The government has amended certain rules governing mergers under the companies law and amalgamations involving a foreign holding company and its wholly-owned Indian subsidiary will now require prior RBI approval.
Amendments have been made to the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 by the corporate affairs ministry.
The changes are with respect to "transferor foreign company incorporated outside India being a holding company and the transferee Indian company being a wholly-owned subsidiary company incorporated in India" entering into a merger.
In such cases, the ministry on Monday said both the companies shall obtain the prior approval of the Reserve Bank of India (RBI) and the transferee Indian company should also comply with the provisions of Section 233 under the Companies Act.
Broadly, Section 233 pertains to mergers and amalgamations of certain companies.
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