Doing The Delaware Flip

Introduction

Increased globalisation and rapid moving operations have resulted in corporations leaving no stone unturned in attempting to match the demands of the global scenario. More specifically, the venture capital market has been encouraging Indian companies, start-ups to be precise, to align themselves with the world economy.

Even though India has been on the rise with major development in the terms of funding by venture capitals for start-ups, the United States of America ("USA") still remains unbeatable. This gap between USA and India is what has led Indian start-ups to utilise the phenomenon of a 'flip'. In a flip transaction, a company incorporated in India subsequently incorporates a new company in a foreign jurisdiction, with the intention to turn the newly incorporated foreign company into the holding company of the Indian company, which would then become the subsidiary company of an international holding. Such a transaction is popularly termed as