India: Merger And Amalgamation Of Indian Companies With Foreign Companies

Last Updated: 10 May 2017
Article by Vikrant Rana and Akshay Gupta

Under Section 394 of the erstwhile Companies Act 1956, the merger1 of a Foreign Company2 with an Indian Company (Inbound Merger) was allowed but the merger of an Indian Company with a Foreign Company (Outbound Merger) was not allowed.

On April 13, 2017, the Central Government amended the Companies (Compromises, Arrangement and Amalgamations) Rules, 2016 and inserted rule 25A3. Further, through S.O. 1182(E) dated April 13, 2017, Section 234 of the Companies Act, 2013 also came into effect4, which allows the merger of an Indian company with a Foreign company. This means that, now both inbound and outbound mergers are allowed.

New Rules related to Cross Border Merger

  • In cases of cross border merger, prior approval of the Reserve Bank of India (hereinafter referred to as "RBI") is mandatory.
  • The notification imposes responsibility on Transferee Company to have valuation of merger by professional of recognized professional body and to ensure that such valuation is as per internationally accepted accounting and valuation principles. Also declaration of that shall be attached at the time of making application to the RBI.
  • The company shall file application to the jurisdictional National Company Law Tribunal (hereinafter referred to as "NCLT") as per provisions of Section 230-232 of the Companies Act 2013 and Companies (Compromises, Arrangement5 and Amalgamations6), Rules 2016.

Jurisdictions in which Outbound Mergers are allowed

  1. A jurisdiction whose securities market regulator is a signatory to the International Organisation of Securities Commission's Multilateral Memorandum of Understanding or a signatory to a bilateral MoU with Securities and Exchange Board of India; or
  2. A jurisdiction whose Central Bank is a member of the Bank of International Settlements; or
  3. A jurisdiction, not identified in the public statement of the Financial Action Task Force as:

    1. Jurisdiction having a strategic anti-money laundering or combating the financing of terrorism deficiencies to which counter measures apply; or
    2. Jurisdiction that has not made sufficient progress in addressing the deficiencies or has not committed to an action plan developed with the Financial Action Task Force to address the deficiencies.

Compliance under Section 230-232 of Companies Act 2013 and Companies (Compromises, Arrangement7 and Amalgamations8), Rules 2016.

  • Firstly, the Company, seeking to undergo such Cross-Border Merger, must be authorized to carry out amalgamation through its Memorandum of Association. If it is so authorized then a draft scheme for amalgamation is to be prepared for approval in Board Meeting.
  • After obtaining prior approval of the Board, followed by approval from the RBI, an application for should be filed by the Indian Company with the NCLT in form NCLT-1 seeking an order in favour of calling a meeting of members/creditors for approving the proposed Merger and Amalgamation. Copy of the scheme, affidavit verifying petition and notice of admission along with material disclosures relating to company such as latest financial position, latest auditor's report, and pendency of proceeding against company is also required to be submitted. The Tribunal has the right to either accept or dismiss the application.
  • It is pertinent to note that if a Scheme of corporate debt structuring is to be filed, the same should be accompanied with documents such as inter alia the Creditor Responsibility Statement, valuation report in case of shares, tangible, intangible asset by a registered valuer.
  • Once the Tribunal allows the Company to hold the meeting of members/ creditors, notice of such meeting along with scheme, details of company, details of board meeting, impact of such merger etc. is to be given to each member/creditor/debenture holder not less than 30 days before date fixed for meeting. Such notice shall also be published in newspapers, on the website of the company, Stock Exchanges, The Securities and Exchange Board of India (hereinafter referred to as "SEBI").
  • It is pertinent to note that notices must mandatorily be given to the statutory authorities such as Central Government, Registrar of Companies, and Income Tax authorities. Notices may also be sent to RBI, SEBI, and other sectoral authorities as may be required by the Tribunal so that they may make a representation 30 days from date of receipt of notice.
  • Members may vote on the matter within 30 day of receipt of notice vote in the meeting through person, proxy, postal ballot or electronic means. The report of the results of meeting shall be filed with the Tribunal within 3 days. If the scheme is approved by the majority of members/creditors, then a Petition for confirming compromise, arrangement shall be made to the Tribunal within 7 days of filing of report of result.
  • The Tribunal after being satisfied that the procedure specified has been complied with, shall pass the order to sanction the scheme and make provisions related to matters such as transfer of whole or part of undertaking, property, liability of Transferor company to Transferee Company, allotment of shares by transferee company, payment of consideration to the shareholders of the merging company in cash, or in Depository Receipts, or partly in cash and partly in Depository Receipts, transfer of legal proceedings, transfer of employees, dissolution of transferor company etc. The Company should file such order of the Tribunal with the Registrar of Companies within 30 days.


The notification is a welcome move and has opened many blocked doors for outbound merger of Indian Companies with Foreign Companies in specified jurisdiction. This should assist domestic companies in expanding their operations globally and list their securities abroad. It is pertinent to note that this revision in merger jurisprudence will also require changes in existing rules and regulations of Income Tax laws and Foreign Exchange Management Laws.


1 Absorption of one company by other.

2 Company or body corporate incorporated outside India whether having place of business in India or not.



5 All modes of reorganizing share capital.

6 Combination of two or more independent business into single business.

7 All modes of reorganizing share capital.

8 Combination of two or more independent business into single business.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Vikrant Rana
In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.