In the last few years, many Indian businesses “flipped” their shareholding structure by setting up a holding company in offshore jurisdictions. This was driven by several factors, including commercial, tax and regulatory considerations. However, this trend has reversed in recent times and the notion of “reverse-flipping” has picked up momentum. One objective of reverse flips has been to achieve a public listing in India. This note explores reverse flips and potential mechanisms to achieve them.
The facilitation of outbound mergers under the Companies Act and the FEMA Regulations has contributed towards expansion of the scope of cross-border mergers in India. However, as a practical matter, the framework for cross-border mergers in India has largely been utilized only in the context of merger of foreign wholly owned subsidiaries with and into their Indian holding companies or vice versa. This note discusses certain key issues leading to limited efficacy of the cross-border merger framework in India from a regulatory and tax perspective.