1. Companies Act, 2013: The primary legislation governing mergers and acquisitions in India is the Companies Act, 2013. It provides the legal framework for merger and acquisition transactions, including provisions related to the structuring, process, and approval requirements.
2. Approval from shareholders and creditors: The Act requires approval from the shareholders and creditors of the merging entities for the consolidation or amalgamation to take place. This ensures transparency and protects the interests of stakeholders.
3. Competition Act, 2002: The Competition Act regulates mergers and acquisitions in India to prevent anti-competitive practices. It establishes the Competition Commission of India (CCI) as the regulatory authority that evaluates and approves mergers and acquisitions that may have an adverse impact on competition in the market.
4. Securities and Exchange Board of India (SEBI) Regulations: SEBI regulates mergers and acquisitions involving listed companies in India. It provides rules for disclosures to be made by companies, safeguards against insider trading, and guidelines on open offer requirements for acquiring substantial shareholding.
5. Foreign Exchange Management Act (FEMA): FEMA regulates foreign investments in India and sets guidelines for cross-border mergers and acquisitions. It determines the approvals necessary for inbound and outbound mergers, including compliance with pricing norms, reporting obligations, and repatriation of funds.
6. Taxation laws: Mergers and acquisitions are subject to taxation in India. The Income Tax Act, 1961 governs tax implications related to the transfer of shares or assets during a merger or acquisition. Specific provisions ensure tax neutrality for certain transactions, such as scheme mergers approved by the National Company Law Tribunal (NCLT).
7. National Company Law Tribunal (NCLT): The NCLT is the authority responsible for approving schemes of mergers and acquisitions under the Companies Act, 2013. It ensures compliance with legal requirements, protects the interests of stakeholders, and resolves any disputes arising from the transaction.
8. Intellectual Property laws: Intellectual Property (IP) rights are protected during mergers and acquisitions through provisions under the Companies Act, as well as specialized laws like the Patents Act, Trademarks Act, and Copyright Act. These provisions safeguard existing IP assets and ensure their continued protection post-transaction.
It is important to note that the key provisions mentioned above serve as a general overview of the Mergers and Acquisitions laws in India. The legal landscape is complex and subject to amendments, so it is advisable to consult with seasoned lawyers who specialize in this area for accurate and up-to-date advice.