The new rules stipulate important changes for companies involved in mergers and amalgamations, especially when dealing with foreign entities.
Under the new rules, when a foreign company incorporated outside India merges with a wholly owned subsidiary (WOS) incorporated in India, prior approval of the Reserve Bank of India (RBI) will be required.
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The stipulation aims to simplify the regulatory framework and strengthen compliance with India’s foreign exchange regulations.
In addition, the transferee Indian company will have to comply with the provisions laid down in Section 233 of the Companies Act, which regulates mergers and amalgamations. Section 233 outlines the procedure for mergers and amalgamations, including the requirement to file an application with the Central Government.
The new rules stipulate that the application for such mergers must be submitted by the transferee Indian company to the central government under Section 233 of the Companies Act.
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In addition, the provisions of Rule 25 will apply to these requests, ensuring that the process is carried out in a structured and transparent manner.
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