Flipkart has received the permission of the National Company Law Tribunal (NCLT) to change the domicile of its holding company in Singapore to India. On 12th December, the NCLT accepted the proposed scheme of Merger by Amalgamation of the company. The court failed to find any objections after considering the approvals of shareholders and creditors of the involved parties.
The decision will allow Flipkart to make a move towards corporate restructuring, which will entail the merging of some of its subsidiaries into its Indian company, Flipkart Internet Private Limited. The change is supposed to streamline the ownership structure of the company and align the legal foundation of the company closer to the primary market, India.
The shift follows the preparations of a potential domestic initial public offering (IPO) at Flipkart. Although the company has not confirmed the time, it has said that it plans to streamline its operations before a public listing.
As per the approved scheme, some group companies will be integrated into Flipkart Internet. The list contains Flipkart Health, Flipkart Marketplace, Myntra Holdings, Flippay, Quickroutes International, and other related businesses. These mergers will be conducted in stages, and they are still subject to further legal approvals in Singapore.
After the first step, Flipkart Private Limited will also merge with Flipkart Internet. This will be a multi-stage procedure that is expected to streamline the operations of Flipkart in India to one local company. According to comments made by the representatives of the company, this structure would provide more regulatory transparency and efficiency.
The reverse flip strategy entails the transfer of the ownership of the parent company in the overseas country to a company registered in India. Flipkart will most likely be in a position to submit its draft red herring prospectus (DRHP) to Indian regulators once the process is complete.
Industry observers see this move as one of the significant milestones Flipkart is taking in its preparation for its planned IPO. As most of its revenue is based on domestic operations, the change in legal domicile makes the structure consistent with the core market of the company.
Even though Flipkart has not announced an IPO timeline, the company is expected to undertake more steps in regulations in the next few months. The move by the NCLT to get the nod to list on the Indian stock exchanges is a step towards its listing, which may occur in the next financial year.