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The Competition Commission of India (CCI) approves the merger of the BNP Paribas (BNPP) Mutual Fund and the Baroda (BOB) Mutual Fund, under Section 31(1) of the Competition Act, 2002

The Proposed Combination relates to the merger of the BNP Paribas Mutual Fund and the BOB Mutual Fund. The Parties propose to amalgamate (i) BOB Asset Management Company (AMC) into BNPP AMC; and (ii) BNPP Trustee Company (TC) into BOB TC. After the merger, BNPP AMC and BOB TC will be the surviving entities.

BNPP AMC is the dedicated AMC for BNPP Mutual Fund and acts as the investment manager of BNPP Mutual Fund. BNPP AMC is also a registered as Portfolio Manager under SEBI Regulations. It provides portfolio management services and advisory activities. BNPP TC is the trustee company of BNPP Mutual Fund.

BOB AMC is the dedicated AMC for BOB Mutual Fund and acts as the investment manager of BOB Mutual Fund. BOB TC acts as the trustee for BOB Mutual Fund.

Ministry of Corporate Affairs

[Press Release dt. 14-11-2019]

Cabinet DecisionsLegislation Updates

The Union Cabinet chaired by Prime Minister Shri Narendra Modi has approved the scheme of amalgamation for amalgamating Bank of Baroda, Vijaya Bank and Dena Bank, with Bank of Baroda as the transferee bank and Vijaya Bank and Dena Bank as transferor banks on 02-01-2019.

The amalgamation will be the first-ever three-way consolidation of banks in India, with the amalgamated bank being India’s second largest Public Sector Bank.

Key points of the Scheme of amalgamation:

(a) Vijaya Bank and Dena Bank are transferor banks and BoB is transferee bank.

(b) The scheme shall come into force on 01-04-2019.

(c) Upon commencement of the scheme, the undertakings of the transferor banks as a going concern shall be transferred to and shall vest in the transferee bank, including, inter alia, all business, assets, rights, titles, claims, licenses, approvals and other privileges and all property, all bor­rowings, liabilities and obligations.

(d) Every permanent and regular officer or employee of the transferor banks shall become an officer or employee and shall hold his office or service therein in the transferee bank such that the pay and allowance offered to the employees/officers of transferor banks shall not be less favourable as compared to what they would have drawn in the respective transferor bank.

(e) The Board of the transferee bank shall ensure that the interests of all transferring employees and officers of the transferor bank are protected.

(f) The transferee bank shall issue shares to the shareholders of transferor banks as per share exchange ratio. Shareholders of the transferee bank and transferor banks shall be entitled to raise their grievances, if any, in relation to the share exchange ratio, through an expert committee.

Ministry of Finance

Corp Comm LegalExperts Corner

Introduction and background

A cross-border merger explained in simplistic terms is a merger of two companies located in different countries. A cross-border merger could involve an Indian company merging with a foreign company or vice versa. If the resultant company being formed due to the merger is an Indian company, it is termed an inbound merger and if the resultant company is a foreign company, it is an outbound merger.

Cross-border mergers may play a vital role in the commercial growth of the economy. Companies Act, 1956 (CA 1956) dealt with cross-border mergers in a limited way. Sections 391-94 of the CA, 1956 laid down provisions with respect to cross-border mergers. However, under the CA, 1956, only inbound mergers were permitted. The term “transferee company” defined under Section 394(4)(b) of the CA, 1956 included only Indian companies and hence transfers were not allowed to be made to foreign companies.

Companies Act, 2013 (CA, 2013) brought about a significant change in this position. Section 234 of the CA, 2013 which was notified in December 2017 has made provisions for both inbound and outbound mergers. It enables the Central Government in consultation with Reserve Bank of India (RBI) to make rules pertaining to cross-border mergers.

In pursuance of the aforesaid, RBI had issued draft regulations in this regard in April 2017. The Foreign Exchange Management (Cross-Border Merger) Regulations, 2018 (Merger Regulations 2018) have been recently notified and are effective from 20-3-2018. Mergers which are in compliance with the Merger Regulations are deemed to be automatically approved by RBI and do not require a separate approval.

The Merger Regulations are a comprehensive set of rules which deal holistically with cross-border mergers. Cross-border mergers are defined under the Merger Regulations as any merger, arrangement or amalgamation in accordance with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 (Companies Amalgamations Rules) notified under the CA, 2013.

