FEMA implications in cross-border M&A — inbound and outbound
Inbound: FDI routes apply; valuation as per DCF / SEBI norms. Outbound: ODI framework with 400% net-worth cap and Form FC. Cross-border mergers per RBI 2018 Regulations.
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Cross-border merger under FEMA Cross Border Merger Regulations, 2018
Enables Indian-foreign company mergers (inbound and outbound). Inbound: foreign assets get 2-year compliance window. Outbound: resident shareholders via LRS / ODI.
Difference between Merger, Demerger and Slump Sale
Merger combines two entities into one. Demerger spins off an undertaking. Slump sale transfers an undertaking for lump-sum consideration without itemised valuation.
Automatic Route vs Approval Route for FDI
Automatic: no prior approval; only post-investment reporting. Approval route: government clearance via FIFP for sensitive sectors and from land-border countries.
Compounding of contraventions under FEMA
Voluntary admission of contravention; compounded by RBI/Directorate of Enforcement; no criminal prosecution post-compounding; quantum based on Master Direction matrix.
Annual Return on Foreign Liabilities and Assets (FLA)
Filed on RBI FLAIR portal by Indian entities with FDI/ODI/foreign assets/liabilities by 15 July each year. Required even if no transactions during the year.