Mergers and acquisitions are used as tools of significant growth and are gradually getting accepted by Indian businesses as an important tool of business strategy. They are usually used in a wide array of fields such as information technology, telecommunications, and business process outsourcing as well as in traditional businesses to gain strength, increase the customer base, eliminate competition or enter into a new market. Mergers and acquisitions are envisaged to access the market through a renowned brand, to get a market share, to eradicate competition, to reduce tax liabilities or to procure competence or to set off accumulated losses of one company against the profits of other companies.
Process of mergers and acquisitions:
- The process of mergers and acquisitions in India is court driven, long-drawn and hence challenging.
- The process may be started through common agreements between the two parties, but that is not enough to offer a legal cover to it. The sanction of the High Court is needed for bringing it into effect.
- The Companies Act includes rules relating to mergers & acquisitions, negotiations, re-arrangements, and reorganizations, though other provisions of the Companies Act get attracted on different occasions and in each circumstance of merger and acquisition, the procedure remains far from simple.
- The Central Government plays a significant role in this process and it acts through an Official Liquidator or the Regional Director of the Ministry of Company Affairs.
- The whole process has to be to the satisfaction of the Court which can results in delays at times.
Single window concept:
- The law provides a single forum that would accept the scheme of mergers and acquisitions in an effective time-bound way.
- The law should also give compulsory intimation to regulators in respect of a particular class of companies.
- The idea of deemed approval should be given for in circumstances where the regulators do not intimate/inform their comments within a specified time to the Court/Tribunal before which the scheme of merger/amalgamation is given for approval.
ASC will assist you in restructuring your business through mergers and Acquisitions. A business may grow over time as the consumption of its products and services is recognized. It raises through an inorganic process, represented by an instantaneous growth of the workforce, customers, infrastructure resources and thereby an overall rise in the revenues and profits of the entity.
