Cross Border Mergers and Acquisitions A Comparative Study between India and the USA

This book presents a comparative analysis of cross-border mergers and acquisitions (CBMA) in terms of competitive framework and procedures between India and the United States of America.

It discusses themes like statutes, regulations, rulings, legislations and analysis of CBMA; competition law, antitrust, and demerger; new legal initiatives by India like New Economic Policy (NEP), Goods and Services Tax (GST), demonetisation and amendments in the Foreign Exchange Management Act (FEMA); and the impact of COVID on CBMA, to showcase the challenges and opportunities of specific CBMA experience in India in a global framework.

This book will be an essential read for scholars and researchers of law, corporate law, company law, international company law, corporate governance, international relations, public policy, international trade law, economics, and for practitioners, policymakers and consultants working on the subject.

Foreword

1 Meaning of Mergers and Acquisitions

The Matrix of the Global Economy

Types of Mergers and Acquisitions

Meaning of Cross-Border Mergers and Acquisitions (CBMA)

History of the CBMA in India

The CBMA and RBI

Mandatory Prior Approval

Central Government Responsibility of Framing of Rules in Consultation with the RBI

Approval by the National Company Law Tribunal (NCLT)

Permitted Jurisdiction for an Outbound Merger

Penalty

Types of CBMAs

The Magnitude of CBMAs

The CBMA and Competition Law in India

The CBMA and Indian Tax Reforms

The CBMA and Financial Sector

CBMA and the Legal Provisions in India

Rules and Regulations

The CBMA and Indian Experience in Implementation

Indian Experience

The FDA and Emerging Markets

The Case of India

Economic Policy Reforms and the CBMA

Major Legal Reforms of the CBMA in India

Demonetisation and the CBMA

Impact of Demonetisation

The CBMA and Growth in Business

The CBMA and Jan Dhan Accounts

People’s Inclusiveness and Economic Reforms

Finance Banking Governance Reforms

IT Act and the CBMA

The CBMA and FEMA

Issuance of Shares in the CBMA

The Framework to the IBC Process—Opportunities

Start-ups and the CBMA

Kaizen and the CBMA

The CBMA and Domestic Experience of Learning Importance

The CBMA and Prevention of Corruption Act, 1988 and Foreign Direct Investment Rules

The CBMA and SEBI

SEBI and the CBMA

Motives for the CBMA

CBMA: Culture and Corporate Governance

The CBMA and Emerging Countries

The CBMA and Specific Types of Mergers

CBMA and the Competition Law, 2002

CBMA and the Stamp Duty Act

CBMA and the Judicial Infrastructure

CBMA and the USA

Securities and Exchange Commission

FTC (The Federal Trade Commission)

The CBMA and USA Tax Reforms

The CBMA and Tax Reforms in the USA, CFC, TIPRA

Controlled Foreign Corporation (CFC)

FIRPTA, 1980 and THA-2015

Internal Revenue Service (IRS)

CBMA and Legal Due Diligence

The Doctrine of Successor Liability and Department of Justice, USA

CBMA and Legal Due Diligence in Antitrust/Competition Matters

The Sarbanes–Oxley Act, 2002

The Dodd-Frank Act

National Security in USA and CBMAs

CIFUS and the CBMA

Clayton and the HSR Acts and Amendments

Specific Examples

Comparison between the USA and India

International Law

CBMA and BRICS (Brazil, Russia, India, China and South Africa)

CBMA and International Trade

Indices and Ratios

CBMA Emerging Economies, India and BRICS

CBMA in Emerging Economies and Developed Economies

LDC and EM in the CBMA Environment

Emerging Opportunities and CBMA

Comparative CBMA in Various States of the USA

Upheavals in Global Economy

CBMA and Cyber Business

Conclusion

2 Cross-Border Mergers and Acquisitions: Statutes, Regulations, Rulings, Legislations and Analysis

Introduction

Culture and the CBMA

CBMAs

CBMAs: Ease of Doing Business

Ease of Doing Business Index (EDBI)

Solvency and Ongoing Concern

IBC (The Insolvency and Bankruptcy Code)

Cross-Border Insolvency; India and the USA

Pre-Packs

The Pre-Pack in the USA

CBMAs and GST

CBMAs and Real Estate Regulation Act (RERA)

Impact of RERA on the Functioning of Real Estate Developers and Other Stakeholders

