NBFC certificate by CA

The request for an "NBFC certificate by a CA" in the context of an amalgamation usually refers to a Certificate of Net Owned Funds (NOF) or a Statutory Auditor's Certificate confirming compliance with specific regulatory requirements during the merger process.

Significance of the Certificate

When amalgamating companies (especially if they are NBFCs or involve an NBFC), regulators like the Reserve Bank of India (RBI) and the National Company Law Tribunal (NCLT) require independent verification of the financial health and regulatory compliance of the entities. A Chartered Accountant (CA) certificate serves as:

• Proof of Compliance: It confirms that the entities have maintained their Net Owned Funds (NOF) at the required levels as per RBI norms.

• Accounting Accuracy: It verifies that the accounting treatment proposed in the Scheme of Amalgamation is in conformity with the Accounting Standards prescribed under the Companies Act, 2013.

• Regulatory Requirement: You cannot approach the NCLT for an amalgamation scheme involving an NBFC without first obtaining prior written approval/No Objection Certificate (NOC) from the RBI. This application to the RBI requires audited financial statements and often specific certificates from the statutory auditors.

Typical Components of Such a Certificate

While there is no single "standard" draft, a CA certificate in this context typically includes:

1. Confirmation of NOF: A calculation and certification of the Net Owned Fund of the transferee (main) company post-amalgamation.

2. Accounting Treatment: A statement confirming that the scheme of amalgamation follows the prescribed Accounting Standards (e.g., AS-14 or relevant Ind-AS).

3. Regulatory Status: Certification regarding the entity's current status (e.g., whether it is a registered NBFC, its category, and its compliance with the Principal Business Criteria).

4. Credential Verification: Confirmation of the financial figures and creditor/shareholder status as presented in the merger scheme.

Essential Steps for Your Group

1. Prior RBI Approval: Under the Reserve Bank of India (Non-Banking Financial Companies – Voluntary Amalgamation) Directions, 2025, you must obtain an NOC from the RBI before filing the scheme with the NCLT.

2. Statutory Auditor's Report: Engage your statutory auditors early. They will need to issue certificates confirming the financial viability of the scheme and the post-merger compliance.

3. Documentation: Prepare a folder with the last three years of audited financial statements, a clear business plan for the merged entity, and a detailed schedule of assets/liabilities.

Summary: In the context of an NBFC amalgamation, a CA certificate is mandatory to prove to the RBI and NCLT that the post-merger entity will maintain regulatory standards, specifically regarding Net Owned Funds (NOF) and adherence to accounting standards. You must obtain an RBI "No Objection Certificate" (NOC) before proceeding to the NCLT, and your statutory auditor will play a key role in certifying the financial accuracy of your merger scheme.