Mergers and Acquisitions explained: this guide covers what Mergers and Acquisitions means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
M&A transactions in India are governed by a multi-layered regulatory framework involving the Companies Act 2013, SEBI regulations, FEMA 1999, and the Competition Act 2002. This guide covers key aspects of M&A deal structuring, legal due diligence, and regulatory approvals.
M&A Deal Structures in India
| Structure | Description | Key Considerations |
|---|---|---|
| Share Purchase (SPA) | Buyer acquires shares from existing shareholders | Liabilities follow the company; stamp duty on shares |
| Asset Purchase | Buyer acquires specific assets | GST implications; need for individual asset transfers |
| Slump Sale | Transfer of entire business undertaking for lump sum | Capital gains tax (LTCG/STCG); no itemised price |
| Amalgamation (NCLT) | Court-approved merger | Tax-neutral if conditions met; takes 6-18 months |
| Share Swap | Acquirer issues shares in exchange for target shares | No cash; valuation-critical; IND AS 103 |
Legal Due Diligence — Key Areas
- Corporate: MOA/AOA, board resolutions, share cap table, statutory registers
- Commercial contracts: Key customer/supplier agreements, IP licences, employment agreements
- IP: Registered IP, assignment agreements, infringement risks
- Litigation: Pending cases (civil, criminal, tax, labour, SEBI)
- Real estate: Title searches, encumbrances, RERA status
- Labour: EPF/ESI compliance, pending dues, trade union agreements
- Tax: IT assessments, GST compliance, transfer pricing, deferred tax
- Regulatory: Sector-specific licences (NBFC, telecom, pharma, food)
Key Regulatory Approvals
- CCI: If combined assets/turnover cross prescribed thresholds (mandatory pre-notification)
- RBI/FEMA: For cross-border M&A (FDI/ODI approvals)
- SEBI: Open offer obligation if listed company involved (SAST Regulations 2011)
- NCLT: For mergers, demergers, schemes of arrangement
- Sector Regulators: IRDA, SEBI, RBI, TRAI as applicable
SHA — Shareholder Agreement Key Clauses
- Tag-along rights (minority can join promoter's exit)
- Drag-along rights (majority can force minority to join exit)
- Pre-emption rights (ROFR — Right of First Refusal)
- Anti-dilution protection (for investors)
- Veto rights on major decisions
- Put/Call options and exit mechanisms
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