Abstract

Cross-border mergers and acquisitions have become central instruments of corporate expansion in an increasingly interconnected global economy, and India’s regulatory response has evolved considerably since the 1991 liberalisation reforms.[1] Section 234 of the Companies Act, 2013, read with Rule 25A of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 and the Foreign Exchange Management (Cross Border Merger) Regulations, 2018, was designed to create a bidirectional statutory pathway for both inbound and outbound mergers between Indian and foreign companies.[2] Nearly a decade after Section 234 was notified into force, however, outbound mergers remain effectively unused in practice, while inbound transactions have been progressively streamlined through two consecutive fast-track amendments in 2024 and 2025. This paper undertakes a doctrinal examination of this asymmetry, tracing its origins from the Companies Act, 1956 through the unrealised recommendations of the J.J. Irani Committee to the contradictory National Company Law Tribunal orders in the Sun Pharmaceutical Industries matters of 2018 and 2019. It argues that the dormancy surrounding outbound restructuring is not an isolated legislative oversight but reflects a recurring institutional habit, visible most recently in the Insolvency and Bankruptcy Code’s own newly inserted, yet unactivated, cross-border insolvency provision, of enacting enabling powers while indefinitely deferring their operationalisation through subordinate rule-making. Through a corrected comparative assessment of the United Kingdom’s post-Brexit loss of its statutory cross-border merger regime and Singapore’s inbound-only redomiciliation framework, the paper contends that India’s caution is not unique among major commercial jurisdictions, but that the absence of functional alternatives to the Section 234 route leaves Indian companies with no viable statutory outbound restructuring mechanism at all. The paper concludes with proposals for phased jurisdictional notification, tax neutrality for outbound structures, legislative correction of the demerger gap exposed in the Sun Pharma orders, and binding timelines for subordinate rule-making.

Keywords: Outbound Cross-Border Mergers; Section 234; Companies Act, 2013; Corporate Restructuring; Regulatory Framework

I. INTRODUCTION

A. Background

India’s economic liberalisation since 1991 transformed the country from a closed, licence-driven economy into one of the world’s most active destinations for foreign direct investment, with cross-border mergers and acquisitions emerging as a principal vehicle for that integration.[3] The Companies Act, 2013 sought to consolidate this shift by introducing, for the first time, an express statutory mechanism for mergers between Indian and foreign companies under Section 234, a provision absent from its 1956 predecessor.[4] Read together with Rule 25A of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 and the Reserve Bank of India’s Foreign Exchange Management (Cross Border Merger) Regulations, 2018, Section 234 was intended to operate bidirectionally: permitting both inbound mergers, where a foreign company merges into an Indian company, and outbound mergers, where an Indian company merges into a foreign company.[5]

In practice, only one half of that bidirectional promise has materialised. Since the Ministry of Corporate Affairs notified Section 234 into force in April 2017, every reported instance of its use has been inbound.[6] No Indian company has successfully completed an outbound merger under this provision, and the one serious judicial attempt to test its outer boundaryin the Sun Pharmaceutical Industries demerger matters of 2018 and 2019 produced National Company Law Tribunal orders that narrowed rather than expanded the provision’s scope.[7] Meanwhile, the Ministry of Corporate Affairs has twice amended the rules governing cross-border mergers in the past two years, in September 2024 and again in September 2025, and on both occasions confined the benefit of fast-track approval exclusively to inbound structures.[8]

[1]Jagannath Samantara, Navigating Cross-Border Complexity: A Comprehensive Analysis of Cross-Border Mergers and Acquisitions, 13 INT’L J. CREATIVE RES. THOUGHTS b978, b982 (2025).

[2]Companies Act, 2013, § 234, No. 18, Acts of Parliament, 2013 (India).

[3]United Nations Conference on Trade and Development (UNCTAD), World Investment Report 2024: Investment Facilitation and Digital Government (2024); Reserve Bank of India, Handbook of Statistics on the Indian Economy (2024).

[4]Companies Act, 2013, § 234, No. 18, Acts of Parliament, 2013 (India); Ministry of Corporate Affairs, Notification No. S.O. 1182(E) (Apr. 13, 2017); Umakanth Varottil, The Evolution of Cross-Border Mergers in India, 6 NUJS L. Rev. 1 (2017).

[5]Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, R. 25A (India); Foreign Exchange Management (Cross Border Merger) Regulations, 2018, RBI Notification No. FEMA.389/2018-RB (Mar. 20, 2018) (India).

[6]Sakkcham Singh Parmaar, The Unactivated Gateway: Analysing the Dormancy of Section 234(1) of the Indian Companies Act, 2013 and Its Impact on Outbound Cross-Border Mergers, IND. J.L. & LEGAL RES. 1, 7-8 (2025).

[7]In re Sun Pharmaceutical Indus. Ltd., 2019 SCC OnLine NCLT 737 (NCLT Ahmedabad Dec. 19, 2019); In re Sun Pharmaceutical Indus. Ltd., 2018 SCC OnLine NCLT 28560 (NCLT Ahmedabad Oct. 31, 2018).

[8]Nishith Desai Assocs., Fast Track Merger: Unlocking New Pathway for Inbound Cross-Border Merger (Oct. 9, 2024), https://nishithdesai.com/default.aspx?id=15154(last visited June 19, 2026).