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ARTICLE · 10 SEPTEMBER 2024

Cross-Border Share Swaps: Amendments To Regulatory Framework

S&R Associates
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In a share swap transaction, consideration is discharged through the issuance or transfer of securities by the acquiring company, rather than cash. This approach alleviates liquidity constraints and may enable.

IndiaCorporate/Commercial Law
Rajat Sethi
Rajat Sethi
Sumit Bansal
Sumit Bansal
Shivani Chhabra
Shivani Chhabra

In a share swap transaction, consideration is discharged through the issuance or transfer of securities by the acquiring company, rather than cash. This approach alleviates liquidity constraints and may enable more effective allocation of resources towards operational needs of the business.

While share swap transactions are common in other jurisdictions, their adoption in India has been limited due to regulatory challenges and the lack of tax neutrality.

With the intent to simplify cross-border share swaps under the exchange control laws, the Government of India has recently liberalized the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 ("NDI Rules") by a notification dated August 16, 2024 pursuant to the Foreign Exchange Management (Non-debt Instruments) (Fourth Amendment) Rules, 2024 (the "Amendment").1

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This insight/article is intended only as a general discussion of issues and is not intended for any solicitation of work. It should not be regarded as legal advice and no legal or business decision should be based on its content.

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