Companies Act Section 234 — Merger or amalgamation of company with foreign company
CHAPTER XV COMPROMISES, ARRANGEMENTS AND AMALGAMATIONS
Commercial / Corporate
Summary
Sub-section (1) says that the rules for mergers and amalgamations in this Chapter apply in the same way to mergers between companies registered under this Act and companies set up in countries that the Central Government has officially listed from time to time. This applies unless any other current law says something different. The Central Government is also allowed to make rules for these mergers, but it must consult the Reserve Bank of India before doing so.
Sub-section (2) says that, as long as other current laws allow it, a foreign company can merge into a company registered under this Act, or the other way around, but only with the prior approval of the Reserve Bank of India. The merger scheme can include terms for paying the shareholders of the merging company, and this payment can be made in cash, in Depository Receipts, or partly in cash and partly in Depository Receipts, depending on what the scheme says.
The Explanation clarifies that, for the purposes of sub-section (2), the term foreign company means any company or body corporate that is incorporated outside India, whether or not it has a place of business in India.
Official Text
(1) The provisions of this Chapter unless otherwise provided under any other law for the time being in force, shall apply mutatis mutandis to schemes of mergers and amalgamations between companies registered under this Act and companies incorporated in the jurisdictions of such countries as may be notified from time to time by the Central Government:
Provided that the Central Government may make rules, in consultation with the Reserve Bank of India, in connection with mergers and amalgamations provided under this section.
(2) Subject to the provisions of any other law for the time being in force, a foreign company, may with the prior approval of the Reserve Bank of India, merge into a company registered under this Act or vice versa and the terms and conditions of the scheme of merger may provide, among other things, for the payment of consideration to the shareholders of the merging company in cash, or in Depository Receipts, or partly in cash and partly in Depository Receipts, as the case may be, as per the scheme to be drawn up for the purpose.
Explanation.—For the purposes of sub-section (2), the expression “foreign company” means any company or body corporate incorporated outside India whether having a place of business in India or not.