Startup Re-Domiciliation: Understanding The Reverse Flipping Phenomenon
- IJLLR Journal
- May 28
- 2 min read
Sakshi Shetty, B.L.S. LL.B., Government Law College, Mumbai
ABSTRACT
The Indian startup ecosystem has seen an emergence in innovative start-ups. History shows how years ago India saw a rise in companies flipping abroad while substantially carrying out business activities in the Indian jurisdiction, raising serious concerns over India’s ease of doing business. However, the recent success stories of PhonePe and Zepto in redomiciling to India and several other prominent companies being in talks to follow this trend, throws light over the increasing phenomenon of re-domiciliation. This shift from global to local calls for an analysis of the rationale behind this emerging trend of reverse flipping in India. The author has approached this phenomenon in five ways. Firstly, this article touches upon the basic understanding of ‘flipping’ and what made companies flip and then delves into the concept of ‘reverse flipping’ and the factors that influence the Indian start-ups to reverse flip. Secondly, it explains through illustrations the various modes of corporate restructuring which the companies primarily adopt to bring re- domiciliation into effect. Thirdly it provides a macroscopic view of the legal framework surrounding it by covering the regulatory, foreign exchange, tax and other relevant compliances keeping in mind the latest amendments and relaxations. Fourthly, the author aims to recognize the emergence of GIFT City and explore the various advantages that positions GIFT City as a preferred destination for re-domiciliation. To understand this phenomenon from a practical viewpoint, the author believes the need to study the several instances of reverse flipping in the Indian market across sectors and the modes of restructuring adopted by them to better understand the emerging trend. Lastly, to conclude, the author assesses whether this move of reverse flipping is a strategic shift for a long-term growth or merely a temporary trend and comments on the way forward.
