Dream Sports executes reverse flipback, becomes India-domiciled company without NCLT approval

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Dream Sports, the parent company of Dream11, has successfully shifted its domicile from Delaware, US, to India through a reverse merger. The move, recently concluded, makes it one of the first firms to leverage the fast-track mechanism for cross-border merger. 

According to a report by The Economic Times, Dream Sports Inc has merged with its Mumbai-based subsidiary, Sporta Technologies. A company spokesperson confirmed, “Dream Sports is leveraging tech to unlock the massive potential of India’s sports ecosystem. We have completed ghar waapsi and are now an India-domiciled business.”

The reverse merger was carried out under the fast-track cross-border merger route, introduced by the Indian government in September 2024. This provision allows a foreign holding company to merge with its Indian subsidiary without requiring National Company Law Tribunal (NCLT) approval. Instead, companies only need clearance from the regional director of the Ministry of Corporate Affairs, significantly reducing the time for completion.

In a filing with the ministry, Dream11, backed by Tiger Global, stated that the reverse flip was aimed at “achieving cost savings from more focused operational efforts, leading to consolidation of the group and elimination of inter-company transactions.” The company has also secured approval from the Reserve Bank of India (RBI) for the transition.

The online gaming industry has been grappling with high Goods and Services Tax (GST) demands, which have exceeded ₹1.1 lakh crore, including retrospective taxes. Several gaming companies have challenged these notices in the Supreme Court, which has currently stayed the demands as an interim measure.

The new GST regime, implemented in 2023, shifted the tax levy from the platform fee to the contest entry amount. As a result, online gaming firms, including Dream Sports, have reported a significant impact on their profitability. Dream Sports, facing a GST demand of over ₹28,000 crore, recorded a 32% increase in net profit and a 66% jump in operating revenue for FY23. However, the financial impact for FY24 remains undisclosed. Insiders suggest that Dream Sports’ profit base could shrink by over 60% as it has not passed the tax burden onto users.

Auditor SR Batliboi & Co highlighted concerns in the company’s FY23 financial statements, stating that pending tax liabilities “may cast significant doubt on (the) group’s ability to continue as a going concern.”

Following the GST changes, Dream Sports began restructuring its operations, shutting down its corporate investment arm, Dream Capital, which had been allocated a $250 million corpus. The company is now focusing on consolidating its core business and broadening its revenue streams.

In a November 2023 interview, Dream Sports cofounder and CEO Harsh Jain said the company plans to expand its presence in sports commerce, content, experiences, fitness, and healthtech. The firm is also strengthening its in-house corporate development team to support startups at later growth stages rather than early-stage investments.

Dream Sports joins a growing list of startups shifting their domicile back to India. Major firms like PhonePe, Groww, Kreditbee, and Zepto have already completed similar transitions, while Razorpay, Meesho, and Pine Labs are in the process. Companies such as Khatabook, Eruditus, and Udaan are also exploring this move.

Flipkart has secured internal approvals to shift its domicile from Singapore to India ahead of a potential public listing. While many firms are making this move to tap into India’s capital markets, Dream Sports reportedly has no immediate plans for an IPO.

Corporate law expert Jay Parikh, partner at Cyril Amarchand Mangaldas, noted that “Despite the possibility of high tax incidence, many startups are looking to reverse flip due to favorable stock markets, economic outlook, and general investor confidence in the Indian startup ecosystem.” He also emphasized that bypassing the time-consuming NCLT process makes the transition more appealing.

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