Jul 16, 2017

‘Centre open to suggestions to improve M&A framework’

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The Corporate Affairs Ministry (MCA) is open to suggestions from the public and other stakeholders to further improve the Merger & Acquisition (M&A) framework in company law, a top official said.

The industry can also share with the government some of the best practices that are already adopted in foreign jurisdictions so that the time period for the legal nod for M&As; can be, if possible, further reduced, Amardeep Bhatia, Joint Secretary, MCA, said in his address to the 6th National Summit on Mergers & Acquisitions, organised by Assocham here on Saturday.

Bhatia also expressed hope that M&As; will be increasingly used as a tool for resolution of distressed assets, besides other mechanisms such as insolvency, strategic debt restructuring and the scheme for sustainable structuring of stressed assets.

Bhatia highlighted that M&A cases have been transferred to the National Company Law Tribunal (NCLT) since December last year. “The responsibility of NCLT has increased manifold. We will work towards increasing the capacity of NCLT. In the next couple of months, you will see more Benches getting formed and more members appointed,” he said.

Indian M&A activity had soared in 2016 with deal values of $56.2 billion. This is comparatively the highest since 2010. Inbound activity contributed significantly to this surge in value. In 2015, the M&A deal value was about $30 billion.

However, there was a 2 per cent decline on the volume front, with only 867 deals in 2016 against 887 in 2015.

Pavan Kumar Vijay, Chairman, Assocham National Council for M&A, said that substantial changes and far reaching reforms on M&As; have been integrated in the Companies Act, 2013.

Now, Indian company law allows mergers of an Indian company with a foreign company, fast-track mergers between two small companies and their wholly-owned subsidiaries and so on, he said.

There has been a quantum leap in M&A transactions across sectors, including oil and gas, healthcare, telecom, pharmaceuticals, energy and power, real estate, media and entertainment, insurance, asset management and consumer products.