Beyond the Deal: Regulatory, Competition and Transaction-Structuring Challenges in Cross-Border M&A in India

This Blog is Written by Jia Singh, 4th Year, BBA LLB (Hons), Amity University, Jharkhand.

Blog 20 | Edition VII

Introduction — Cross-Border M&A Beyond Commercial Deal-Making

Most often, cross-border mergers and acquisitions (M&A) are seen as business transactions that are conducted through valuation, raising capital and strategic expansion. But in India, the cross-border transaction is completed through a multi-layered regulatory structure. Foreign exchange controls, restrictions on foreign direct investment (FDI), merger control, securities regulation and sector-specific approvals and corporate law provisions can be in effect at the same time. The lawfulness of an acquisition thus cannot be judged from the documents of the transaction alone. The Regulatory strategy should be integrated into the design of the transaction. The article discusses how the interplay between transaction structuring, FEMA/FDI compliance, competition law and due diligence and contractual risk allocation affect the possibility of a cross-border M&A transaction closing with reasonable legal certainty.

The Transaction Structuring (How to Do it): M&A Routes

There are various legal implications in deciding to acquire shares, assets or to merge. A share acquisition will usually retain the target's identity and contracts, licences and liabilities, but will also introduce historical liabilities for the acquirer. A greater degree of selectivity may be allowed under an asset acquisition, but this can call for individual transfers, consents and approvals for contracts, licences and intellectual property. The amalgamation or merger develops a more unified system of restructuring. Section 234 of the Companies Act, 2013 allows a foreign company to merge with an Indian company or vice versa with conditions as per the various provisions of the Companies Act, 2013 after securing RBI approval. Therefore, rather than just choosing structure for commercial convenience, regulatory approvals, tax implications, liabilities and change of control restrictions and transfer of assets and licences must be considered.

FEMA and FDI Compliance: The First Hurdle in the Regulatory Path is FEMA and FDI Compliance

The Foreign Exchange Management Act, 1999 (FEMA) and Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 are the foundation regulatory provisions for an FDI investor in Indian business. Foreign investment is governed by RBI's Foreign Investment Master Direction and the NDI Rules and relevant regulations. The investor is required to verify whether the investment is to be under the automatic route or government route, whether foreign investment is allowed in the specific sector, whether any sectoral cap or other conditions exist. In particular, industries like banking, insurance, telecommunications and defence require special care. The two are equally significant – pricing norms and reporting obligations. There may be filings under FC-GPR or FC-TRS depending on the nature of the transaction and periodical filings may be required under FLA. The RBI gives guidelines on the time limits for the reporting of foreign investment transactions. There are consequences to non-compliance, which can go beyond monetary fines. There might be delays in the transaction, objections to the transaction by regulators, problems in repatriation or restructuring of the proposed investment. In this case, analysis of the FEMA should start at the term-sheet phase, not after signing of the contract.

Managing Risk in Merger Control: Competition Law and CCI Approval

 The merger control regime in India may apply to a cross-border transaction even when the acquirer is not incorporated in India. The terms acquisition, merger, amalgamation and combinations are used in the Competition Act, 2002 in respect of which an acquisition, a merger or an amalgamation which meets the prescribed jurisdictional thresholds may be deemed as a “combinations”, and such combinations must be notified to Competition Commission of India (CCI) under Acts 5 and 6 of the Act. The CCI has the authority to alter or bar a combination that it considers to have created and/or will create an Appreciable Adverse Effect on Competition (AAEC). The modern framework also takes into account the thresholds for deals, especially in cases where the business acquired is valuable and the assets or the turnover are relatively small in the Indian context. On notification and exemptions, the framework of 2024 also added specific guidelines. The CCI evaluates the factors covered under Section 20(4) such as Market Concentration, Entry barriers, Countervailing power, Imports, Substitutes and chances of elimination of an effective competitor. Most importantly, India's merger-control regime is suspensory. Section 6(2A) restricts implementation of the combination before the statutory approval or before the end of the period of time fixed by the rule. If implemented early, it could constitute "gun jumping" and could incur penalties.

Emirates NBD and RBL Bank Signed a Recent Agreement

The deal with Emirates NBD Bank (P.J.S.C.) to acquire a majority stake in RBL Bank illustrates how multiple regulatory jurisdictions can come together in a single cross border transaction. CCI has approved the proposed acquisition in January 2026. The structure comprised preferential allotment of up to 60% of RBL's shares; an open offer under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 of up to 26% of the Bank's shares, and proposed amalgamation of Emirates NBD's Indian banking operations with RBL Bank.  The transaction finally went through all the necessary governmental and regulatory approvals and closed in June 2026, whereby Emirates NBD acquired 60% of RBL's expanded share capital. This transaction demonstrates that, in addition to one regulatory approval, coordination between CCI, RBI, Government and SEBI is required in respect of cross-border M&A.

Knowing What One is Getting Into and Handling Regulatory Risk through Contractual Allocation

The regulatory due diligence should uncover license, foreign investment restrictions, pending proceedings, change of control clauses, regulatory correspondence and historical compliance issues. Where there is a listed target, there is the need to do a take over regulation analysis as acquisition of shares/control may give rise to obligations under open offer. SEBI understand that there may be instances where shares are acquired directly as well as indirectly, which could give rise to takeover requirements. Representations and warranties, indemnities, conditions precedent and covenants should thus be written to allocate regulatory risks in the acquisition agreement. In the absence of legal requirements, regulatory approvals should be considered conditions precedent to the closing. Long-stop dates should give enough time to gain approvals and termination rights, deal with prolonged regulatory uncertainty.

Laying the Groundwork for Regulatory Approvals and Deal Certainty: Building Regulatory Approvals and Deal Certainty

The failure to regulate can have a material impact on valuation and financing assumptions. Parties should consequently adopt an approval time frame and assign responsibility for filing and, to make sure, any additional regulatory requirements, the long-stop dates and carefully crafted termination provisions become even more critical, where multiple regulators are required to approve different elements of the same transaction. It is also possible to negotiate for a material adverse change clause that is not too broad to include routine regulatory delays as a termination cause. Introducing New Regulatory Hurdles in Cross-Border M&A. New Regulatory Hurdles in Cross-Border M&A. Data, technology and digital-market issues are more and more impacting cross-border M&A. Sensitive personal data, critical technology or highly regulated businesses may be the subject of scrutiny in addition to the usual merger-control analysis. The deal-value threshold also reflects the regulator's growing competence in examining deals with a competitive value that may not be evident in the conventional asset/turnover metrics.

Concluding with Building Regulatory Certainty into M&A Transactions

The signing of the definitive agreement is not the final step in a cross-border M&A transaction in India. The success hinges on the legality of the transaction's legal structure to meet India's foreign-exchange, corporate, competition, securities and sectoral regulatory regimen. The investment must be compliant with FEMA and FDI regulations for it to be able to enter the Indian market, it must be compliant with competition law to be able to go through without the need to set up an AAEC and contractual mechanisms will determine how regulatory uncertainty is shared between the parties. The important conclusion is regulatory compliance shouldn't be the final hurdle. It should be built in from the ground up – transaction strategy. In complex cross-border M&A, regulatory planning is not just about defense, it's about being an integral part of the deal.

(Write to the author at singhjia044@gmail.com.)