Procedure for Mergers and Acquisitions services in India

What do you understand by mergers?

• When two or more entities combined together to form a new entity is known as a merger. The merger is clearly mentioned under the Companies Act, 2013.

• There are two kinds of parties involved in the merging, one is the merger and the other is merged.

• The merger is the one, that handover its assets to other entity; while merged is the one, who accepts the assets of the merger.

• In Mergers and Acquisitions process the companies, take approval of the board of the directors and shareholders. Without their approval, entities cannot undergo Mergers and Acquisitions.

What is the procedure of mergers?

• The first step is to hold board meetings to discuss the following details-

Scheme approval

Date, place and time of meeting for creditors and shareholders

• Once they come up with the resolution, it has to be published to check if there are any objections regarding the merger or not.

• A document of solvency must be filed with the ROC of their states before summoning up the members and creditors for the meeting.

• Before holding a meeting, members of the company must be notified at least 21 days in prior and further details regarding details of compromise and arrangement, declaration of insolvency, and a copy of scheme.

• Creditors of the company must also be informed at least 21 days, before the meeting. And 9th/10th of the creditors must approve the scheme of the merger for the execution.

• The final conclusion of the meeting must be filed within 7 days with the regional director, registrar of the companies and official liquidator.

• At last, the confirmation must be filed with ROC if transferor and transferee agree to the scheme and there is no objection filed against it.

Mergers and Acquisitions

What do you understand by acquisition?

In acquisition, two companies are involved; one is called the acquiree while the other is called an acquirer. Acquiree company is the merged and acquirer company still exists either with the same name or with a different one.

The acquisition involves the buying of a company by other company. To gain control ownership, the acquiring company must have at least 50 % of the shares of the acquired company and at the same time; give consideration to shareholders.

What is the procedure of Acquisition?

• You must do a detailed inspection of the company, which you are going to acquire to do away with future challenges. One should have a proper record of Revenues of the acquired company.

• Once you are done with the research, the acquiring company can contact the target company to clarify the issues, if any.

• After this, a non-disclosure agreement must be signed by the target company, stating that they will disclose any of the insider information to anyone outside the company.

• When the non-disclosure agreement is signed, the target company will hand over all the documents and other details to the Acquiring Company.

• The non-disclosure agreement will be followed by the submission of a list of documents by the target company to the Acquiring Company.

• The submission of documents may take some time, as the target company has to consolidate all the basic details required. Then the acquiring company will negotiate the prices with the target company if required. The author is an expert on the Mergers and Acquisitions, click here for more interesting information