CS Professional · Compliance Management, Audit and Due Diligence · Due Diligence
Sundaram Textiles Ltd, an Indian company, proposes to merge into a company incorporated in a notified foreign jurisdiction, with shareholders to receive part cash and part Depository Receipts. While carrying out due diligence on the structure, the company secretary checks the approval requirement specific to cross-border mergers under the Companies Act, 2013. Which approval must be confirmed?
The company must confirm the prior approval of the Reserve Bank of India. Section 234(2) of the Companies Act, 2013 permits a merger between a foreign company and an Indian company only with RBI's prior approval, and allows consideration in cash, Depository Receipts or both.
- APrior approval of the Reserve Bank of IndiaCorrect
- BPrior approval of the Securities and Exchange Board of India only
- CPrior approval of the Registrar of Companies only
- DPrior approval of the Competition Commission only
Explanation
Section 234(2) provides that a foreign company may, with the prior approval of the Reserve Bank of India, merge into an Indian-registered company or vice versa. Consideration may be cash, Depository Receipts or partly each. The other authorities named are not the approval specified in this provision.
Did you get it right without looking?
One question tells you little. A timed set on Due Diligence shows your real accuracy, how long you take and where you lose marks.
More Due Diligence questions
- Zenith Polymers Ltd proposes to appoint Ms. Radhika Menon, whose name appears in the notified data bank of independent directors, as an inde…
- A director of Lotus Textiles Ltd is found to have breached the duties in section 166 without any specific undue gain. What punishment does t…
- Kaveri Pharma Ltd is shortlisting a person from the data bank of independent directors for appointment. The CS tells the Board that the resp…
- The Tribunal finds that a Company Liquidator of Vikram Metals Ltd failed to exercise due care and diligence in performing his functions, and…
- Kaveri Textiles Ltd., an Indian company, proposes a merger with Orion Fabrics Pte Ltd., a company incorporated outside India with no place o…
- During a due diligence exercise for Bharat Agro Ltd, registered valuer Mr. Sharma discovers that he held shares in the target company two ye…