The NCLT’s Sanction of the Indian Leg
The NCLT sanctions the scheme of the Indian transferor company under Sections 230–232. The Tribunal’s order transfers the Indian company’s assets and liabilities to the foreign transferee. The NCLT will require the FEMA approval to be placed on record, because the transfer of Indian assets to a foreign entity is a cross-border transaction regulated by FEMA.
The FEMA Approval
The RBI’s approval under the Cross-Border Merger Regulations is mandatory. The approval is subject to pricing guidelines, sectoral conditions, and the foreign transferee’s compliance with the Indian foreign investment regime. The RBI may impose conditions on the transfer, including the retention of proceeds in India or the gradual repatriation of assets.
The Foreign Transferee’s Capacity
The foreign transferee must be able to hold the Indian assets and to comply with Indian regulatory requirements. If the foreign transferee is not in a sector that is permitted for foreign investment, the RBI may refuse the approval. The company should verify the foreign investment policy for the relevant sector before filing the scheme.
The Two-Stage Approval
The NCLT’s sanction is the Indian leg; the foreign transferee may also require approval in its home jurisdiction for the acquisition of the Indian assets. The two approvals should be coordinated, and the NCLT should be informed of the foreign approval before the scheme is made effective.
Call to Action: For foreign transferee FEMA approval, RBI NOC strategy, or NCLT–RBI sequencing, contact office@anujdesaiassociates.com or 9619456656. Website: https://anujdesaiassociates.com. LinkedIn: linkedin.com/in/ca-anuj-desai-122547230.