MCA Notification on Amendment of M&A Rules for Foreign Companies, i.e. the Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2017
The MCA has amended the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 and has notified Amendment Rules 2017, i.e. Rule 25A on Merger or amalgamation of a foreign company with a Company and vice versa has been inserted, as under:
GSR ._ In exercise of the powers conferred by section 234 read with section 469 of the Companies Act, 2013, the Central Government, in consultation with the Reserve Bank of India, hereby makes the following rules to amend the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, namely:-
1. (1) These rules may be called the Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2017. (2) They shall come into force on the date of their publication in the Official Gazette.
2. In the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, (hereinafter referred to as the principal rules) after rule 25 the following rule shall be inserted, namely:-
“25A. Merger or amalgamation of a foreign company with a Company and vice versa.
(1) A foreign company incorporated outside India may merge with an Indian company after obtaining prior approval of Reserve Bank of India and after complying with the provisions of sections 230 to 232 of the Act and these rules.
(2) (a) A company may merge with a foreign company incorporated in any of the jurisdictions specified in Annexure B after obtaining prior approval of the Reserve Bank of India and after complying with provisions of sections 230 to 232 of the Act and these rules.
(2) (b) The transferee company shall ensure that valuation is conducted by valuers who are members of a recognised professional body in the jurisdiction of the transferee company and further that such valuation is in accordance with internationally accepted principles on accounting and valuation. A declaration to this effect shall be attached with the application made to Reserve Bank of India for obtaining its approval under clause (a) of this sub-rule.
(3) The concerned company shall file an application before the Tribunal as per provisions of section 230 to section 232 of the Act and these rules after obtaining approvals specified in sub-rule (1) and sub-rule (2), as the case may be.
Explanation 1- For the purposes of this rule the term “company” means a company as defined in clause (20) of section 2 of the Act and the term “foreign company” means a company or body corporate incorporated outside India whether having a place of business in India or not;
Explanation 2- For the purposes of this rule, it is clarified that no amendment shall be made in this rule without consultation of the Reserve Bank of India.”
3. In the principal rules after Annexure A the following Annexure shall be inserted namely:-
Jurisdictions referred to in clause (a) of sub-rule (2) of rule 25A
(i) whose securities market regulator is a signatory to International Organization of Securities Commission’s Multilateral Memorandum of Understanding (Appendix A Signatories) or a signatory to bilateral Memorandum of Understanding with SEBI, or
(ii) whose central bank is a member of Bank for International Settlements (BIS), and
(iii) a jurisdiction, which is not identified in the public statement of Financial Action Task Force (FATF) as:
(a) a jurisdiction having a strategic Anti-Money Laundering or Combating the Financing of Terrorism deficiencies to which counter measures apply; or
(b) a 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.”.
Note: The principal rules were published in the Gazette of India, extraordinary, Part II, Section 3, sub-section (i) vide number G.S.R 1134(E), dated the 14 Dec. 2016.