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.
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CS
Company Secretary interview questions
12 questions available.
Difficulty
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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Foreign Contribution (Regulation) Act, 2010 — applicability and renewal
FCRA regulates receipt of foreign contributions by associations / NGOs / individuals. Registration via Form FC-3A; valid 5 years, renewable.
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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.
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Foreign Currency Convertible Bonds (FCCBs) — structure and regulation
Debt instrument denominated in foreign currency, convertible into equity at predetermined ratio. Issued under ECB framework with conversion price floor.
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Liberalised Remittance Scheme (LRS) for resident individuals
Allows resident individuals to remit up to USD 250,000 per FY for permissible capital and current account transactions, with TCS applicable above ₹7 lakh.
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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.
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Overseas Direct Investment (ODI) under FEMA
Indian entities can invest abroad up to 400% of net worth (automatic) under FEM (OI) Rules 2022. New ODI/OPI bifurcation, financial services restrictions and Form FC.
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External Commercial Borrowings (ECB) framework
Foreign-currency or INR-denominated borrowings by eligible Indian entities, under tenor / pricing / end-use restrictions per RBI Master Direction.
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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.
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FDI reporting — FC-GPR and FC-TRS
FC-GPR: report receipt of FDI and allotment within 30 days. FC-TRS: report transfer of shares between resident and non-resident within 60 days.
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Difference between Capital and Current Account transactions under FEMA
Capital account: alters assets/liabilities of resident outside India (FDI, ODI, ECB, NRI deposits). Current account: rest (trade, services, dividends, salaries).
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