MCA has by way of the Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2024, dated September 9, 2024, amended the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 (‘Merger Rules’). The amendments have come into effect from September 17, 2024, and provide for certain amendments to Rule 25A of the Merger Rules. The amendment states that if a transferor foreign company (incorporated outside India) enters into a merger or amalgamation with its wholly owned subsidiary which is a company incorporated in India (transferee), then the following will apply:

i.    both the companies would require prior approval from the Reserve Bank of India (‘RBI’);

ii.   the transferee Indian company would have to comply with Section 233 of the Act (fast track merger process) and make an application to the Central Government. Rule 25 of the Merger Rules will apply to such application; and

iii.  a declaration under form CAA-16 as provided under Rule 25A(iv) of the Merger Rules (declaration regarding company which is incorporated in a country sharing land border with India) will have to be made at the stage of making an application under Section 233 of the Act.

The fast-track approval process has eliminated the requirement of obtaining approval for mergers from the National Companies Law Tribunal and has vested it with the Central Government, i.e., the Regional Director.