The enforcement of the relevant provisions pertaining to Cross Border Mergers contained in the Companies Act, 2013 by the Ministry of Corporate Affairs with corresponding provisions in Companies (Compromises, Arrangements and Amalgamation) Rules, 2016, including insertion of the Rule 25A and introduction of draft Foreign Exchange Management (Cross Border Merger) Regulations, 2017 has ushered in infinite opportunities of partnerships in the form of mergers, consolidations, acquisitions etc.

What makes this event an epochal one is that the notified provisions and the draft regulations not only provide for inbound cross border mergers, but also outbound cross border mergers unlike the erstwhile Companies Act.

As per the notified provisions prior approval of the Reserve Bank of India is the requisite to go ahead with such mergers. And the draft Regulations issued by the RBI provide that cross-border merger shall be deemed to be approved by the RBI if it is accordance with the draft Regulations. Hence once the regulations are notified there will be reduction in the procedural hassles attached to the cross border mergers.

WHAT IS THE GENERAL ELIGIBILITY OF COMPANIES TO ENTER CROSS-BORDER MERGER ARRANGEMENT?

Ans: Section 234 of the Companies Act, 2013 provides for scheme of mergers and Amalgamations between Companies registered under the said Act and Foreign Companies. However, in case of Outbound mergers only Companies which are incorporated in the Jurisdictions of such Countries which are notified by the Central Government are eligible.

ARE ANY SUCH JURISDICTIONS NOTIFIED BY THE CENTRAL GOVERNMENT?

Ans: Yes, pursuant to the insertion of Rule 25A in Companies (Compromises, Arrangements and Amalgamation) Rules, 2016 vide amendment notification dated 13.04.2017 an Indian company can merge with foreign companies located in the following specific jurisdictions only:

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