Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2024

The Ministry of Corporate Affairs (MCA) issued a notification on 9th September 2024, amending the Companies (Compromises, Arrangements, and Amalgamations) Rules, 2016. These amendments, effective from 17th September 2024, primarily focus on mergers or amalgamations involving a foreign holding company and its wholly-owned Indian subsidiary. The newly introduced sub-rule 5 under Rule 25A stipulates that both companies must obtain prior approval from the Reserve Bank of India (RBI) before proceeding. Additionally, the Indian transferee company must comply with Section 233 of the Companies Act, 2013, and submit an application to the Central Government under the same section. The rule further clarifies that the required declaration under sub-rule (4) should be made when the application is submitted. This amendment brings more clarity and procedural requirements for cross-border mergers involving foreign holding companies and their Indian subsidiaries, ensuring compliance with both regulatory bodies and the Companies Act, 2013.

MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, the 9th September, 2024

G.S.R. 555 (E).— In exercise of the powers conferred by sub-sections (1) and (2) of section 469 read with sections 233 and 234 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following rules further to amend the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, namely :-

1.(1) These rules may be called the Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2024.

(2) They shall come into force from the 17th day of September, 2024.

2. In the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, in rule 25A, after sub-rule (4), the following sub-rule shall be inserted, namely: –

“(5) Where the transferor foreign company incorporated outside India being a holding company and the transferee Indian company being a wholly owned subsidiary company incorporated in India, enter into merger or amalgamation, –

(i) both the companies shall obtain the prior approval of the Reserve Bank of India;

(ii) the transferee Indian company shall comply with the provisions of section 233;

(iii) the application shall be made by the transferee Indian company to the Central Government under section 233 of the Act and provisions of rule 25 shall apply to such application; and

(iv) the declaration referred to in sub-rule (4) shall be made at the stage of making application under section 233 of the Act.”.

[F. No. 2/31/CAA/2013 – CL.V Part]
MANOJ PANDEY, Addl. Secy.

Note: The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide notification number G.S.R 1134(E) dated the 14th December, 2016 and subsequently amended vide the following notifications: –