Cross-Border Mergers explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
The most valuable provision in the 2018 Regulations is the one that removes a step — compliance with the rules is itself the approval.
The definition
Regulation 2(iii) of the Foreign Exchange Management (Cross Border Merger) Regulations, 2018 defines a cross-border merger as any merger, amalgamation or arrangement between an Indian company and a foreign company undertaken in accordance with Section 234 of the Companies Act, 2013 read with Rule 25A of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016.
The definition is deliberately tied to the company law route. A transaction that does not proceed under section 234 and Rule 25A is not a cross-border merger for these purposes, whatever its commercial shape.
What Rule 25A requires
Rule 25A requires that the valuation of the companies be carried out by recognized valuers in accordance with internationally accepted principles on accounting and valuation, and that the application made to the National Company Law Tribunal be accompanied by the prescribed declarations under the Companies Act framework.
Note the valuation standard — internationally accepted principles, matching the NDI Rules requirement for unlisted companies rather than the Companies Act's general position of leaving the approach to the valuer's judgment. Where a merger crosses a border, the valuation basis is fixed.
The declaration and the deeming provision
Regulation 9(2) of the Cross Border Merger Regulations requires the Managing Director or Whole-time Director (where authorized) and the Company Secretary (if any) to furnish a declaration to the NCLT confirming compliance with the FEMA Cross Border Merger Regulations.
Further, Regulation 9(1) provides that any transaction undertaken in accordance with these Regulations shall be deemed to have the prior approval of the Reserve Bank of India, thereby eliminating the requirement of obtaining a separate RBI approval under FEMA.
Recall the timeline problem the session identified for FEMA approvals generally: an application requiring RBI approval ordinarily takes between four and ten months for disposal, with instances of more than two years.
A cross-border merger already requires an NCLT process with its own timeline. Adding a separate RBI approval, sequenced before or after it, could make the transaction commercially unviable on timing alone.
Regulation 9(1) removes that step entirely. Compliance with the Regulations is the approval — no application, no queue, no discretionary decision to wait for.
Regulation 9(2) is the price of that convenience. Instead of the RBI examining the transaction in advance, named officers certify compliance to the Tribunal. The verification moves from a regulator's prior review to a director's declaration, with the accountability that attaches to making it.
That is a meaningful shift in where the risk sits. An officer signing the Regulation 9(2) declaration is asserting FEMA compliance on the record, and the deemed approval depends on that assertion being correct.
The integrated framework
The session noted that this integrated regulatory framework has significantly streamlined the approval process for cross-border mergers by enabling the NCLT-approved scheme to operate without the need for a separate RBI approval, provided the transaction complies with the applicable FEMA requirements.
The proviso carries the weight. The deeming operates only where the transaction actually complies — it is not a safe harbour for a transaction that does not.
The 2026 developments
The session concluded with a review of the recent regulatory developments in 2026, including the removal of ambiguity surrounding fast-track cross-border mergers and the introduction of acquisition financing through External Commercial Borrowings (ECBs) and domestic bank financing.
| Development | Significance |
|---|---|
| Fast-track cross-border mergers | Ambiguity removed — extending the section 233 efficiency to transactions crossing a border |
| Acquisition financing through ECBs | External commercial borrowings become available to fund acquisitions |
| Domestic bank financing | Acquisition funding from Indian banks |
Both financing developments address a long-standing structural constraint, since the absence of acquisition financing had confined many transactions to what an acquirer could fund from its own resources.
Common mistakes
- Applying separately for RBI approval where Regulation 9(1) already deems it.
- Relying on the deeming provision where the transaction does not in fact comply.
- Using a domestic valuation basis for a cross-border merger.
- Filing the NCLT application without the Regulation 9(2) declaration.