India mergers and acquisitions: Simplification of share swaps boosts structuring avenues and opportunities

Share swaps: Growing in popularity

Global trends reveal ‘share swaps’ have emerged as an attractive proposition for implementing Mergers and Acquisitions (“M&A”) for several commercial, strategic and regulatory reasons. Several landmark transactions, both globally[1] and in India[2], involving share-swap arrangements have been implemented.

In India, the rules around cross-border share swaps have been considerably liberalised over the years. The era of liberalisation which started in 2015 when the foreign exchange rules permitted limited types of ‘share-swaps’ culminated with substantial liberalisation of the norms in 2024. Some of the remaining uncertainties have been further clarified, as recent as in January 2025. Only a handful of share-swap structures remain under the ‘approval’ route. This opens exciting new structuring opportunities for structuring M&A transactions, particularly for start-ups. Further, growth-stage companies with limited liquidity are often inclined towards swap routes for undertaking strategic acquisitions. The reforms are likely to provide a fillip to such companies for relocation to India (‘reverse’ flipping in common parlance).

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