An NCLT scheme transfers the transferor company’s business, including its import and export licences, to the transferee company. The transfer of the licences is not automatic, and the transferee company must apply to the Directorate General of Foreign Trade (“DGFT”) for the transfer or for a fresh licence, depending on the nature of the authorisation.
The DGFT Regime
The Foreign Trade Policy (“FTP”) governs the import and export authorisations. Some authorisations are freely transferable, while others are non-transferable or require the DGFT’s approval for the transfer. The FTP requires a company that is under NCLT proceedings to submit a summary of its outstanding export obligations and liabilities to the DGFT. The DGFT may insist on the discharge of the export obligations before it permits the transfer.
The Transfer vs. Fresh Application
The transferee company should determine whether the licence is transferable. A transferable authorisation can be transferred with the DGFT’s endorsement, while a non-transferable authorisation requires a fresh application. The scheme should identify the material licences and the transferability conditions.
The Practical Steps
The transferee company should conduct a licence audit, notify the DGFT of the scheme, and apply for the transfer or the fresh licence. The scheme should include a condition that the transfer of the licences is subject to the DGFT’s approval, and the effective date should be aligned with the receipt of the approvals.
A technically sound scheme addresses the DGFT approvals as a separate workstream, with a clear timeline and a contingency plan.
Call to Action
Anuj Desai & Associates advises companies on the DGFT aspects of an NCLT scheme—from the licence audit and the transferability analysis to the DGFT applications and the scheme conditions. If your scheme involves import or export licences, we can help you manage the approvals.
📧 office@anujdesaiassociates.com
📞 9619456656
🌐 https://anujdesaiassociates.com
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