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

The Central Government proposes to frame rules on mergers between Indian and foreign companies under section 234. Which statement is correct?

The Central Government may make rules on cross-border mergers and amalgamations in consultation with the Reserve Bank of India, as the proviso to section 234(1) provides. SEBI and the Tribunal have no such rule-making power under this section, and the section expressly contemplates rules.

  1. ARules may be made only by SEBI without consulting anyone
  2. BRules may be made by the Central Government in consultation with the Reserve Bank of IndiaCorrect
  3. CRules may be made by the National Company Law Tribunal on its own
  4. DRules are not permitted, since section 234 is self-executing

Explanation

The proviso to section 234(1) states that the Central Government may make rules, in consultation with the Reserve Bank of India, in connection with such mergers and amalgamations. Neither SEBI nor the Tribunal is given this power, and rules are expressly contemplated.

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