Rule 25A 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.
Rule 25A deals with mergers across borders. A foreign company may merge into an Indian company, and an Indian company may merge into a foreign company in a listed set of jurisdictions, in each case after prior approval of the Reserve Bank of India and compliance with sections 230 to 232. The rule has been added to since 2017, with a declaration for land-border countries and a route for a foreign holding company merging into its wholly owned Indian subsidiary. This article reads the rule as amended up to G.S.R. 603(E) dated 4 September 2025 per the MCA e-book; later amendments should be checked.
A foreign company may merge with an Indian company after prior approval of the Reserve Bank of India and after complying with sections 230 to 232 and the CAA Rules. An Indian company may merge with a foreign company only if it is in a jurisdiction listed in Annexure B, again after RBI approval. The valuation must be by valuers who are members of a recognised professional body in the transferee's jurisdiction, on internationally accepted principles. Mergers with companies from countries sharing a land border with India need a Form CAA-16 declaration. A foreign holding company into its wholly owned Indian subsidiary goes under section 233.
Rule 25A(1) and (2): the two directions of merger
- Inbound (25A(1)). A foreign company incorporated outside India may merge with an Indian company after obtaining the prior approval of the Reserve Bank of India and after complying with sections 230 to 232 of the Act and these rules.
- Outbound (25A(2)(a)). A company may merge with a foreign company incorporated in any of the jurisdictions specified in Annexure B, after obtaining the prior approval of the Reserve Bank of India and after complying with sections 230 to 232 and these rules.
The rule names the Reserve Bank of India and nothing more about its approval. The conditions, forms and procedure of that approval are in the foreign-exchange regulations and RBI directions, which are not part of the Companies Rules; check them separately with the current text. The Companies Act provision behind this rule is section 234, covered in our note on section 234: cross-border merger.
If you are planning a merger that crosses a border, our legal due diligence team can map the approvals and filings with you before the scheme is drafted.
Rule 25A(2)(b): valuation
The transferee company shall ensure that the valuation is conducted by valuers who are members of a recognised professional body in the jurisdiction of the transferee company, and that the valuation is in accordance with internationally accepted principles on accounting and valuation. A declaration to this effect is attached to the application made to the Reserve Bank of India for its approval under clause (a).
Rule 25A(3): Tribunal application after approvals
The concerned company files its application before the Tribunal under sections 230 to 232 and these rules after obtaining the approvals specified in sub-rule (1) and sub-rule (2), as the case may be. The application and meeting steps are those in rules 1 to 4 and the rules that follow.
Rule 25A(4): countries sharing a land border
Notwithstanding sub-rule (3), for a compromise, arrangement, merger or demerger between an Indian company and a company or body corporate incorporated in a country that shares a land border with India, a declaration in Form CAA-16 is required at the stage of submitting the application under section 230. This sub-rule was inserted by the 2022 amendment, and Form CAA-16 was added to Annexure A at the same time.
Rule 25A(5): foreign holding company into a wholly owned Indian subsidiary
Added by the 2024 amendment. Where the transferor foreign company, incorporated outside India, is a holding company and the transferee Indian company is its wholly owned subsidiary, and they merge:
- both companies obtain the prior approval of the Reserve Bank of India;
- the transferee Indian company complies with section 233;
- the application is made by the transferee Indian company to the Central Government under section 233, and rule 25 applies to that application; and
- the declaration referred to in sub-rule (4) is made at the stage of the application under section 233.
The steps after the application follow the fast-track chain explained in rule 25: fast-track merger.
Explanations
Explanation 1 says "company" means a company as defined in section 2(20) of the Act and "foreign company" means a company or body corporate incorporated outside India, whether or not it has a place of business in India. Explanation 2 says no amendment shall be made in the rule without consultation with the Reserve Bank of India.
Annexure B: the jurisdictions
Annexure B lists the jurisdictions referred to in rule 25A(2)(a). A jurisdiction qualifies if it meets the first test or the second test, and also the third:
| Test | Condition as printed |
|---|---|
| (i) | Its securities market regulator is a signatory to the International Organization of Securities Commissions' Multilateral Memorandum of Understanding (Appendix A Signatories), or a signatory to a bilateral Memorandum of Understanding with SEBI |
| (ii) | Its central bank is a member of the Bank for International Settlements |
| (iii) | It is not identified in the public statement of the Financial Action Task Force as (a) a jurisdiction with strategic anti-money laundering or combating the financing of terrorism deficiencies to which counter measures apply, or (b) a jurisdiction that has not made sufficient progress in addressing the deficiencies or has not committed to an action plan developed with the Financial Action Task Force |
The annexure does not list country names. Whether a particular country meets the tests depends on the bodies' current lists, which should be checked at the time.
Route at a glance
| Case | Approval | Where the application goes |
|---|---|---|
| Foreign company into Indian company | Reserve Bank of India, prior | Tribunal, sections 230 to 232 |
| Indian company into foreign company in an Annexure B jurisdiction | Reserve Bank of India, prior | Tribunal, sections 230 to 232 |
| Counterparty from a land-border country | CAA-16 declaration with the section 230 application | As above |
| Foreign holding company into wholly owned Indian subsidiary | Reserve Bank of India, both companies | Central Government, section 233 and rule 25 |
Example
Lakshmi Pharma Limited, an Indian company, plans to merge into its foreign parent's affiliate in a jurisdiction that meets all three Annexure B tests. It first seeks the RBI's approval, attaching the declaration that the valuation was done by members of a recognised professional body in the transferee's jurisdiction on internationally accepted principles. Only after that approval does it file the Tribunal application under sections 230 to 232. Had the affiliate been incorporated in a country sharing a land border with India, the CAA-16 declaration would have gone in with the section 230 application.
Need help with a cross-border scheme?
Cross-border schemes need approvals outside the Companies Act, correctly sequenced with the Tribunal filings. Our team can help examine the structure and the papers through legal due diligence.
Key takeaways
- Inbound and outbound mergers both need the prior approval of the Reserve Bank of India and compliance with sections 230 to 232.
- Outbound mergers are limited to the jurisdictions meeting the Annexure B tests.
- Valuation is by members of a recognised professional body in the transferee's jurisdiction, on internationally accepted principles.
- A Form CAA-16 declaration is needed for land-border countries.
- A foreign holding company merging into its wholly owned Indian subsidiary uses section 233 and rule 25.
Read next
- Rule 25: fast-track merger
- Rules 26 and 27: dissenting shareholders and minority purchase
- Section 234: cross-border merger
- Companies (Listing in Permissible Jurisdictions) Rules, 2024: international listing
Disclaimer: Based on the Companies Act, 2013 rules named above as consolidated in the MCA e-book (consulted on 3 October 2026), with the later notifications the article names. Later amendments, fees, forms and the Companies Act, 2013 provisions referred to should be checked. This article is general information, not legal advice; check the official text before acting.