution plan can propose various measures including, but not limited to, a change in capital structure by way of merger\/amalgamation\/demerger, debt restructuring, one-time settlement and transfer or sale of assets.<\/p>\n<p>ii. Liquidation: A liquidator is appointed by the NCLT for the purpose of selling the assets of the company by way of a public auction or private sale.<\/p>\n<p><strong>CA 2013<\/strong><\/p>\n<p>The CA 2013 provides for the following procedures:<\/p>\n<p>i. Voluntary Schemes of Arrangement and Compromise: A reorganisation\/restructuring can be carried out through a contractual arrangement between the company, its shareholders and its creditors. The scheme must be approved by 75% of the creditors and shareholders, following which it can be sanctioned by the NCLT.<\/p>\n<p>ii. Voluntary or Compulsory Winding up: Voluntary winding up can be initiated by passing a resolution in the general meeting of a company, and compulsory winding up can be initiated by filing a petition in court, usually by a creditor, the company itself, or the ROC.<\/p>\n<p><strong>Stressed Assets Framework<\/strong><\/p>\n<p>The Prudential Framework for Resolution of Stressed Assets by the RBI applies to financial restructuring of distressed debtors. The framework envisages determination of a resolution strategy and the implementation of a resolution plan which may involve sale of exposure, change in ownership or restructuring and provide for treatment of creditors with differential security interest and a liquidation value to be paid to dissenting creditors.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does entry into any insolvency or other process in your jurisdiction prevent or delay secured lenders from accelerating their loans or enforcing their security in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p><span class=\"TextRun SCXW238870713 BCX8\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"none\"><span class=\"NormalTextRun SCXW238870713 BCX8\">IBC imposes a moratorium upon commencement of the CIRP. During this moratorium, the lender loses the ability to enforce its own security outside of the CIRP under IBC and is required by law to be a part of the CIRP.<\/span><\/span><span class=\"EOP SCXW238870713 BCX8\" data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559685&quot;:720,&quot;335559740&quot;:276}\">\u00a0<\/span><\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">In what order are creditors paid on an insolvency in your jurisdiction and are there any creditors that will take priority to secured creditors?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Under the CIRP, the priority of claims is left to the commercial wisdom of the COC. In case of liquidation, the IBC sets out a predefined waterfall, per which only payment of insolvency resolution process\/liquidation costs take priority to secured creditors.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any hardening periods or transactions voidable upon insolvency in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p><strong>IBC<\/strong><\/p>\n<p>The NCLT can set aside the following transactions:<\/p>\n<p>i. Preferential transactions: Transactions not in the ordinary course of business that put any person in a better position than they would have been in the distribution waterfall, where entered into within 2 years (if involving related parties) or 1 year (if involving non-related parties) preceding the CIRP commencement date.<\/p>\n<p>ii. Undervalued transactions: Transactions not in the ordinary course of business where the company has gifted\/transferred property at a value that is significantly less than the consideration paid by the company, where entered into within 2 years (if involving related parties) or 1 year (if involving non-related parties) preceding the CIRP commencement date.<\/p>\n<p>iii. Extortionate credit transactions: Transactions where credit has been extended on extortionate terms, where entered into within 2 years preceding the CIRP commencement date.<\/p>\n<p>iv. Transactions defrauding creditors: Transactions where the company deliberately enters into undervalued transactions to keep the assets beyond the reach of creditors or to adversely affect their interests.<\/p>\n<p><strong>CA 2013<\/strong><\/p>\n<p>The court can set aside the following transactions:<\/p>\n<p><strong>Fraudulent preference:<\/strong> Transactions between the company and a creditor in preference to other creditors within 6 months prior to the filing of a winding-up petition.<\/p>\n<p><strong>Voluntary transfer:<\/strong> Transfer of property not in the ordinary course of business, in good faith or for real and valuable consideration, where transferred within 1 year prior to the filing of a winding-up petition.<\/p>\n<p><strong>Floating charge:<\/strong> Floating charge on the undertaking or property of a company created within 12 months before commencement of winding up unless the company was solvent immediately after creation of the charge.