RBI Broadens Approval Framework for Cross-Border Mergers Under FEMA Regulations

In a significant regulatory update aimed at supporting modern corporate restructuring practices, the Reserve Bank of India (RBI) has amended the Foreign Exchange Management (Cross Border Merger) Regulations, 2018. The revised provisions seek to create a more flexible approval mechanism for cross-border merger and amalgamation transactions while ensuring consistency with the evolving framework under the Companies Act, 2013.

Key Regulatory Amendment Announced

Through the Foreign Exchange Management (Cross Border Merger) (Amendment) Regulations, 2026, the RBI has introduced an important change by replacing references to the National Company Law Tribunal (NCLT) with the broader term “Competent Authority” in several provisions governing cross-border merger transactions.

This amendment reflects the changing landscape of corporate restructuring and recognizes that merger approvals may be granted by authorities other than the NCLT, depending on future legislative and regulatory developments.

Definition of “Competent Authority” Clarified

Under the revised regulations, a Competent Authority refers to any authority authorized under the Companies Act, 2013, including applicable rules and subordinate legislation, to approve a merger or amalgamation scheme.

By introducing this broader definition, the RBI has expanded the scope of recognized approving bodies, ensuring that regulatory compliance remains effective even if the institutional framework governing mergers changes over time.

Regulations Updated to Reflect New Framework

The amendment removes the earlier NCLT-specific definition contained in the principal regulations. Consequently, references to the NCLT in Regulations 4, 5, 7, and 9 of the Cross Border Merger Regulations have been substituted with the term Competent Authority.

This change provides greater regulatory adaptability and eliminates the need for future amendments whenever merger approval powers are reassigned to another legally authorized authority.

Alignment Between FEMA and Corporate Restructuring Laws

According to the RBI, the primary objective of the amendment is to ensure better alignment between the Foreign Exchange Management Act (FEMA) framework and India's broader corporate restructuring regime.

The revised approach ensures that approvals granted by any legally empowered authority under the Companies Act will be recognized for foreign exchange compliance purposes, thereby strengthening regulatory consistency across different legal frameworks.

Expected Benefits for Cross-Border Transactions

Market experts believe the updated framework will simplify the execution of cross-border mergers involving Indian and foreign entities. By broadening the approval mechanism, the amendment is expected to reduce procedural uncertainties and improve regulatory efficiency.

The move is also viewed as a forward-looking step that accommodates future changes in the corporate governance and restructuring ecosystem, making cross-border transactions more seamless and business-friendly.

Legal Basis of the Amendment

The amendment has been issued by the RBI under the powers vested in it through Section 47 of the Foreign Exchange Management Act (FEMA), 1999, enabling the central bank to update foreign exchange regulations in line with evolving legal and economic requirements.

Short Summary

The RBI has amended the FEMA Cross Border Merger Regulations, 2018, replacing references to the NCLT with the broader term “Competent Authority.” The change aligns foreign exchange regulations with the Companies Act framework, enhances regulatory flexibility, and is expected to facilitate smoother cross-border merger and amalgamation transactions.