The challenge entailed a United Kingdom-based multinational company (MNC) that maintains a global presence, including an Offshore Development Centre in India. This MNC is under the ownership and management of a Private Equity Fund (referred to as the ‘PE Fund’). The management of the PE Fund strategically decided to divest one of the MNC’s business verticals. However, this business vertical served as the legal shareholder (referred to as the ‘Immediate Holding Company’) of the India offshore development centre, and the management sought to retain ownership of the centre. It is important to note that, in accordance with India’s regulations, the India offshore development centre is legally established as a private corporation.
Several key challenges were addressed in this situation:
Group Structure: The India entity needed to be divested from the Immediate Holding Company and transferred to another legal entity part of the MNC at the UK level.
Rules and Regulations: Various obstacles such as India Exchange Control, Tax Efficiency, and other regulatory challenges had to be effectively managed.
Accommodating Buyer’s last-minute Request: The Buyer, who already operates an India offshore development Centre, expressed interest in acquiring the divested business vertical and requested the transfer of a select number of employees at India level as part of the transaction. The primary challenge here was to ensure a seamless transition for the employees, preserving their work experience and accrued employment benefits within the new organization (referred to as the ‘Transferee entity’).
Timelines: The transaction had to be completed within a strict timeline of 30 working days, ensuring compliance with tax and regulatory requirements both India as well as UK.