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any other notable risks or concerns for secured lenders in enforcing their rights under a loan or collateral agreement (whether in an insolvency or restructuring context or otherwise)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>See our response at 29 above. Additionally, in the event of the liquidation of a company, lenders could face substantial financial losses.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Please detail any taxes, duties, charges or related considerations which are relevant for lenders making loans to (or taking security and guarantees from) entities in your jurisdiction in the context of acquisition finance, including if any withholding tax is applicable on payments (interest and fees) to lenders and at what rate.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p><strong>Stamp Duty<\/strong><\/p>\n<p>All financing documents are subject to the payment of stamp duty, which differs based on the Indian state where such financing document is executed. Additionally, if the financing is by way of bonds, stamp duty is also payable on the bonds under the Indian stamp law.<\/p>\n<p>Documents executed outside India are not required to be stamped. However, if such a document is subsequently brought into India, stamp duty will be payable depending on the state in which the document is received. Additionally, if a document is stamped in one Indian state and the original or a copy (including electronic copies) is brought into another in which stamp duty is higher, the differential stamp duty is payable.<\/p>\n<p><strong>Withholding Tax<\/strong><\/p>\n<p>Subject to tax treaties, interest (but not principal) payable to a foreign lender by any Indian borrower is subject to tax at the hands of the foreign lender. The Indian borrower is under a legal obligation to withhold tax as per applicable rates while making interest payments and filing necessary withholding tax returns with the Indian income tax authority. The current applicable rate of withholding tax on interest is 20%, subject to any tax treaty benefits with the country of residence of the foreign lender.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any other tax issues that foreign lenders should be aware of when lending into your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Refer to our response at #33 above.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What is the regulatory framework by which an acquisition of a public company in your jurisdiction is effected?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The main regulatory framework for acquisition of public companies in India is the SEBI (Substantial Acquisitions and Takeovers) Regulations, 2011 (Takeover Code). Other legislation that are relevant to public takeovers in India include:<\/p>\n<ol>\n<li>CA 2013;<\/li>\n<li>Indian Contract Act, 1872;<\/li>\n<li>Income Tax Act, 1961; and<\/li>\n<li>Competition Act, 2002.<\/li>\n<\/ol>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the key milestones in the timetable (e.g. announcement, posting of documentation, meetings, court hearings, effective dates, provision of consideration, withdrawal conditions)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>An indicative timetable under the Takeover Code would be as follows:<\/p>\n<table>\n<tbody>\n<tr>\n<td>Action<\/td>\n<td>Timeline (days are working days)<\/td>\n<\/tr>\n<tr>\n<td>The acquirer shall appoint a merchant banker prior to making of the public announcement<\/td>\n<td>Prior to T<\/td>\n<\/tr>\n<tr>\n<td>Public announcement by the acquirer for acquiring shares of the target company on the date of agreeing to acquire shares or voting rights in, or control over the target or within such other timelines specified under the Takeover Code. A copy of the public announcement shall be shared with the SEBI, the stock exchange and the target.<\/td>\n<td>T<\/td>\n<\/tr>\n<tr>\n<td>Last date by which the acquirer shall open the escrow account and deposit the consideration payable in the same.<\/td>\n<td>T+3<\/td>\n<\/tr>\n<tr>\n<td>Latest date by which the acquirer shall publish a detailed public statement in the newspapers.<\/p>\n<p>A copy of the same shall be shared with the SEBI, the stock exchange and the target<\/td>\n<td>T+5<\/td>\n<\/tr>\n<tr>\n<td>Last date by which the acquirer shall file a draft letter of offer with the SEBI. The acquirer shall also send a copy of the draft offer of letter to the stock exchange and the target.<\/td>\n<td>T+10<\/td>\n<\/tr>\n<tr>\n<td>Last date by which the SEBI can provide its comments to the draft letter of offer<\/td>\n<td>T+25<\/td>\n<\/tr>\n<tr>\n<td>Latest date by when the letter of offer shall be dispatched to the shareholders of the target.