To conclude an M&A deal in the Republic of India, parties must seek the NCLT’s endorsement. Purchasing shares is the easiest & most economical way of acquiring a company in the Republic of India. Buying an Indian company’s shares can be structured as a secondary investment (i.e. when existing stakeholders’ shares are bought) & an initial investment (i.e. when a buyer subscribes to a new issue of shares). FDI in an Indian company is allowed by subscribing to/buying shares or financial instruments that are convertible to shares or other securities.
India: Establishing a JV
To establish a JV in the Republic of India, parties must draw up a list of terms & conditions indicating their intentions. Buyers will then have to perform financial, tax & legal DD of Indian companies. Should the purchaser be a foreigner, AML DD is usually carried out, too. To transfer assets of an Indian company, subscribe to/purchase shares or establish a JV, parties must sign a respective agreement.
Buying Stressed Assets
Purchasing stressed assets of Indian companies is normally structured as a 2-tier deal. Under the terms of the deal, execution of an agreement takes place in advance, while a deal itself is considered concluded after all conditions are fulfilled. How long this process will take is conditional on the time required for DD, length of talks & time required for obtaining all the necessary permits.
India: Obtaining Ownership of Companies’ Shares
Companies’ shares may be purchased in immaterial or physical form. If the former is the case, transfer of legal title takes place after a change is reflected in a depositor's records. If the latter is the case, transfer of legal title is considered finished once share certificates of stakeholders are verified in the purchaser's name. After that, the company’s register of members will need to be updated to indicate a purchaser's credentials.
India: Initiation of an M&A Transaction
Initiating an M&A transaction in the Republic of India necessitates getting stakeholders & lenders’ approval. Any objections raised by relevant government agencies must be handled by the NCLT. After resolving objections & making sure that an M&A transaction serves the best interests of a company’s stakeholders, the NCLT will make the final decision.
Buying a private company’s shares in the Republic of India necessitates drawing up a subscription or purchase agreement. Normally, shareholder agreements concluded between the existing stakeholders & investors govern all their rights & obligations. In some cases, one major agreement is concluded governing subscription/purchase terms & stakeholders' obligations & rights. Acquiring going concerns in India normally necessitates signing an agreement containing an in-depth description of a company, including all its liabilities & assets.
Conducting M&A transactions in the Republic of India requires:
- Registering documents & paying stamp duty;
- Authorizing & authenticating contracts;
- Signing all transaction-documents.
India: Termination of an M&A Deal
Those seeking to conduct an M&A transaction in the Republic of India should keep in mind that a transaction may be terminated once an agreement has been signed. Normally, transactions are terminated under these circumstances:
- by mutual agreement;
- regulatory bodies probit conclusion of a transaction;
- precedent conditions aren’t met;
- buyers disagree with updated disclosure requirements.
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