Foreign Exchange Management (Cross Border Merger) (Amendment) Regulations, 2026

 RBI Notification No. FEMA 389(1)/2026-RB | Dated: 29th May, 2026

The Reserve Bank of India (Foreign Exchange Department), Central Office, Mumbai, has notified the Foreign Exchange Management (Cross Border Merger) (Amendment) Regulations, 2026, amending the Foreign Exchange Management (Cross Border Merger) Regulations, 2018 (Notification No. FEMA 389/2018-RB dated March 20, 2018) (the Principal Regulations). The amendment comes into force with effect from the date of its publication in the Official Gazette.

Background

The FEMA (Cross Border Merger) Regulations, 2018 govern foreign exchange related aspects of cross-border mergers, demergers, amalgamations, and arrangements involving Indian companies and foreign companies. These regulations operate in conjunction with the cross-border merger framework under the Companies Act, 2013 and the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016. Until now, the Principal Regulations specifically referenced the National Company Law Tribunal (NCLT) as the approving authority for schemes of merger or amalgamation across these provisions.

Amendments Introduced

Amendment to Regulation 2 — Definitions

Two changes have been made to the definitions clause:

First, clause (vii) of Regulation 2 has been omitted entirely.

Second, a new clause (iia) has been inserted after clause (ii), introducing the definition of "Competent Authority" as follows:

"'Competent Authority' means any authority empowered under the Companies Act, 2013 or any subordinate legislation made thereunder to approve a scheme of merger or amalgamation."

Amendment to Regulations 4, 5, 7 and 9 — Substitution of "NCLT" with "Competent Authority"

In Regulations 4, 5, 7, and 9 of the Principal Regulations, the word "NCLT" wherever it occurs has been substituted with the words "Competent Authority".

Significance of the Amendment

The central effect of this amendment is a deliberate broadening of the approval framework for cross-border merger schemes under FEMA. By replacing the specific reference to "NCLT" with the wider concept of "Competent Authority," the RBI has aligned the FEMA cross-border merger framework with the reality that schemes of merger and amalgamation under the Companies Act, 2013 may be sanctioned by authorities other than the NCLT — including those constituted under subordinate legislation made under the Companies Act.

This change has the following practical implications:

One, it future-proofs the FEMA regulations. Any authority that may be designated under subordinate legislation under the Companies Act, 2013 to approve merger schemes will automatically be recognised for FEMA purposes, without requiring a fresh amendment to the Principal Regulations.

Two, it removes the rigidity of tying FEMA compliance obligations — such as reporting, pricing norms, and conditions applicable to cross-border mergers — exclusively to NCLT-sanctioned schemes. The obligations under Regulations 4, 5, 7, and 9 will now apply uniformly regardless of which competent authority has sanctioned the scheme.

Three, for professionals advising on inbound cross-border mergers (where a foreign company merges into an Indian company) and outbound cross-border mergers (where an Indian company merges into a foreign company), the definitional shift must be factored into transaction structuring and regulatory compliance planning.

Effective Date

The amendment is effective from the date of publication in the Official Gazette.

Source: RBI Notification No. FEMA 389(1)/2026-RB dated 29th May, 2026 [ADVT.-III/4/Exty./142/2026-27]

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