Regulations of Cross-Border Mergers in India

Cross-Border Mergers are the best way for a company to expand its operations by way of extending business oversees as not only does this give the merged entities a wider customer base in an untapped market it also increases the amount of market capitalised by the merged entity. It also saves the entity the cost of research and development that is required in bringing a product to the market. It also allows them to reap the benefits of the goodwill that the other entity might have in another geography and hence saves them the cost of promotion. The due diligence must entail an extensive financial analysis as well as an analysis of the cultures. This is of utmost importance as the entities will exist as one and cultural differences will make that difficult. The compliance of a merger occurring with an Indian company is extensive as it attracts the jurisdictions of a wide variety of regulatory bodies as the scope of the impact such a merger has globally is astronomical. The Competition Commission is involved as it is responsible to ensure free trade practices. The SEBI intervenes as it is the security regulatory body in India, and it lays down guidelines for this type of combination. All sanctions are received through the National Company Law Tribunal, and it is at liberty to recommend changes, approve or deny the scheme of the merger in order to facilitate the smooth functioning of the merged entity.