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INDIA: Local Businesses Now Cleared to Merge into Overseas Companies

Indian companies will now be permitted to merge into overseas businesses for the first time, following an amendment to the Companies Act (2013) on 13 April. Previously, it was only permissible for foreign-owned companies to be merged into Indian companies and then only with the prior approval of the Reserve Bank of India (RBI), the country’s central bank.

RBI approval will still be required for these so-called outbound mergers, while a number of other criteria need to be met prior to such a deal going through. Chief among these is the stipulation that the concerned overseas business must have been incorporated in a jurisdiction compliant with the standards laid out by the Financial Action Task Force (FATF), the international body responsible for policing money laundering and funding of terrorism-related activities. The deal must also be in compliance with a number of additional international statutory financial requirements.

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