India's M&A Landscape Soars: A Record-Breaking Year of Strategic Deals in 2022

 During the period from 2015 to 2019, the merger and acquisition ("M&A") landscape in India demonstrated resilience. However, the year 2022 marked a significant upswing, with India experiencing an unprecedented surge in both the volume and value of strategic M&A deals. This surge stood in contrast to a decline in dealmaking observed in many other parts of the world. In 2022, India witnessed over 20 large transactions, propelling M&A deal values to a historic high of USD 107 billion—an almost twofold increase from the previous year's USD 52 billion.

Notably, one of the most substantial M&A transactions in India's corporate history was the USD 60 billion merger between HDFC and HDFC Bank. This deal surpassed the total value of all transactions in 2021, which amounted to USD 52 billion. The year 2022 saw some of the largest-ever transactions in sectors like cement, aviation, and banking. These transactions were primarily driven by companies seeking to consolidate their positions or venture into new segments.

While the overall deal activity in 2022 was slightly lower than in 2021, it exceeded pre-pandemic levels, indicating a robust M&A environment. The general M&A activity in India is currently approaching an all-time high, with companies engaging in more deals than ever before.

Various sectors played a pivotal role in this M&A surge, with banking and financial services, IT & ITES, fintech, energy, and natural resources leading both in terms of deal volume and value. Additionally, contributions from sectors such as e-commerce, manufacturing, education, and aviation further diversified the M&A landscape. Some of the noteworthy deals included the HDFC-HDFC Bank merger valued at USD 60 billion, Adani Enterprises' acquisition of Ambuja Cements and ACC Cements for USD 10.5 billion, and L&T Infotech's USD 2.2 billion acquisition of Mindtree.

Power of expertise- How Company Secretaries Enhance HR and Labor Law Compliance.

 📚 Featured in the June 2023 edition of Chartered Secretary, our latest article explores "The Power of Expertise: How Company Secretaries Enhance HR and Labor Law Compliance." 🤝💼

📖 Dive into the insightful piece, where we discuss a wide range of questions, including what kind of businesses company secretaries can start and much more. We explore how their expertise positively impacts HR operations, ensuring strict compliance with labor laws. 💼💡

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Important Considerations for Foreigners Registering a Company in India

When a foreigner is considering registering a company in India, they may have several important questions in mind. Here are some common questions that foreigners often ask before starting a company in India:

What are the legal requirements for a foreigner to register a company in India?

What are the different types of business entities available for registration, and which one is most suitable for my business?

What is the minimum capital requirement for registering a company in India?

Are there any restrictions on foreign ownership or investment in certain sectors or industries?

What are the tax implications for foreign-owned companies in India?

What licenses or permits are required for specific industries or business activities?

How long does the company registration process typically take in India?

Can I repatriate profits and funds back to my home country? Are there any restrictions or procedures involved?

What are the compliance and reporting obligations for a registered company in India?

Are there any special incentives or benefits available for foreign companies operating in India?

Registering a company in a foreign country can be a complex and challenging endeavor, and India is no exception. As a foreigner planning to establish a business in India, there are several crucial factors to consider. This article aims to address some of the important questions that often arise in the minds of foreigners before embarking on the process of company registration in India.

Legal Requirements and Business Entities:

Foreigners must familiarize themselves with the legal requirements for establishing a company in India. It is essential to understand the various types of business entities available, such as private limited company, limited liability partnership (LLP), or branch office, and determine which structure aligns best with their business goals and objectives.

Foreign Ownership and Investment:

Foreign ownership and investment regulations vary across different sectors and industries in India. It is crucial to be aware of any restrictions or limitations on foreign ownership, as well as the procedures and guidelines for obtaining necessary approvals, especially in sectors such as defense, retail, and finance.

Minimum Capital Requirements:

Understanding the minimum capital requirements for company registration is vital. While the government has relaxed the minimum capital requirements for certain types of companies, it is important to evaluate the appropriate capital infusion based on the nature and scale of the business.

Tax Implications and Incentives:

Foreign-owned companies in India must navigate the tax landscape effectively. Understanding the tax implications, such as corporate tax rates, transfer pricing regulations, and double taxation treaties, is essential. Additionally, exploring any special incentives or benefits available to foreign companies operating in specific sectors can be advantageous.

Licenses, Permits, and Compliance:

Certain industries and business activities in India require specific licenses and permits. Foreigners must identify and comply with the regulatory requirements relevant to their business operations. Moreover, understanding ongoing compliance obligations, such as filing annual returns and financial statements, is crucial for a smooth and lawful operation.