A foreign company under the Merger Regulations means a company which is incorporated outside India. Similarly, an Indian company is one which is incorporated in India. Outbound investment is permitted only with companies incorporated in the countries mentioned in Annexure B of the Companies Amalgamations Rules. The companies which take over the assets and liabilities of the companies involved in the cross-border merger are called “resultant company”. A resultant company may be either Indian or foreign.

The Merger Regulations lay down detailed processes for both inbound and outbound mergers. The salient features of the Merger Regulations are as follows:

Inbound mergers

An inbound merger is one where a foreign company merges with an Indian company resulting in an Indian company being formed. Following are the key regulations which need to be followed during an inbound merger:

Transfer of securities

Typically, the resultant company of the cross-border merger can transfer any security including a foreign security to a person resident outside India in accordance with the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017. However, where the foreign company is a joint venture/wholly-owned subsidiary of an Indian company, such foreign company is required to comply with the Foreign Exchange Management (Transfer or Issue of any Foreign Security) Regulations, 2004 (ODI Regulations).

Branch/office outside India

An office/branch outside India of the foreign company shall be deemed to be the resultant company’s office outside India for in accordance with the Foreign Exchange Management (Foreign Currency Account by a Person Resident in India) Regulations, 2015.


The borrowings of the transferor company would become the borrowings of the resulting company. The Merger Regulations has provided a period of 2 years to comply with the requirements under the external commercial borrowings (ECB) regime. The end use restrictions are not applicable here.

Transfer of assets

Assets acquired by the resulting company can be transferred in accordance with the Companies Act, 2013 or any regulations formulated thereunder for this purpose. If any asset is not permitted to be acquired, the same shall be sold within two years from the date when the National Company Law Tribunal (NCLT) had given sanction. The proceeds of such sale shall be repatriated to India.

Opening of overseas bank accounts for resultant company

The resultant company is allowed to open a bank account in foreign currency in the overseas jurisdiction for a maximum period of 2 years in order to carry out transactions pertinent to the cross-border merger.

Outbound mergers

An outbound merger is one where an Indian company merges with a foreign company resulting in a foreign company being formed. The following are the major rules governing an outbound merger:

Issue of securities

The securities issued by a foreign company to the Indian entity, may be issued to both, persons resident in and outside India. For the securities being issued to persons resident in India, the acquisition should be compliant with the ODI Regulations. Securities in the resultant company may be acquired provided that the fair market value of such securities is within the limits prescribed under the Liberalised Remittance Scheme.

Branch office

An office of the Indian company in India may be treated as the branch office of the resultant company in India in accordance with the Foreign Exchange Management (Establishment in India of a Branch Office or a Liaison Office or a Project Office or any Other Place of Business) Regulations, 2016.

Other changes

(a) The borrowings of the resulting company shall be repaid in accordance with the sanctioned scheme.

(b) Assets which cannot be acquired or held by the resultant company should be sold within a period of two years from the date of the sanction of the scheme.

(c) The resulting foreign company can now open a special non-resident rupee account in terms of the Foreign Exchange Management (Deposit) Regulations, 2016 for a period of two years to facilitate the outbound merger.

Implications of the Merger Regulations

Prior to the enactment of CA, 2013, Indian companies were prohibited from merging with foreign entities. The notification of Section 234 in December 2017 brought about an end on this restriction and made out-bound mergers a reality.

The Merger Regulations further consolidate this process by laying down detailed ground rules to be followed during cross-border mergers. Moreover, providing deemed approval of RBI to companies which are compliant with the Merger Regulations is a welcome step. The time period of 2 years, provided to the parties to sell off the assets not permitted to be held and to become compliant with the ECB regime provides flexibility to the transferor and transferee companies.

One can hope that with serious and effective implementation, the Merger Regulations would go a long way in creating a more conducive commercial environment and would strengthen and increase India’s presence on the global front.


*Bhumesh Verma is Managing Partner at Corp Comm Legal and can be contacted at and **Soumya Shekhar is Research Associate.

