The Regulatory Framework
A cross-border merger or asset transfer involving an Indian company and a foreign entity is governed by the FEMA (Cross-Border Merger) Regulations. The RBI’s approval is mandatory under FEMA, and if the foreign entity is from a country sharing a land border with India, additional filings are required. The NCLT sanction is necessary but not sufficient; the FEMA compliance runs in parallel.
The 2026 Amendment
On 29 May 2026, the RBI notified the Foreign Exchange Management (Cross-Border Merger) (Amendment) Regulations, 2026, replacing the term “NCLT” with the broader expression “competent authority” across the FEMA Regulations. The amendment links timelines for asset disposal, operation of foreign currency accounts, and filings for deemed RBI approval to the authority sanctioning the merger, rather than the NCLT alone. Eligible transactions through the fast-track route can now rely on the FEMA framework without the earlier NCLT-specific ambiguity.
The Substantive Requirements Unchanged
The amendment does not relax the substantive FEMA requirements: pricing guidelines, sectoral conditions, valuation requirements, reporting obligations, and timelines for disposal of assets that cannot be retained after the merger continue to apply. The “competent authority” definition is intentionally broad and does not identify specific authorities, requiring transaction participants to determine the appropriate approving authority.
The NCLT’s Role in Cross-Border Schemes
The NCLT continues to sanction cross-border mergers, and it has cleared transactions where the merger qualified for deemed approval under the FEMA Cross Border Merger Regulations. The Tribunal’s order is a condition for the scheme’s effectiveness, but the FEMA approval (or deemed approval) must be obtained before or alongside the NCLT filing.
Call to Action: For FEMA cross-border merger approval, competent authority mapping, or NCLT–RBI sequencing, contact office@anujdesaiassociates.com or 9619456656. Website: https://anujdesaiassociates.com. LinkedIn: linkedin.com/in/ca-anuj-desai-122547230.