Merger and Acquisition (M&A) Law in India

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.