Merger and Acquisition (M&A) is
the term used to define consolidation of the companies. The Merger is the
combination of two companies as one, the less powerful company loses its
identity and becomes one with the more powerful one. On the other hand,
Acquisition is when one company is completely taken over by another one. The
main reason behind M&A is to create more value for the company. Many
countries have their own propagated M&A law. Mergers
and Acquisition firms in India can
help you understand this law and regulations of M&A so that you can
consolidate without any hassle.
M&A in India is governed by the
Indian Companies Act, 1956, under section 391 and 394. It can also be done
through the court with the mutual agreement of both the companies. The High
court should approve merger and Acquisition, and the proposal should be
sanctioned by three-fourths of the shareholders or creditor of the concerned
company.
Indian Antagonism: This allows 210 days to the
companies to consider merger and acquisition. This time is different from the
minimum obligatory stay period for claimants. The time period for claimants cab
be either 210 days from the filing of the notice or acknowledgment of the
Commission’s order.
Entry Limit: The number of companies who are
merging is based on the context of asset worth and the company’s annual income.
The entry limit of companies under Indian law is much higher than European
companies.
International M&A: Company registration in India
is not mandatory for merging and acquisition as the Indian law permits the combination
of Indian firms with its international counterpart. But yes, the international
firm should have its set up in India otherwise it won’t be possible.
There have been some modifications in
the Competition Act, 2002. Recently, some voluntary announcement systems were
replaced by a mandatory one. Nine out of one hundred and six nations come under
voluntary announcement system. If a company is found participating in any sort
of monopoly then as per Indian law, they are ordered to de-merge the companies.
Tecnova is one of the top management
consulting firms in India, which can help you with the merger and
acquisition process. They can make the process quick and smooth for you with
their knowledge and experience.
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