CBMAs, RERA Priorities Present, and Future

Amendments to PC Act, 1988 and FDI Rules

The CBMA and Insider Trading

The CBMA and Hostile Takeover

The CBMA and Warranties

The CBMA and Industrial Dispute Act and Essential Acts

The CBMA, Specific Relief Act, and Corruption

Corruption and IBC 2016

The CBMA and FDI

Gaps in the CBMA Domestic and International Learning Experience

Purchase and Sales and CBMAs

CBMAs and Influencing Factors

Enabling Factors of the CBMA

Foreign Investors

Motives for the CBMA

The Benefits of the CBMA

Challenges and the CBMA

Synergy—CBMA

Corporate Governance

The CBMA Culture Governance and Corporate Governance

Employee Attrition and the CBMA

Comparative Factors, International versus Emerging Countries, and the CBMA

Implementation in Developed Countries—CBMA

Emerging Markets and the CBMA

Example of the CBMA in Intra-emerging Developing Countries

The CBMA and Specific Types of Mergers

Fraud and the CBMA

Insider Trading

Provision of Section 195 of Companies Act, 2013

Competition Law and the CBMA

Provisions and Implementation of the Stamp Duty Act (1899)

Judicial Review

Innovation and the CBMA

Integration and the CBMA

Technology and the CBMA

Research and the CBMA

The Effect of Synergy

Culture and CBMAs

The CBMA and Corruption

Lawyers and the CBMA

Reasons for Failure of the CBMA

3 CBMA, Competition Law, Antitrust and Demerger

Introduction

Competition, Antitrust and the CBMA

The CBMA and Antitrust Laws

The CBMA and US Antitrust Experience

Case Study

Antitrust Matters and Global Enforcement Guidelines

Antitrust Litigation in the United States

Frivolous, Bad Faith and Sham Commercial Litigation and CBMA

Competition Policy and CBMA in India

Competition Commission of India, Recent Developments

Coordination among Various Regulators

Competition Act, Competition Commission, Mergers, Amalgamation Enforcement, Suggestions

Recent Experience in CBMA and Ease of Doing Business Index

Gaps, Tribunals, Scope for Correction

The Concept of Demergers in India and the USA

Legislative Initiatives in India and Jurisdiction of Ministry of Corporate Affairs

Ministry for Corporate Affairs, Government of India

Inbound Mergers

Out Bound Mergers

Companies Compromises and Agreement or Amalgamation Rules, 2016 Bilateral Agreements and CBMA

Nokia’s Case

Stamp Duty and CBMA

Stamp Duty Act and Its Implications on CBMA

Stamp Duty Law in India-Legislative Provisions

Maharashtra Stamp Act, 1958

Karnataka Stamp Act

Controversy

Li Taka Pharmaceuticals vs State of Maharashtra (1997)

Hindustan Lever vs State of Maharashtra (2004)

Delhi Towers Ltd vs GNCT of Delhi (2009)

Delhi Towers Ltd vs GNCT of Delhi (2009)

Specific Relief Act, 1963: The Amendment Bill, 2017 Implications on Business Transactions and CBMA

Specific Relief Act, 1963

The Implications of the Amendments to the Specific Relief Act, 1963 (SRA, 1963)

The Proposed Changes

General Rule, Specific Performance and Changes

Discretion Given to Courts and Committees

Rights of Third Parties

Separate Class for Public Contracts

Implications

Effects of the Specific Relief (Amendment) Bill, 2017 on the Law of Remedies for Breach of Contract

Limited Liability Act, 2008 and Its Implications on CBMA

LLP Act in India

Benefits

CBMA and CAG

Corruption Transparency Issues in Cross-Border Mergers and Acquisitions, the USA and India

