NCLT Ahmedabad Clears Cross-Border Merger of GNRL Oil & Gas Bahamas Unit With Indian Parent

The National Company Law Tribunal (NCLT) at Ahmedabad has cleared a cross-border merger that will see a Bahamas-based oil and gas company merged into its Indian parent.

A coram of Judicial Member Chitra Hankare and Technical Member V G Venkata Chalapathy said the scheme was “bona fide and in the interest of the shareholders and creditors” and approved it under the Companies Act.

The merger involves GNRL Oil & Gas Ltd., incorporated in the Bahamas, and GNRL Oil & Gas (I) Private Limited in India.

The Bahamas entity is engaged in oil and gas exploration and production. It operates a project office in Ahmedabad and is wholly owned by the Indian company. Under the scheme, it will merge into the Indian entity with effect from April 1, 2023. Since the subsidiary is wholly owned, the shares held by the parent will be cancelled, and no new shares will be issued.

The Tribunal reviewed compliance with regulatory requirements before granting approval. The company said the merger qualified for deemed approval under the FEMA Cross Border Merger Regulations. It also pointed out that no objection was received from the Reserve Bank of India despite notice.

The Income Tax Department informed the tribunal of outstanding tax demands of about Rs 33 lakh against the Indian company. The tribunal permitted the merger after the company undertook to take over all tax liabilities.

The Directorate General of Hydrocarbons sought bank guarantees and changes to Production Sharing Contracts for oil fields operated by the group. After these undertakings were given, the DGH stated that it had no objection to the scheme.

Allowing the merger, the tribunal directed that "All the property right and powers of the Transferor/non-petitioner Company and all the other property, rights and powers of the Transferor/non-petitioner Company be transferred as per scheme without further act or deed to the Transferee Company and accordingly the same shall, pursuant to Section 232 of the Act, be transferred to and vested in the Transferee Company for all the estates and interest of the Transferor/non-petitioner Company therein."

It also ordered that the Bahamas company shall stand dissolved without winding up. The tribunal directed that the project office in India be closed within six months in compliance with FEMA regulations and clarified that employees of the foreign company would continue with the Indian entity on the same terms.

For Applicant: Advocate Dharmishta N. Raval

For Statutory Authorities: Advocate Kunan Naik for Hydro Carbon; Dy. Dir Shiv Pal Singh for RD; Advocate Aman A Mir for Tax Dept.