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CS Professional · Corporate Restructuring, Valuation and Insolvency · Cross Border Mergers

Bharat Tools Ltd, registered under the Companies Act, 2013, proposes to merge into Alpine GmbH, a company incorporated in Germany. Under Section 234, which of the following is a correct statement of the conditions for such a merger?

The merger needs the prior approval of the Reserve Bank of India, subject to any other law in force. Section 234(2) permits a foreign company to merge into an Indian company or the reverse, so shareholder consent alone is not enough.

  1. AIt needs the prior approval of the Reserve Bank of India, subject to any other law in forceCorrect
  2. BIt needs only the consent of shareholders; no regulator approval is required
  3. CIt needs prior approval of SEBI instead of the Reserve Bank of India
  4. DIt is not permitted because Indian companies can merge only with Indian companies

Explanation

Section 234(2) allows a foreign company to merge into an Indian company or vice versa, subject to other laws, with the prior approval of the Reserve Bank of India. Shareholder consent alone is therefore not sufficient, and the Act does not substitute SEBI for the RBI.

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