NCLT Mumbai Approves Cross-Border Merger Of UAE Legal Consultancy Company With Indian Parent

The Mumbai bench of the National Company Law Tribunal (NCLT) has recently approved the cross-border merger of Begur International Legal Counsellors FZ-LLC, a UAE-based company engaged in legal consultancy, with its Indian parent, Pranesh Eservices Private Ltd.

The tribunal found the proposed scheme to be fair, reasonable, and not contrary to law or public policy.

A tribunal comprising Judicial Member Lakshmi Gurung and Technical Member Hariharan Neelakanta Iyer held that all statutory requirements had been fulfilled before sanctioning the scheme.

Begur International Legal Counsellors FZ-LLC is a wholly owned subsidiary incorporated in the Ras Al Khaimah Economic Zone in the United Arab Emirates. In an earlier order, the tribunal dispensed with meetings of the Indian company's equity shareholders and unsecured creditors. It also recorded that the UAE company had no secured or unsecured creditors.

The company served notices on the Reserve Bank of India, the Regional Director, the Income Tax Department, the Goods and Services Tax authorities and the Official Liquidator. The Regional Director filed observations, which were addressed through clarifications and undertakings furnished by the company. It further found no objection to the scheme from the Income Tax Department or the Goods and Services Tax Department.

The tribunal recorded the company's submission that the scheme was deemed to have prior approval of the Reserve Bank of India under Regulation 9 of the Foreign Exchange Management (Cross Border Merger) Regulations, 2018. It also recorded the company's undertaking to comply with FEMA, RBI guidelines, and all applicable laws in India and the United Arab Emirates.

Since the UAE company was a wholly owned subsidiary, the tribunal directed that the equity shares held by Pranesh Eservices in the subsidiary would stand cancelled and extinguished once the scheme became effective. No shares will be issued by the Indian company under the amalgamation.

The tribunal directed Pranesh Eservices to file a certified copy of the order with the Registrar of Companies within 30 days. It also directed the company to lodge the order with the Superintendent of Stamps within 60 days for adjudication of stamp duty.

For Petitioner Company: Advocate Hemant Sethi along with Advocate Tanaya Sethi