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CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Legislative Framework of Corporate Governance in India

Bharat Ventures Ltd, an Indian company, plans to merge with Altair Corp, a company incorporated abroad with no place of business in India. Under the Companies Act, 2013, which statement is correct about the merger?

The merger is permitted, subject to other laws, with the prior approval of the Reserve Bank of India. The scheme may provide consideration in cash, in Depository Receipts, or partly in each. A foreign company here includes one with no place of business in India.

  1. AIt can proceed subject to other laws with prior approval of the Reserve Bank of India, and consideration may be in cash, Depository Receipts or partly eachCorrect
  2. BIt needs no approval because Altair has no place of business in India
  3. CIt requires prior approval of SEBI only, and consideration must be wholly in cash
  4. DIt is barred because a foreign company cannot merge with an Indian company

Explanation

Section 234(2) allows a foreign company, with prior RBI approval and subject to other laws, to merge into an Indian company or vice versa. Consideration can be cash, Depository Receipts or a mix. The Explanation defines foreign company to include one incorporated outside India whether or not it has a place of business in India, so the absence of an Indian presence does not exempt it.

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