Regulatory framework for mergers in India: An overview

Economic reforms aim at the national cause of creating wealth for citizens through numerous ways. With the policy of liberalization and economic reforms adopted by the government in 1991, the economy became vibrant in which Mergers and Acquisitions (M&As) have become a normal feature. This paper attempts to discuss the regulatory framework for mergers in India. M&As are governed by the provisions of the Companies Act, 1956, Income Tax Act 1961, the Competition Act, Stamp Duty Act, Accounting Standard 14 etc. Given the current pace of Merger wave, various regulations need to be streamlined and provide for every minute detail, which may dilute the efficacy of the deal. For example, Jet-Sahara merger in which transfer of Air Sahara's rights to parking bays and landing slots at various airports all over the country is the point of disagreement. Mergers must be targeted at creating wealth in real sense, instead of taking advantage of loopholes of regulatory framework, for example, tax-saving-induced mergers. Procedure of mergers/amalgamation is complex, involving not only the compromises or arrangements between the companies but also its stakeholders. Merger deals’ approval is, generally, a time consuming process and needs redressed; may be in the form of deemed approval with expiry of certain period of time.