india going global.indd - The IIPM Think Tank

MERGERS & ACQUISITIONS
company, could merge with an Indian company. Either a
foreign company or a branch of a foreign company in India
can merge with an Indian company by following the procedure
provided for in section 391 to 394 of the Companies
Act 1956 with the sanction of the High Court. Conversely,
as the land stands today, when an Indian company merges
with a foreign company, because the High Courts (of India)
cannot go beyond the horizon of land, it appears due to
lack of jurisdiction, such merger cannot be approved by the
Indian High Courts. This inadequacy in Indian law have
been judicially noticed by Andhra Pradesh High Court in
the matter of Moschip Semi Conductor Technology Ltd
[2004] 120 Comp Cas 108 (AP). Irani Committee Report
has recommended for removal of this operational hurdle.
Such mergers would reap in economic wealth to our domestic
browses by listing of Indian Depository Receipts.
Indian Shareholders of the foreign company would also
enjoy the benefits of the foreign company. Our FDI may
also see a trajectory growth.
As cross border M&A involve movement of domestic
currency overseas, recently liberalized Foreign Exchange
Management (Transfer or Issue of any Foreign Security)
Regulations, 2000 and Foreign Exchange Management
(Transfer or Issue of Security by a Person Resident Outside
India) Regulations, 2000 are also required to be complied
with.
Conclusion:
The scale and the pace at which M&A activities are coming
up in Indian Inc. are remarkable. The recent booms in
M&A suggest that the organizations are spending a significant
amount of time and money either searching for firms
to acquire or worrying about whether some other firm will
acquire them. Also, mergers are regarded as one of the fast
track growth strategy or a measure of external growth in
contrast to internal growths. The recent booms in M&A
would increase at a much faster rate in near future because
the world markets are becoming more integrated besides
global push for open trade policies and easy and cheaper
availability of funds especially Private Equity – Venture and
Hedge funds. Because M&A have a universal impact, practically
everyone from society, shareholders, employees, and
directors to financial institutions, it should be so designed
to create value or economic wealth for all the stakeholders
of the corporate. Our laws also need to be aligned to this
global economic integration phenomenon.