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M&A transactions in India are regulated by:

  • TM Law;
  • Patent Law;
  • IT Law;
  • Copyright Law;
  • Industrial Designs Act;
  • Payment & Settlement Systems Law.

India: DD of M&A Deals

DD of Indian companies is meant to:

  • determine legal ownership of assets;
  • determine whether any 3rd parties are capable of affecting ownership or use of assets.
  • determine whether a company faces any claims in relation to assets sold or whether any assets-related violations have been committed;
  • determine whether assets are protected by patents & if they aren’t, whether their sale may result in violation of any patents.

DD of an M&A transaction in India also involves verifying ownership of shares & ensuring that a seller is properly authorized to conduct an M&A transaction in India.

India: Transferring IP in M&A Transactions

Whether there’s any limitations associated with transfer of IP in India depends on a license type (e.g. whether it’s exclusive or non-exclusive) & agreements signed by a licensee. Just as their name suggests, non-exclusive licenses do not provide licensees with any rights whatsoever, whereas exclusive ones do.

Privacy of Data, IP & Cybersecurity

Normally, any info like this must be disclosed prior to conclusion of an M&A deal in India. In particular, sellers may be requested to provide evidence that they’re the only owners of the IP sold & that its sale doesn’t violate any 3rd parties’ rights.

As regards data protection, sellers may be asked to provide proof of their company’s compliance with all applicable rules, including those of them that are contained in the IT Act.

Normally, concluding M&A agreements in India is agreed on an individual basis (that particularly applies to concluding cross-licensing patent agreements in India).

Acquiring a Company in India: Innovations

Foreign investors are allowed to invest no more than twenty six percent in Indian companies (especially digital media outlets). To be able to make such an investment, they must obtain government approval.

Companies set up with FDI are allowed to conduct online sales even before opening physical stores. However, they’re required to open physical stores within twenty four months after online sales are launched. 

To encourage establishment of start-ups in India, the government has raised a cap on DVR to seventy four percent from the previous twenty six percent.

If you want to conclude an M&A deal in India or purchase shares of an Indian company, you should be intimately aware of all the legal nuances related to the regulation of M&A transactions in India. If you don’t know where to start, IQ Decision UK will be happy to provide you with advice on any aspect of M&A transactions in India.