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CS Professional · Corporate Restructuring, Valuation and Insolvency · Fast Track Mergers

Mehta Textiles Ltd, an Indian company, wants to merge into a foreign company incorporated in a country that has been notified by the Central Government. Under Section 234, which is the correct position?

Under Section 234(1), the Chapter's provisions on mergers apply mutatis mutandis to schemes between Indian companies and companies incorporated in countries notified by the Central Government. So a merger with a company from a notified jurisdiction follows the Chapter's procedure with the necessary changes.

  1. AChapter provisions apply mutatis mutandis to the scheme, because the foreign company is incorporated in a notified jurisdictionCorrect
  2. BThe scheme needs no special approval because the foreign company has no place of business in India
  3. COnly the Registrar of Companies can approve such a scheme, without any Tribunal process
  4. DSection 234 applies only when the foreign company is a wholly owned subsidiary of the Indian company

Explanation

Section 234(1) applies the Chapter provisions mutatis mutandis to schemes between Indian companies and companies incorporated in jurisdictions notified by the Central Government. The option on having no place of business is wrong because the definition of foreign company covers such companies and it does not remove the approval requirements. Nothing in the section limits it to wholly owned subsidiaries.

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