The recent FEMA amendment by RBI substitutes NCLT references with Competent Authority designations, addressing merger process deficiencies but exposing unresolved structural issues.
FEMA Amendments: Key Changes and Implications
The Reserve Bank of India has enacted significant amendments to the Foreign Exchange Management Act (FEMA) in 2026, replacing references to the National Company Law Tribunal (NCLT) with Competent Authorities to oversee reverse-flip mergers. This adjustment aims to expedite the merger process and rectify existing regulatory gaps.
Despite this advancement, industry experts have pointed out that the amendments do not fully resolve underlying structural issues that may hinder effective corporate restructuring. The alterations appear to grant enhanced powers to Competent Authorities, which could lead to improved efficiency in handling mergers and acquisitions.
For legal practitioners involved in corporate transactions, it is essential to closely monitor how these amendments are operationalized. Updating compliance protocols and understanding the implications of these changes will be paramount in advising clients navigating corporate mergers under the revised framework.
Citations
- FEMA Amendment (2026) Gazette Notification 789
