The whole presentation talks about the law that should be followed by companies in case of merger in both the case of merger within India and foreign company

1. Law’s Governing merger
in India
Presented By: Team Udaan
26 April 2018

2. CONTENT
 DEFINATION
 TYPES OF MERGER
 LAW’S REGULATING MERGER
 LAW’S UNDER COMPANIES ACT,2012
 LAW’S UNDER FEMA, 1999 – CROSS BORDER MERGER
 MULTIMEDIA
 LAW’S UNDER COMPETITION ACT,2002
 CONCLUSION

3. Definition:
A merger is the combination of two companies into one by either closing
the old entities into one new entity or by one company absorbing the
other.
In other words, two or more companies are consolidated into one
company.

4. Types of Merger’s
4
Conglomerate
Merger
A merger between
firms that are
involved in totally
unrelated business
activities. There are
two types of
conglomerate
mergers: pure and
mixed.
Horizontal Merger
Horizontal merger
is a business
consolidation that
occurs between
firms who operate
in the same space,
often as competitors
offering the same
good or service.
Market Extension
Merger
A market extension
merger takes place
between two
companies that deal
in the same
products but in
separate markets.
Product Extension
Merger
A product extension
merger takes place
between two
business
organizations that
deal in products that
are related to each
other and operate in
the same market.

5. Concentric Merger
It refers to
combination of two
or more firms which
are related to each
other in terms of
customer groups,
functions or
technology.
Forward Merger
In a forward
merger, the target
merges into the
buyer.
Reverse Merger
In this case, the
buyer merges into
the target and the
shareholders of the
buyer get stock in
the target. This is
treated as a stock
acquisition by the
buyer.
Subsidiary Merger
A subsidiary
merger is said to
occur when the
buyer sets up an
acquisition
subsidiary which
merges into the
target.
Types of Merger’s

6. Law’s Regulating Merger
6Following are the laws that regulate the merger of the company:-
The Companies
Act,2013
Chapter 15-
Compromises,
Arrangements and
Amalgamations
Section- 233, 234,
237
Competition Act,
2012
Chapter 2-
Regulation Of
Combination, Power to
impose penalty for non-
furnishing of
information on
combinations, Appeal
to Supreme Court,
Section 5,6,72, 73
Foreign Exchange
Management
Act,1999
Cross Border
Merger
Regulation
Act,2018

7. Companies Act,2013
7: Merger or amalgamation of certain companies
Section: 233
(1) The provisions of section 230 and section 232, a
scheme of merger or amalgamation may be entered into
between two or more small companies or between a
holding company and its wholly-owned subsidiary
company or such other class or classes of companies as
may be prescribed.

8. Companies Act,2013
: Merger or amalgamation of company with foreign company
Section: 234
(27)Provided that the Central Government may make rules, in
consultation with the Reserve Bank of India, in connection
with mergers and amalgamations provided under this section.
Foreign company: means any company or body corporate
incorporated outside India whether having a place of business
in India or not.
28(2) Subject to the provisions of any other law for the time
being in force, a foreign company, may with the prior
approval of the Reserve Bank of India, merge into a company
registered under this Act or vice versa and the terms and
conditions of the scheme of merger may provide, among
other things, for the payment of consideration to the
shareholders of the merging company in cash, or in
Depository Receipts, or partly in cash and partly in
Depository Receipts, as the case may be, as per the scheme to
be drawn up for the purpose.

9. Companies Act,2013
: Power of Central Government to provide for amalgamation of companies in public interest
Section: 237
(1) Where the Central Government is satisfied that it is
essential in the public interest that two or more companies
should amalgamate, the Central Government may, by order
notified in the Official Gazette, provide for the amalgamation
of those companies into a single company with such
constitution, with such property, powers, rights, interests,
authorities and privileges, and with such liabilities, duties and
obligations, as may be specified in the order.
(2) The order under sub-section (1) may also provide for the
continuation by or against the transferee company of any
legal proceedings pending by or against any transferor
company and such consequential, incidental and
supplemental provisions as may, in the opinion of the Central
Government, be necessary to give effect to the amalgamation.

10. Foreign Exchange Management Regulation,1999
: Cross Border Merger, 2018
Cross Border Merger
• ‘Cross border merger’ means any merger, amalgamation or
arrangement between an Indian company and foreign
company in accordance with Companies (Compromises,
Arrangements and Amalgamation) Rules, 2016 notified under
the Companies Act, 2013
• ‘Inbound merger’ means a cross border merger where the
resultant company is an Indian company.
• ‘Outbound merger’ means a cross border merger where the
resultant company is a foreign company.
• ‘Resultant company’ means an Indian company or a foreign
company which takes over the assets and liabilities of the
companies involved in the cross border merger.

