Cross-Border Mergers Permitted in India

With protectionist winds holding sway in the developed economies, India seems to be bucking the trend with the notification of Section 234 of the Companies Act, 2013 ("Co Act") on 13^th April 2017 allowing outbound mergers subject to specific conditions. While the erstwhile Companies Act, 1956 provided only for inbound mergers, i.e. merger of a foreign company with an Indian company, this provision gives the green signal for cross-border mergers, both inbound and outbound.

It is now possible for an Indian company to merge with a foreign company and vice versa, subject to the following:

• All such schemes of mergers and amalgamations between a foreign company and an Indian company will be subject to the prior approval of India's central bank, the Reserve Bank of India ("RBI").