Repatriation of Profits and Funds:

Foreign investors often have concerns about repatriating profits and funds back to their home countries. Understanding the procedures, restrictions, and any necessary approvals for repatriation is essential to ensure smooth financial operations and compliance with foreign exchange regulations.

Expert Advice and Assistance:

Given the intricacies of establishing a company in India, seeking professional advice and assistance is highly recommended. Engaging legal and business experts who specialize in Indian company registration and regulations can help navigate the complexities and ensure compliance with applicable laws.

Conclusion:

Registering a company in India as a foreigner offers numerous opportunities in a rapidly growing economy. However, it is essential to be well-informed and prepared to address the important considerations discussed above. By understanding the legal requirements, foreign ownership restrictions, tax implications, compliance obligations, and seeking professional guidance, foreign entrepreneurs can pave the way for a successful business venture in India.

Filing of Hard Copies Not Mandatory - NCLAT Embraces Electronic Functioning

Introduction:

In a significant move aimed at enhancing the efficiency of the judicial system, the Hon'ble National Company Law Appellate Tribunal (NCLAT) has recently issued an order, numbered 064/2023 and dated 15th May 2023, declaring the filing of hard copies of Appeals, Interlocutory Applications, Replies, Rejoinders, and other related documents as non-mandatory with immediate effect. This decision marks a progressive shift towards prioritizing electronic filing and streamlining legal processes.

Eliminating the Requirement for Hard Copies:

Under the new ruling, parties appearing before the NCLAT are no longer obliged to submit physical copies of their case-related documents. Instead, the tribunal encourages and emphasizes the use of electronic filing mechanisms. By abolishing the mandatory requirement of hard copies, the NCLAT aims to strengthen the electronic functioning of the judicial system, making it more efficient and convenient for all stakeholders involved.

Advantages of Electronic Filing:

Increased Efficiency: The elimination of hard copy filings reduces administrative burdens and processing time, leading to quicker and more streamlined legal proceedings. Parties can now file their documents promptly, without the need for physical transportation and manual handling.

Cost Savings: Electronic filing significantly reduces expenses associated with printing, courier services, and storage of physical documents. It promotes a more sustainable approach by minimizing paper usage and related environmental impacts.

Accessibility and Convenience: Embracing electronic filing enhances accessibility for litigants, advocates, and judicial authorities. Parties can submit their documents remotely, eliminating the need for in-person visits to the tribunal. This convenience promotes broader participation and reduces geographical barriers.

Enhanced Data Security: Electronic filing systems often employ robust security measures, including encryption and access controls, ensuring the protection of sensitive information. This move towards electronic filing safeguards data integrity and strengthens confidentiality.

Implementation and Implications:

With the NCLAT's decision to make hard copies non-mandatory, litigants can adapt to the electronic filing process. Parties are expected to utilize the designated online platforms or portals to submit their documents electronically. The tribunal's move aligns with the broader digital transformation initiatives undertaken by various legal authorities, promoting a more efficient and tech-enabled justice system.

Conclusion:

The NCLAT's order to make filing of hard copies non-mandatory demonstrates their commitment to embrace electronic functioning, aligning with the evolving landscape of digital technology. This progressive step not only streamlines legal processes but also reduces costs, enhances accessibility, and strengthens data security. By encouraging electronic filing, the NCLAT sets a precedent for other legal institutions to follow suit, further modernizing the justice system for the benefit of all stakeholders involved.

Fast Track Merger Process Accelerated: Timelines Shortened for Speedy Approvals

 #FastTrackMerger #ExpeditedApprovals #EfficientMergers #StreamlinedProcesses #TimeBoundDecisions #BusinessNews

Companies (Compromises, Arrangements, and Amalgamations) Rules, 2016 Amended to Ensure Timely Issuance of Orders by Regional Director

The Companies (Compromises, Arrangements, and Amalgamations) Rules, 2016 have undergone a significant amendment to facilitate a more streamlined and time-bound process for issuing orders. The amended Rule 25 empowers the Regional Director (RD) to issue orders promptly, ensuring efficient resolution of corporate restructuring and amalgamation cases. This amendment, which comes into effect from June 15, 2023, introduces strict timelines and provisions for cases where no objections are received, as well as cases where objections are raised.

One of the noteworthy changes in the amended rules is related to cases where no objection is raised by the Registrar of Companies (RoC) and Official Liquidator (OL). According to the revised Rule 25, if there are no objections from the RoC and OL, the RD must issue the confirmation order within 45 days of receiving the scheme. In instances where the RD fails to issue the confirmation order within 60 days of receiving the scheme, it will be deemed that the RD has no objection to the scheme, and a confirmation order shall be issued accordingly. This provision significantly accelerates the process for cases where there are no objections, avoiding unnecessary delays and ensuring a more efficient resolution.

