Thursday, 27 April 2017

RBI issues new draft rules for M&As

The Reserve Bank has proposed a fresh set of regulations regarding mergers and acquisitions which seek reporting of such actions to be more stringent and time-bound, and provide for mandatory permission for all deals which are not on the automatic route, reported PTI. 

This follows the new regulations notified by Corporate Affairs Ministry under the Companies (Compromises, Arrangements, and Amalgamation) Amendment Rules of 2017 issued on April 13. The proposed regulations will be brought in under the FEMA rules of 1999 and seek to address the issues that may arise when a domestic firm and a foreign firm enter into the cheme of merger, demerger/amalgamation/rearrangement.

The regulation makes reporting of any cross-border activity mandatory within 180 days from the date of sanction. Called Foreign Exchange Management (Cross-border Mergers) Regulations, the new rules pertain to mergers, demergers, amalgamations and arrangements between domestic and foreign companies.

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