<\/td>\n<td>T+32<\/td>\n<\/tr>\n<tr>\n<td>Last date by when advertisement announcing the schedule of activities for the open offer shall be made.<\/td>\n<td>T+36<\/td>\n<\/tr>\n<tr>\n<td>Last date by which the tendering period (i.e., period within which the shareholders may tender their shares in acceptance of the open offer) shall start<\/td>\n<td>T+37<\/td>\n<\/tr>\n<tr>\n<td>Last date by when the tendering period will close and the acquirer is required to complete all requirements under the Takeover Code, including payment of consideration to the shareholders who have accepted the open offer.<\/td>\n<td>T+47<\/td>\n<\/tr>\n<tr>\n<td>Last date by when the merchant banker shall file a report with the SEBI confirming completion of various open offer requirements.<\/td>\n<td>T+52<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>An open offer, once made, can only be withdrawn in the following circumstances: (a) if the statutory approvals required for completing the open offer or the underlying transaction are refused; (b) if the acquirer, being a natural person, has died; (c) if the pre-conditions of the underlying transaction have not been met for reasons outside the control of the acquirer; or (d) if the withdrawal of the open offer is permitted by SEBI.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What is the technical minimum acceptance condition required by the regulatory framework? Is there a squeeze out procedure for minority hold outs?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Under the Takeover Code, the acquirer is required to make an open offer for at least 26% of the target company.<\/p>\n<p>The most commonly used squeeze-out method in India is the reduction of share capital. This involves a repurchase by the company of shares held by certain shareholders and a consequent cancellation of those shares. Such a scheme of reduction requires approval from the NCLT and at least 75% of the shareholders of the company.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">At what level of acceptance can the bidder (i) pass special resolutions, (ii) de-list the target, (iii) effect any squeeze out, and (iv) cause target to grant upstream guarantees and security in respect of the acquisition financing?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>While Indian companies are permitted to include higher thresholds of acceptable in their constitutional documents for all or certain matters, in general the level of acceptance to undertake the following actions are:<\/p>\n<p>Special resolutions: A shareholder holding 75% or more of the shares of the target can pass special resolutions.<\/p>\n<p>De-listing the target: SEBI prescribes the process for de-listing of equity shares, which requires, amongst other things, the approval of shareholders holding at least 75% or more of the shares of the target.<\/p>\n<p>Effecting squeeze out: Refer to our response at #37 above.<\/p>\n<p>Upstreaming guarantees and security: Subject to restrictions mentioned at our response at #3 above, once a company is de-listed and converted from a public company to a private company with the approval of shareholders holding at least 75% or more of the shares of the target, it may grant upstream guarantees and security without being subject to financial assistance restrictions.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there a requirement for a cash confirmation and how is this provided, by who, and when?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The acquirer is required to open an escrow account and deposit an amount equal to 25% of the consideration for the first INR 500 crore and an additional 10% of the balance consideration. Deposits can be in the form of cash, bank guarantees or frequently traded securities.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What conditions to completion are permitted?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The acquirer may specify that the open offer has been made subject to certain conditions, with the most common condition being a minimum level of acceptance. The acquirer shall disclose all such conditions in the detailed public statement and letter of offer.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\r\n<div class=\"word-count-hidden\" style=\"display:none;\">Estimated word count: <span class=\"word-count\">7602<\/span><\/div>\r\n\r\n\t\t\t<\/ol>\r\n\r\n<script type=\"text\/javascript\" src=\"\/wp-content\/themes\/twentyseventeen\/src\/jquery\/components\/filter-guides.js\" async><\/script><\/div>"}},"_links":{"self":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide\/122286","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide"}],"about":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/types\/comparative_guide"}],"wp:attachment":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/media?parent=122286"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}