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

Zenith Pharma Ltd, an Indian company, plans to merge into a foreign company. The scheme proposes paying Zenith's shareholders partly in cash and partly in Depository Receipts. Which approval is specifically required under Section 234(2) for this cross-border merger?

Section 234(2) requires the prior approval of the Reserve Bank of India for a merger between a foreign company and an Indian company. The scheme may then pay consideration in cash, Depository Receipts, or partly in each, so a cash and DR mix is permissible.

  1. APrior approval of the Reserve Bank of IndiaCorrect
  2. BPrior approval of the Competition Commission of India only
  3. CApproval of the Registrar of Companies alone
  4. DApproval of the stock exchange where Zenith is listed alone

Explanation

Section 234(2) allows a foreign company to merge into an Indian company or vice versa with the prior approval of the Reserve Bank of India. The consideration may be cash, Depository Receipts, or partly each. The other approvals are not what Section 234(2) names.

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