SUBSTANTIVE ANALYSIS OF CROSS-BORDER MERGERS AND JURISDICTIONAL CHALLENGES
AUTHOR – VARSHA DAS, STUDENT AT CHRIST (DEEMED TO BE UNIVERSITY)
BEST CITATION – VARSHA DAS, SUBSTANTIVE ANALYSIS OF CROSS-BORDER MERGERS AND JURISDICTIONAL CHALLENGES, INDIAN JOURNAL OF LEGAL REVIEW (IJLR), 6 (2) OF 2026, PG. 603-615, APIS – 3920 – 0001 & ISSN – 2583-2344.
Abstract
Cross-border mergers represent a pivotal strategy for global corporate expansion, enabling companies to access new markets, optimise operations, and achieve synergies amid economic globalisation. These transactions involve the amalgamation of entities from different jurisdictions, governed by a complex interplay of domestic and international laws, but they frequently encounter substantive hurdles rooted in divergent legal systems, regulatory frameworks, and enforcement mechanisms.
In India, the legal architecture for cross-border mergers crystallised with Section 234 of the Companies Act, 2013[1], supplemented by Rule 25A of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016[2], and the Foreign Exchange Management (Cross Border Merger) Regulations, 2018[3]. Inbound mergers, where foreign entities merge into Indian companies, enjoy streamlined approvals via deemed RBI consent and tax exemptions under Sections 47(vi) and (vii) of the Income-tax Act, 1961[4], facilitating capital gains relief and loss carry-forwards. Conversely, outbound mergers, allowing Indian firms to merge into foreign entities from notified jurisdictions (e.g., USA, UK, Singapore, Mauritius), face stringent FEMA compliance, sectoral FDI caps, and the absence of tax neutrality, often triggering capital gains taxation and eroding shareholder value.
[1] Companies Act, 2013, § 234, No. 18, Acts of Parliament, 2013 (India).
[2] Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, r. 25A.
[3] Foreign Exchange Management (Cross Border Merger) Regulations, 2018.
[4] Income-tax Act, 1961, §§ 47(vi), 47(vii), No. 43, Acts of Parliament, 1961 (India).