A study of amalgamation of companies in India

Abstract

Even though mergers and acquisitions (M and A) have been an important element of corporate sector all over the world from several decades, research on mergers and acquisitions has not been able to provide the complete knowledge about legal framework of Amalgamation. There is no conclusive evidence on whether they enhance efficiency or destroy wealth. There is thus an ongoing global debate on the effects of mergers and acquisitions on industries. newlineThough mergers and acquisitions have become common in India today but, very little appears to be known about their procedure and the legal angle in takeovers. Our study attempts to fill this gap in knowledge about mergers and acquisitions in India. In my first chapter there is a detail description about meaning and definition of amalgamation, merger, acquisition as well as takeover, I have quoted different definition, given by major legal dictionaries and definition given by philosopher and writer. From the perception of business organizations, there is a whole host of different mergers. However, from an economist point of view i.e. based on the relationship between the two merging companies, mergers are classified into following: 1. Horizontal merger. 2. Vertical merger. 3. Circular merger 4. Conglomerate merger 5. Within stream merger 6. Diagonal On the other hand acquisition will be classified as negotiated and friendly, open market or hostile takeover and Bailout takeover. In our Third Chapter legal provisions related to takeover and merger from different Acts of India are discussed. Such as the procedure amalgamations are given in section 390 to 395 of companies Act, 1956 which deals with arrangement, amalgamation and merger. Section 5 and 6 of Competition Act, 2002 deal with combinations which defines combination by reference to assets and turnover exclusively in India and outside India also. The Foreign Exchange Management Act, prescribes to foreign entities.