New Delhi, Sept. 10 -- The Corporate Laws (Amendment) Bill 2026 seeks to enhance the ease of doing business in India by amending the Companies Act 2013 and the Limited Liability Partnerships Act 2008. In the process of reviewing the Bill, the Joint Parliamentary Committee proposed additional measures to advance these objectives.
One such proposal is to allow foreign-registered companies to transfer their corporate registration to the International Financial Services Centre (IFSC). This would provide a less costly and cumbersome route for re-domiciling foreign companies, as compared to conventional reverse flip mechanisms, including inbound mergers, share swaps and transfers of shares or assets to an Indian entity.
The committee's proposal is a welcome step. However, limiting the framework to the IFSC leaves its broader potential unrealised. Extending the proposed framework for transfer of registration throughout India would give the process of re-domiciling a significant boost by reducing the costs associated with such transactions.
Understanding the transfer process
Transfer of registration allows a company incorporated in one jurisdiction to transfer its corporate domicile to another. The company ceases to be a resident of its home state and becomes a juristic person under the laws of the new jurisdiction. Such a transfer requires that the laws of the company's original jurisdiction permit its de-registration and transfer to another jurisdiction.
A fundamental advantage of transfer of registration is the continuity of the company's corporate existence and identity. Accordingly, re-domiciliation does not affect its contractual relationships, brand continuity, property rights or status of litigations.
In jurisdictions such as Hong Kong and Singapore, the transfer process requires the company to satisfy the requirements of the new jurisdiction. These typically include a declaration by the directors confirming their eligibility under the applicable company law. Further, the company is required to register all its outstanding charges in the new jurisdiction and furnish a certificate of de-registration from its former home jurisdiction to prevent fraudulent transfers.
Rationale for permitting transfer of companies to India
The case for extending transfer of registration throughout India rests on two considerations.
First, conventional reverse-flip mechanisms can be costly and procedurally cumbersome.
Second, recent developments in Indian tax jurisprudence place greater emphasis on substance over form when determining tax liability. This may require companies to reassess their existing structures and, in some cases, undertake internal restructuring, including shifting their bases to India. A simplified mechanism for such re-domiciliation would facilitate these transitions.
Reverse-flip concerns
For a foreign entity, a merger, share swap, transfer of shares or assets, or incorporation of a new entity in India can involve significant time, cost and regulatory complexity. Although the fast-track merger process has substantially reduced the time involved, the costs are still significant. Schemes of merger are stamped under state laws as conveyances, attracting the highest stamp duty. Moreover, the exemption from capital gains tax is available only to mergers which meet the thresholds under the Income Tax Act 2025.
Recent changes to the Foreign Exchange Management (Non-Debt Instruments) Rules 2019 have liberalised the framework for cross-border share swaps. However, such swaps remain costly because they are permitted only through schemes of merger, demerger or amalgamation. The stamp duty and capital gains tax considerations described above, therefore, continue to apply.
Cross-border transfers of assets and shares are also subject to valuation requirements under Indian foreign exchange laws. This valuation is used to calculate the capital gains tax liability and stamp duty payable, each of which can be substantial.
Changing tax jurisprudence
Recent developments in Indian tax jurisprudence indicate a shift towards determining tax liability based increasingly on substance rather than form. Consequently, tax planning will require companies to reassess their corporate structures and undertake internal reorganisations, including re-domiciliation to India.
Although the conventional reverse-flip mechanisms will remain available, the cost concerns discussed above may deter companies from pursuing re-domiciliation. In situations where these costs outweigh the commercial benefits of maintaining an Indian base, investors may instead consider establishing or retaining their structures in more tax-favorable jurisdictions.
The way ahead
Following the committee's report, the legislature will evaluate the proposals and may amend the Bill before it is presented to parliament. We recommend that the legislature adopt the proposed framework for transfer of registration and extend it throughout India. Doing so would promote reverse flips by enabling companies to shift their base to India at lower cost and through a simpler process.
Sanchit Agarwal is Partner and Divyanshu Sharma is Associate at law firm Khaitan & Co. Views are personal.
Published by HT Digital Content Services with permission from VC Circle.