The Indian companies law currently allows Indian companies to
merge with foreign companies and vica- versa (Cross Border
Mergers/Merger). Further, on March 20th, 2018, the government
notified the Foreign Exchange Management (Cross Border Merger)
Regulations, 2018 (Merger
Regulation) which attempt to provide clarity
regarding Cross Border Mergers from a foreign exchange law
perspective. In this background this article examines the key
aspects of the Merger Regulation and its implications.
INBOUND MERGERS
Inbound Merger means when an Indian company
(IC) acquires assets and liabilities of a foreign
company consequent to a Cross Border Merger. In this regard, the
Merger Regulations are allowing transfer of securities to a foreign
shareholder, subject to compliances applicable to a foreign
investor under the foreign direct investment regulations
(FDI Regs). This effectively means that such Cross
Border Mergers cannot result in any contravention of any
restriction
