Companies may soon get to retain legal identity in flipbacks

New Delhi: A parliamentary panel has proposed creating a statutory framework for "inward re-domiciliation," or reverse flip, which would allow companies incorporated overseas to migrate to India while retaining their legal identity, potentially removing one of the biggest legal hurdles for Indian-origin firms seeking to relocate home, said people familiar with the development.

The joint parliamentary committee examining the Corporate Laws (Amendment) Bill is expected to recommend the new framework in its report to be tabled on Monday. The panel is also set to propose sweeping changes to align corporate law with the Digital Personal Data Protection Act and overhaul several aspects of company law architecture, the people cited told ET.

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At present, Indian-origin companies with overseas holding structures need to undertake complex restructuring including liquidation of foreign entities, transfer of assets and liabilities, and multiple regulatory approvals to shift domicile back to India.

While the government eased the process in 2024 by removing the requirement of prior National Company Law Tribunal (NCLT) approval for startups undertaking reverse flips, there is still no legal mechanism allowing a foreign-incorporated company to migrate to India while preserving its legal identity.

Besides, there are multiple other issues, including related to taxation, that have been flagged by the industry.

Statutory pathway

While the government eased the process in 2024 by removing the requirement of prior National Company Law Tribunal (NCLT) approval for startups undertaking reverse flips, there is still no legal mechanism allowing a foreign-incorporated company to migrate to India while preserving its legal identity.

Besides, there are multiple other issues, including related to taxation, that have been flagged by the industry.

The committee, chaired by Lok Sabha member Sudhir Gupta, has recommended inserting a new chapter in the Companies Act to create a statutory pathway for eligible foreign-incorporated companies to shift their domicile to India’s International Financial Services Centre without winding up the existing entity, said one of the persons, who did not wish to be identified.

The panel has also recommended consequential amendments across related laws to provide clarity on taxation, continuity of legal proceedings, preservation of contracts and migration of regulatory licences, said another person familiar with the deliberations.

According to the person, the proposed framework draws on re-domiciliation regimes in Singapore, the United Arab Emirates, Mauritius, Canada and Hong Kong.

“The panel held 25 sittings, consulted 83 stakeholders and examined 130 memoranda. In a short span, we have completed an extensive examination of the bill with the support of all members,” Gupta told ET, declining to divulge details of the report.

The report will be tabled by him and member Supriya Sule in the Lok Sabha and members Vinod Tawde and Sujeet Kumar in the Rajya Sabha.

Several Indian startups, including PhonePe and Flipkart, have undertaken reverse flips from Singapore through existing legal routes.

A formal re-domiciliation regime could widen the universe of companies returning to India, particularly those operating in sectors such as aircraft leasing, ship leasing, treasury operations and international trading, said experts.

Beyond inward re-domiciliation, the committee has identified several emerging areas where India’s corporate law lacks dedicated provisions and has recommended a broader legislative overhaul to future-proof the framework.

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Its recommendations cover modernisation of the legal framework for pooled investment vehicles, harmonisation of corporate procedures with the Digital Personal Data Protection Act, reforms to the alternative investment fund ecosystem, strengthening corporate social responsibility implementation, rationalisation of the National Financial Reporting Authority framework, improvements to statutory audit provisions and measures to expedite company law cases before the NCLT.

The committee has proposed 14 new clauses in addition to the new chapter on inward re-domiciliation. Taken together, the recommendations are understood to affect nearly 50 provisions, more than 40% of the legislative framework under review.

The Corporate Laws (Amendment) Bill, 2026 was introduced in the Lok Sabha on March 23 and referred to a joint parliamentary committee after both Houses approved the proposal. The committee was constituted on May 19.