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A legal analysis of the 2024 rule changes that let a foreign holding company merge into its Indian subsidiary, the companies that used them, and the tax questions that still make a flip back expensive.
India's Reverse-Flip Wave: Regulatory Breakthroughs and Enabling Frameworks
From IndiaCorpLaw by Dev Goyal and Manas Divetia 12 min read
- Rule 25A(5) of the merger rules opened the fast-track route under Section 233 to foreign holding companies merging into their Indian subsidiaries.
- The 2024 NDI Rules amendment lets the Indian company issue shares to the foreign holding company's shareholders under the automatic route.
- A reverse flip is still a taxable event, and GAAR needs documented commercial substance, which is where most of the cost sits.