Corruption

FCPA in the USA

Example of Major Cases

Enforcement in the USA

Control Framework and Structures

Compliance Programmes

Scope of Improvement

Vicarious Liability/Responsibility and CBMA

Anti-corruption due Diligence and Critical Examples

Effectiveness of FCPA Implementation

Critical Examples of Anti-corruption Prosecution in CBMA

Transparency and Evaluation of Indian CBMAs

Conclusion

4 New Legal Initiatives by India in CBMA Environment

Introduction

Money Laundering and CBMA

SFIO and the CBMA

The Importance of Credit in the CBMA

SARFAESI and the CBMA

The CBMA and Banking Reforms

The CBMA and Banking Sector Reforms

RBI Reforms and the CBMA

Tax Havens and the CBMA

Banking Sector and the CBMA

Banking and New Initiatives

Stamp Act and the CBMA

Latest Developments

Improvement in Ease of Doing Business Index

Efforts for Modifications of Law

Conclusions

5 COVID and the CBMA

The Impact of COVID-19 Pandemic Crisis on Mergers and Acquisitions

COVID-19 Pandemic and the CBMA Trends

Logistics, Transportation, Supply Chain Management and COVID-19 Pandemic

Government Regulators

Scope for Increases in FDI and FPI through CBMA during COVID- 19 Pandemic

Travel and Tourism

Regulator Dilemma

COVID-19 Pandemic and the Changes in the Structure of Business in the Context of the CBMA

Investment Funds and SEBI

Letters of Intent

Non-Uniform Impact of the COVID-19 Pandemic

The MAE/MAC Impact on the CBMA vs. COVID-19 Pandemic

The Strategic Outlook of the Global Economy Due to the COVID-19

Pandemic

Resilience and COVID-19 Pandemic

Flattening of the Pandemic Graph

Lockdown and COVID-19 Pandemic

Impact of COVID-19 Pandemic on International Business Law

Accountancy Issues

Accounting-Related Issues

Long-term Stability vs. Short-term Crisis

The Response of Major Centres and Industrial Sectors

Prevention is Better than Perishing

Anticipation Is Better than Precipitation

International Rules on the CBMA Restructuring

RCEP and the CBMA

COVID-19 Pandemic, the CBMA and Corporate Fraud

Risks and Threats to the CBMA

Mergers and Acquisitions and Distressed Assets

Protective Measures and Impact of COVID-19 Pandemic

Law Business Strategy, the CBMA and COVID-19 Pandemic Impact

Economy and Cross-Border Mergers and Acquisitions

Litigation and Cross-Border Mergers and Acquisitions

Due Diligence and Emerging Technology

Legal Implications and Labour Law

Impact, Short- and Long-Term of COVID-19 Pandemic on the CBMA

Legal Implications of Failed Negotiations on Price Front

Revenue and Solvency Issues

Date-line Compliance

Legal Position of Merger Law and the Changes in the USA

Regulatory Law in the USA

Pandemic COVID-19 and Lessons

Attempts to Amend the Merger Law in the USA

Work from Home and Quarantine Care and COVID-19 Pandemic

Global Economic Distress and COVID-19 Pandemic

Business during COVID Era

Innovations in Administration

COVID-19 Pandemic and Govt. of India’s Response

Opportunistic and Predatory Takeovers

Effects of Timelines and Antitrust Review Mechanism by the State

T-Mobile Sprint Case

Introduction

The Verdict of DOC, the USA

Conclusions of Law

FTC and COVID-19 Pandemic

Employee Attrition and Precautions in the CBMA Environment due to COVID-19 Pandemic

Post-COVID-19 Pandemic Strategies in the CBMA

Proper Due Diligence

Evaluation of Business Worth in the Post-COVID-19 Pandemic

Post-COVID-19 Pandemic Regulatory Aspects by Government and Autonomous Agencies

Compliance to Legal Provisions and Documentation

IBC, CBMA, COVID-19 Pandemic, India and the USA

Insolvency and Bankruptcy Code and Its Effectiveness

Resolving Insolvency

Banks, Non-Performing Assets, Insolvency and Bankruptcy Code

NPA and IBC

Non-Performing Assets

IBC vs Insolvency Proceedings in the USA

Timelines and IBC

The Similarity between IBC and USBC

International Opinion about IBC

Effect of IBC in India

Banker’s View on IBC

The US Bankruptcy Code, 1978

Comparison of Bankruptcy Regulations between India and the USA

Post-Bankruptcy and Reconstruction

Composition of Creditors Committee and the Law

Historical Evolution of Bankruptcy Law in the USA and India in the Context of the CBMA

Impact of Current Pandemic Wave-II in India

6 Pandemics, Business Response, Law and the CBMA

Supply Chain Logistics and COVID-19 Pandemic

Insurance and COVID-19 Pandemic

Case Study of Start-up and Acquisition during COVID-19 Pandemic Era in India

Case Study Example of the Law Enforcement in India as the Cause of Ease of Doing Business in India

New Technology Banking Reforms and COVID-19 Pandemic

Industrial Labour Reforms and Ease of Doing Business Index

Legal Innovation

Online Dispute Resolution and Ease of Doing Business

Digitalisation and Cross-Border Mergers and Acquisitions

Fraud Prevention

Whistle blower Protection and Rule of Law as a Tool for Ease of Doing Business in CBMA Environment

