The federal government has amended sure guidelines governing mergers underneath the businesses regulation and amalgamations involving a international holding firm and its wholly-owned Indian subsidiary will now require prior RBI approval.
Amendments have been made to the Firms (Compromises, Preparations and Amalgamations) Guidelines, 2016 by the company affairs ministry.
The adjustments are with respect to “transferor international firm included outdoors India being a holding firm and the transferee Indian firm being a wholly-owned subsidiary firm included in India” getting into right into a merger.
In such circumstances, the ministry on Monday stated each the businesses shall get hold of the prior approval of the Reserve Financial institution of India (RBI) and the transferee Indian firm also needs to adjust to the provisions of Part 233 underneath the Firms Act.
Broadly, Part 233 pertains to mergers and amalgamations of sure corporations.
Sandeep Jhunjhunwala, Companion at Nangia Andersen LLP, stated the pattern of reverse flipping has been the norm for a lot of new-age startups in current instances and the resilience and progress of the nation’s IPO market present buyers with a viable exit technique for realising returns.
On this backdrop, he stated the ministry has launched a brand new sub-rule whereby each the international transferor holding firm and its wholly-owned Indian subsidiary must now get hold of a previous RBI approval in circumstances of merger or amalgamation.
“In parallel, the Indian transferee firm can be required to file an software with the Central Authorities underneath the present provisions of Part 233 of the Firms Act 2013 and Rule 25 of the Firms (Compromises, Preparations and Amalgamations) Guidelines, 2016 for looking for approval on such India inbound mergers,” he added.
(Solely the headline and film of this report might have been reworked by the Enterprise Normal employees; the remainder of the content material is auto-generated from a syndicated feed.)
First Revealed: Sep 10 2024 | 8:40 PM IST
