Analysis Of Laws Regarding International Cross-Border Mergers And Acquisitions

Divyaansh Jain & Ram Abraham, Bennett University

ABSTRACT

India has emerged as one of the leading economies in the global marketplace, creating a favorable environment for mergers and acquisitions (M&As) involving foreign companies. This growth has been fueled by a combination of factors, including economic liberalization, an expanding middle class, and increasing foreign direct investment (FDI). To facilitate and regulate these cross-border corporate transactions, India has established a comprehensive legal and regulatory framework that governs international M&As. This paper aims to provide an overview of the key Indian laws that shape the landscape of international mergers and acquisitions, emphasizing their procedural requirements and the regulatory bodies responsible for overseeing these transactions.

Central to the regulatory framework is the Companies Act of 2013, which provides detailed guidelines for the functioning of companies in India, including the processes for mergers and acquisitions. The Act sets forth essential provisions for the approval of such transactions, ensuring transparency and fairness in business practices. Furthermore, it outlines the rights of shareholders and the procedures for protecting their interests during M&A activities.

The Foreign Exchange Management Act (FEMA) is another critical piece of legislation that governs cross-border transactions involving foreign investment. FEMA aims to facilitate external trade and payment while promoting the orderly development and maintenance of the foreign exchange market in India. The Act imposes specific guidelines on foreign investments, including the need for approvals from regulatory authorities, thereby ensuring that M&As align with national interests.

The Competition Act of 2002 plays a vital role in maintaining fair competition within the Indian market. This legislation is designed to prevent anti-competitive practices that may arise from mergers and acquisitions.