Case BriefsForeign Courts

European Court of Justice: ECJ has provided guidance on the scope of the standstill obligation. It ruled that gun-jumping (when an acquiring company seeks to exercise control over a target company’s business operations pre-close) can only occur when the acquiring company’s action results in a lasting change in the control of the target business and not simply because the target company takes unilateral actions in anticipation of the merger.

In 2013, Ernst & Young (EY) entered into a merger agreement with KPMG Denmark. Danish law, on the lines of EU merger-control law, prohibited the parties to a merger transaction from taking any steps to implement the transaction prior to receiving clearance from the Danish Competition Council. It is the “standstill obligation” and its violation is considered to be “gun-jumping.”

As per the agreement, KPMG Denmark gave notice to terminate its cooperation agreement with KPMG International on the day that the merger agreement was signed, before the companies had even notified the Danish Competition and Consumer Authority (DCCA) of their proposed merger, much less received clearance for it. While the notice was effective immediately, the termination did not take effect until the transaction closed. Subsequent to the notice, KPMG International established a new auditing business in Denmark. In December 2014, the DDCA ruled that KPMG Denmark had breached its standstill obligation and had jumped the gun in implementing the merger. The parties appealed that decision, and the case was referred to the ECJ for a preliminary ruling.

ECJ noted that Article 7(1) (the “standstill obligation”) of the EU Merger Regulation (EUMR) limits the standstill obligation to “concentrations” as defined under Article 3 EUMR, i.e., to situations where there is a “change of control on a lasting basis” allowing an acquirer to exercise decisive influence over the target company. The ECJ added that even the partial implementation of a concentration falls within the scope of Article 7(1) EUMR. It explained that preparatory or ancillary acts to the concentration which do not lead to a change of control, do not fall within the scope of Article 7(1) EUMR.

In essence, the EUMR applies to any transaction constituting a concentration to which Regulation 1/2003 does not apply. This means that conduct of the merging parties may breach (i) the standstill obligation if it contributes to a change of lasting control prior to clearance by the Commission, or (ii) breach Article 101 TFEU if it does not lead to a change of control, but nevertheless restricts competition within the internal market. An example of the latter conduct could be an exchange of sensitive commercial information between two merging competitors.

The ECJ concluded that the termination of the cooperation agreement between KPMG Denmark and KPMG International was not subject to the prohibition of gun-jumping as termination did not contribute to the change of control over KPMG Denmark despite the fact that it took place before the DCCA had cleared the transaction. The ECJ further stated that whether an alleged gun-jumping violation causes market effects is irrelevant. [Ernst & Young v. Konkurrencerådet, [2018] Bus LR 1718, dated 31-05-2018].

Case BriefsForeign Courts

Supreme Court of United Kingdom– Allowing the appeal by the Competition and Markets Authority wherein the issue was whether Groupe Eurotunnel SE (GET) acquired an “enterprise” or the bare assets of a defunct enterprise, the Court held that the merger control provisions of the Enterprise Act 2002 are not limited to the acquisition of a business that is a “going concern” and the possession of “activities” is a descriptive characteristic of an enterprise under the Act. An enterprise is subject to merger control if the capacity to perform those activities as part of the same business subsists.

In the instant case, SeaFrance SA, operated a ferry service until it ceased operations. It was formally liquidated on 9 January 2012, and most of its employees were dismissed. GET, the parent company of the Group operating the Channel Tunnel, and Société Coopérative De Production SeaFrance SA (“SCOP”), a workers’ co-operative incorporated by a number of former SeaFrance employees to secure the continuance of the ferry service, acquired substantially all of SeaFrance’s assets including three of the four SeaFrance vessels, trademarks, IT systems, goodwill and customer lists. GET and SCOP resumed ferry services. The acquisition was referred to the Competition Commission, the regulator at the time. The Authority considered that what GET acquired was an enterprise and that accordingly a merger situation existed which was expected to result in a substantial lessening of competition in the cross-Channel market. Hence the present appeal.

The Court by a majority observed that the determining test is one of economic continuity. Lord Sumption, giving the majority judgment stated that an acquirer acquiring assets acquires an “enterprise” where (i) those assets give the acquirer more than might have otherwise been acquired by going into the market and buying factors of production and (ii) the extra is attributable to the fact that the assets were previously employed in combination in the “activities” of the target enterprise. [Société Coopérative de Production SeaFrance SA v The Competition and Markets Authority, decided on 16.12.2015]