Furthermore, the amended rules address situations where objections are raised by the RoC, OL, or any other party. If the RD receives objections and fails to issue a confirmation order within 60 days of receiving the scheme, or if no application is filed before the National Company Law Tribunal (NCLT) based on the objections received within the same 60-day period, it will be considered that the RD has no objection to the scheme. In such cases, a confirmation order will be issued accordingly. This provision encourages the RD to address objections in a timely manner or risk their objections being considered void, promoting expeditious decision-making and resolution.

The amendment to the Companies (Compromises, Arrangements, and Amalgamations) Rules, 2016 aligns with the objective of promoting efficiency and expediency in the corporate restructuring and amalgamation processes. By introducing specific timeframes and consequences for the RD's failure to issue orders within the stipulated period, the amended rules aim to minimize delays, enhance transparency, and foster a more predictable regulatory environment.

The provision empowering the RD to issue confirmation orders within 45 days when no objections are raised enables companies to move forward swiftly with their restructuring plans. It reduces uncertainty and provides reassurance to stakeholders involved in the process. Additionally, the provision ensuring that objections are promptly addressed or deemed void emphasizes the importance of a time-bound resolution and encourages all parties to engage in a constructive and expedient manner.

The amended Companies (Compromises, Arrangements, and Amalgamations) Rules, 2016 reflect a commitment to enhancing the ease of doing business and strengthening corporate governance in India. These changes, effective from June 15, 2023, bring greater clarity, efficiency, and predictability to the process of issuing orders in corporate restructuring and amalgamation cases. The inclusion of strict timelines and consequences for non-compliance ensures that all stakeholders benefit from a more streamlined and time-bound resolution process, promoting a healthy business environment in the country.

Foreign Investment in India - Rationalisation of reporting in Single Master Form (SMF) on Foreign Investment and Reporting and Management System (FIRMS) Portal

 Date of amendment: 4th Jan 2023

Prior to the amendment, the forms submitted at FIRM's portal were not auto-acknowledged. With this amendment, the authorized dealers are hereby informed that now forms submitted at FIRM's portal including Form FC GPR, FC TRS, DI reporting, etc. will be auto-acknowledged with time and stamp and auto generated email will be sent to registered email id. 

AD bank has to verify the same within five working days based on the uploaded documents. 

Where there is delay in reporting, the AD Bank will either advise LSF which is Late Submission fee or advise compounding depending on case to case.

Detailed guidelines are at FIRMS portal https://firms.rbi.org.in

i) The forms submitted within prescribed timelines, will be verified by the AD banks based on the uploaded mandatory documents and ensure that the same are in compliance with the extant guidelines. 

ii) The system would identify the delay in reporting, if any. 

iii) For forms filed with a delay less than or equal to three years, the AD banks will approve the same, subject to payment of LSF. 

iv) The LSF will be computed by the system and an e-mail will be sent to the applicant and the concerned Regional Office (RO) of RBI specifying the amount and the timeline within which it is to be paid to the concerned RO of RBI. 

 v) Once the LSF amount is realised, the concerned RO will update the status in the FIRMS portal and the updated status will be communicated to the applicant through a system generated e-mail, which can also be viewed in the FIRMS portal. 

vi) The AD bank will approve the forms filed with a delay greater than three years, subject to compounding of contravention. The applicant may thereafter approach RBI with their application for compounding. 

 vii) The remarks of the AD Bank for rejection of forms, if any, will be communicated to the applicant through a system generated e-mail and the same can also be viewed in the FIRMS portal.

Query on DPT 3 compliances

 A client approached with a query as below;

Please provide me the suggestion for the below amount to be shown in DPT-3 or not.

 a. XYZ  is a partnership firm. As on  31st March 2020 – In balance sheet having the other payables provision of Rs.7.77 Cr.

b. On 30th Sep 2020 – XYZ purchased by (transferred as going concern) ABC private limited. 

c. Liability also transferred to ABC private limited.

Please suggest whether the above transaction to  be shown in DPT-3 as on 31st Mar 2021 or not by ABC Private Limited.

 If yes – How to show in the DPT-3

In order to understand whether these are deposits or not, it is important to understand the nature of transaction. The nature of transaction is settlement of the retiring Partners capital account upon retirement from the firm.

Unless some amount is received by the entity first, and then, repayment is due, no DPT 3 is filed.

In this scenario, the amount is due for payment not repayment, hence, no DPT 3 is to be filed.

Since the query was interesting, so posted for knowledge sharing.