The Reserve Bank today has placed on its website the draft guidelines proposed to be issued on cross border merger transactions pursuant to the Rules notified by Ministry of Corporate Affairs through Companies (Compromises, Arrangements and Amalgamation) Amendment Rules, 2017 on April 13, 2017.

Section 234 of the Companies Act, 2013 provides for mergers and amalgamations between Indian companies and foreign companies. Accordingly, Ministry of Corporate Affairs has issued Companies (Compromises, Arrangements and Amalgamation) Amendment Rules, 2017 on April 13, 2017 to operationalize this section.

The Reserve Bank of India has proposed these Regulations under the Foreign Exchange Management Act, 1999 (FEMA) in order to address the issues that may arise when an Indian company and a foreign company enter into Scheme of merger, demerger, amalgamation, or rearrangement. These Regulations stipulate conditions that should be adhered to by the companies involved in the Scheme. The Regulations shall be named Foreign Exchange Management (Cross Border Merger) Regulations.

Members of public, including the stakeholders and experts in the area, are requested to offer their views and comments on the proposed Regulations. The comments may be sent latest by May 9, 2017 to email with the subject “Cross Border Mergers – Comments/Suggestions”.

Ajit Prasad

Assistant Adviser

 

 

Cross-border merger regulations: RBI invites public comments on proposed FEMA framework governing mergers between Indian and foreign companies RBI proposes draft Foreign Exchange Management (Cross Border Merger) Regulations under FEMA to govern cross-border merger, demerger, amalgamation or rearrangement transactions involving Indian and foreign companies, stipulating conditions and compliance requirements aligned with recently issued amendment rules operationalising international mergers. The Reserve Bank has published the draft for public consultation and invited stakeholders and experts to submit comments by the specified deadline via email.