11. Foreign Exchange Management Regulation,1999
: Cross Border Merger, 2018
Cross Border Merger
Valuation
(1) The valuation of the Indian company and the foreign
company shall be done in accordance with Rule 25A of the
Companies (Compromises, Arrangement or Amalgamation)
Rules, 2016.
Miscellaneous
(1) Compensation by the resultant company, to a holder of a
security of the Indian company or the foreign company, as the
case may be, may be paid, in accordance with the Scheme
sanctioned by the NCLT.
(2) The companies involved in the cross border merger shall
ensure that regulatory actions, if any, prior to merger, with
respect to non-compliance, contravention, violation, as the
case may be, of the Act or the Rules or the Regulations
framed there under shall be completed.

12. Foreign Exchange Management Regulation,1999
: Cross Border Merger, 2018
Cross Border Merger
Reporting
(1) The resultant company and/or the companies involved in
the cross border merger shall be required to furnish reports as
may be prescribed by the Reserve Bank, in consultation with
the Government of India, from time to time.
Deemed approval
(1) Any transaction on account of a cross border merger
undertaken in accordance with these Regulations shall be
deemed to have prior approval of the Reserve Bank as
required under Rule 25A of the Companies (Compromises,
Arrangement and Amalgamations) Rules, 2016.
(2) A certificate from the Managing Director/Whole Time
Director and Company Secretary, if available, of the
company(ies) concerned ensuring compliance to these
Regulations shall be furnished along with the application
made to the NCLT under the Companies (Compromises,
Arrangement or Amalgamation) Rules, 2016.

13. Multimedia

14. Competition Act,2002Chapter 2
Combination
“Group” means two or more enterprises which, directly or
indirectly, are in a position to —
(i) exercise twenty-six per cent or more of the voting rights
in the other enterprise; or
(ii) control the management or affairs of the other enterprise
The group, to which the enterprise remaining after the
merger or the enterprise created as a result of the
amalgamation, would belong after the merger or the
amalgamation, as the case may be, have or would have,—
(A) either in India, the assets of the value of more than
rupees four-thousand crores or turnover more than rupees
twelve thousand crores; or
(B) In India or outside India, in aggregate, the assets of the
value of more than two billion US dollars, including at least
rupees five hundred crores in India, or turnover more than
six billion US dollars, including at least rupees Fifteen
Hundred Crores in India

15. Competition Act,2002
CHAPTER 2
Regulation Of Combination
(c)Any merger or amalgamation in which—
(i) The enterprise remaining after merger or the enterprise
created as a result of the amalgamation, as the case may
be, have,-
(A) either in India, the assets of the value of more than
rupees one thousand crores or turnover more than rupees
three thousand crores; or
(B) In India or outside India, in aggregate, the assets of the
value of more than 500 million US dollars, including at
least rupees 500 crores in India, or turnover more than
1500 million US dollars, including at least rupees 1500
crores in India.

16. Competition Act,2002
Regulation of combinations
Regulation of combinations
6. (1) No person or enterprise shall enter into a combination which
causes or is Likely to cause an appreciable adverse effect on
competition within the Relevant market in India and such a
combination shall be void.
(2) Any person or enterprise, who or which proposes to enter into
a combination, shall give notice to the Commission, in the form as
may be specified, and the fee which may be determined, by
regulations, disclosing the details of the proposed combination,
within14 days of—
(a) Approval of the proposal relating to merger or amalgamation,
referred to in clause (c) of section 5, by the board of directors of
the enterprises concerned with such merger or amalgamation, as
the case may be;
15[(2A) No combination shall come into effect until 210 days
have Passed from the day on which the notice has been given to
the Commission under sub-section(2) or the Commission has
passed orders under section 31, whichever is earlier.]

17. Competition Act,2002
Power to impose penalty for non-furnishing of information on combinations
72[Power to impose penalty for non-furnishing of
information on combinations]
73[43A. If any person or enterprise who fails to give
notice to the Commission under sub- section(2) of section
6, the Commission shall impose on such person or
enterprise a penalty which may extend to one percent, of
the total turnover or the assets, whichever is higher, of
such a combination.

18. Competition Act,2002
Appeal to Supreme Court
Appeal to Supreme Court
53T. The Central Government or any State Government or
the Commission or any statutory authority or any local
authority or any enterprise or any person aggrieved by any
decision or order of the Appellate Tribunal may file an
appeal to the Supreme Court within sixty days from the
date of communication of the decision or order of the
Appellate Tribunal to them;
Provided that the Supreme court may, if it is satisfied that
the applicant was prevented by sufficient cause from filing
the appeal within the said period, allow it to be filed after
the expiry of the said period of sixty days

19. Conclusion
19
 laws under merger are very rigid
 Strict action’s of CCI
 Merger as a process take more time

20. Thank You!Any Questions?