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Key M&A Regulation Developments Revealed

India
29 Aug 2012

Financial Q1 2013 has seen a fair bit of action on world economy, reflecting the depressed sentiments witnessed for the past few quarters now. Taxand India investigates into M&A developments in India and how this affects foreign investment.

In terms of mergers & acquisitons, regulators (RBO and SEBI) are making attempts to increase foreign currency flows into the country and various measures have been introduced to ease the liquidity crunch. This includes opening up equity trading for QFIs, conversion of foreign currency in EEFC accounts into Indian Rupees, and permitting various overseas investment bodies to invest in government securities.

Other key developments in M&A rules include:

  • The decision that the rate of interest on inter corporate loans should be linked to Government securities
  • The adaptation on stamp duty on the applicability for mergers / demergers in certain states; where it used to be no stamp duty was payable, there is now a small percentage between 0.6% - 2% payable
  • The concept of Core Investment Companies (CICs) was introduced to specifically regulate certain investment companies
  • In terms of intangibles, goodwill will not be recognised until the net assets of wholly owned subsidairy are recorder at fair values pursuant to the amalgamation

On tax and regulatory, the Finance Bill was approved, and the Government's decision to defer implementation of GAAR by a year is a welcome move for investors. It is expected that once these guidelines are published, they will have a large impact on foregin investment moving forward. Alternative Investment Funds Regulations have also been introduced to regulate private equity funds in the country.

Key M&A regulatory updates revealed
 

Taxand's Take


Countries and markets worldwide are experiencing continuous dips and lows. The Euro Zone appears to have limited visibility on the future, and this has significantly impacted other nations. Governments are striving to rectify the situation by passing new legislation and initiatives; and this means mulitnationals must be continually updating their knowledge bank in order to do business and be legally correct across borders.

Discover more: Taxand India's M&A Newsletter

Your Taxand contact for further queries is:
Rohit Berry
T. +91 11 3081 5030
E. rohit.berry@bmradvisors.com

Taxand's Take Author