Foreign and Indian Entities can merge with prior approval from RBI

MCA on April 14, 2017 has notified Section 234 of Companies Act, 2013 and issued rules thereunder, thus paving way for merger and amalgamation of a foreign entity with an Indian entity and vice-versa.

What is the new Rule 25A about?

  1. Mandatory Prior Approval from RBI for a foreign company incorporated outside India, to merge with an Indian entity. Provisions of Section 230-232 and rules thereunder shall also have to be complied with.
  2. An Indian company may merge with a foreign company incorporated under specified under certain jurisdictions (or to say friendly countries in terms of law and order); and after obtaining prior approval of RBI and compliance with provisions of Section 230-232 of Companies Act, 2013.
  3. Thereafter, an application needs to be made to NCLT accordingly for merger of the respective entities.

(The above article has been compiled by CS Reema Jain)