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CS Executive · Company Law and Practice · Introduction to Company Law

Under the Companies Act, 2013, a foreign company wishes to merge into an Indian company registered under the Act. What condition and consideration options does the Act provide?

A foreign company may merge into a company registered under the Act, or vice versa, with prior approval of the Reserve Bank of India. The scheme may pay shareholders in cash, in Depository Receipts, or partly in each.

  1. APrior approval of the Reserve Bank of India; consideration may be cash, Depository Receipts, or partly eachCorrect
  2. BPrior approval of SEBI; consideration only in equity shares
  3. CNo approval needed; consideration only in cash
  4. DApproval of the Registrar; consideration only in Depository Receipts

Explanation

Section 234(2) allows a foreign company, subject to other laws, to merge into an Indian-registered company with prior RBI approval. The scheme may provide payment in cash, Depository Receipts, or partly in each. The other options misstate the approving authority or the consideration.

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