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CS Professional · Compliance Management, Audit and Due Diligence · Due Diligence

Kaveri Pharma Ltd is the acquirer in a merger with a foreign company incorporated in a jurisdiction not notified by the Central Government. The diligence team assumes Chapter provisions on schemes will apply to the cross-border merger under section 234(1). What is the correct position?

The assumption is wrong. Section 234(1) applies the scheme provisions mutatis mutandis only to mergers with companies incorporated in jurisdictions notified by the Central Government. A non-notified jurisdiction falls outside it, regardless of the consideration or any Indian place of business.

  1. ASection 234(1) applies mutatis mutandis only to mergers with companies of countries notified by the Central GovernmentCorrect
  2. BSection 234(1) applies to every foreign jurisdiction automatically
  3. CSection 234(1) applies only if the foreign company has a place of business in India
  4. DSection 234(1) applies only if consideration is wholly in cash

Explanation

Section 234(1) extends the Chapter mutatis mutandis to schemes between Indian companies and companies incorporated in jurisdictions notified by the Central Government. A non-notified jurisdiction is outside this sub-section, so the assumption is wrong. Place of business or form of consideration does not decide this.

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