Ultimate Suggestions

COVID-19 Pandemic and Cybersecurity and the CBMA

Cybersecurity, CBMA, and DSCI

National Company Law Tribunal

COVID-19 Pandemic and Resolution for Liquidation

NCLT, COVID-19 and New Electronic Initiatives

7 Fairness in Acts and Activity

Competition Commission of India

IBBI Initiatives and Accountability

The Federal Trade Commission of the USA and Its Performance Snapshot for the Year 2019

Security Exchanges Commission and Mergers Acquisitions Joint Venture Guidelines, an Update in the USA

FDI and Its Links with Foreign Trade Growth in India

Banking Sector Reforms and the CBMA

Start-Ups and New Technologies

Suggestions

The Non-Last Word

8 Recent Reforms in Law in India

CBMA and UNICORNS

One-Person Company Framework (OPC)

MCA

21 Version 3.0

NCLT Framework Strengthening

Foreign Direct Investment in Insurance Companies

Securities Market Code

Exemption of Stamp Duty in Government Sale Transactions

Mergers—Acquisitions Vis-à-vis Budget 2021–2022

Latest Developments (till June 24, 2021)

Prevention of Scams/Frauds in CBMAs

Role of NFRA (India), PCAOB (USA)

Comparative Infrastructure in the USA and Lessons to Be Learned

PCAOB

Cross-Border Mergers and Acquisitions and Jurisdiction

United States and the Doctrine Effect

9 Kaizen for Global Excellence

Recent Examples of Implementation of Legal Provisions in India

Post-COVID Pandemic Changes, Threats and Opportunities

IBBI Regulatory Framework Changed Mandate

Evaluation of Initiatives and Implications for Further Action

Suspending a Tiny Part of IBC

Lessons of the Pandemic—2nd Annum in the Year 2021

Role of AI (Artificial Intelligence) and ML (Machine Learning) in the Corporate Sector

Exposure of New Sectors to Competition and Predation

The Dangers of Living with Obsolescence

Disruptions, Hacking, Cyber Threats and Fraud

Cost of Repetition and the Question of Legitimacy and Intention of Enforcement

Kaizen in the Economy, Law and Integration of Technologies vs Increasing Redundancy of Differentials

Current Reforms in India

Non-Performing Assets and the Banking Law

IBC, IBBA and Specific Law for the Prevention of Insolvency

The Role of Enforcement

Lobbies, Pressure Groups, Publicity and Public Interest Litigation Policy

Indexes of Governance—Ease of Doing Business, Arbitration, Redressal of Disputes, ADRs

Regulatory Authorities and Enforcement

Credibility of the State through Performance of Government

Seamless Connectivity from Military, Medicine and Management (M3) for Diagnosis, Delivery and Diligence (D3)

Law as a Link from the Past, through Present for Future and Perspectives of Law

Law as a Fair Elixir of Tri Virtues—Equality, Freedom and Justice

Corporate Justice, Civil Justice, Criminal Justice and Governance

Global Trade, Export Import 2021 and International Trade in Goods and Services in India

Domestic Trade Policy

Financial Services

Suppliers of Financial Services Must Comply with the Requirements Set Out in the Relevant Legislation

Banking

Securities

Insurance

DIPP and FDI

Index

Boppudi Naga Ramesh belonged to the Indian Police Service (1988 batch), and worked in West Bengal cadre and in different parts of India, fighting anti-insurgency forces and left-wing extremist forces in the Kashmir Valley and in central Indian states. As a civil engineer, he worked for TATAS and earned an MBA degree from the Indian Institute of Management, Calcutta. A triple PhD, his first PhD was from the Indian Institute of Technology, Kharagpur; his second PhD was from the National Police Academy, Hyderabad; and the third PhD was from National Law University, Delhi, India. He is MA Psychology, LLB, LLM and Post-Doc Fellow from JNU, New Delhi. He retired as a DGP, in West Bengal, and presently is a Professor of Law and Management at Maharashtra National Law University, Aurangabad, where he pursues a postdoctoral fellowship in LLD. He won the President of India Police Medal for Meritorious Services and many other medals which include the distinguished alumni medal from IIT Kharagpur. He has participated in many marathons and is an international cyclist as a commando trainer.