Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
Popular Search: form 3cd :: articles on VAT and GST in India :: cpt :: list of goods taxed at 4% :: empanelment :: ACCOUNTING STANDARD :: due date for vat payment :: Central Excise rule to resale the machines to a new company :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: VAT RATES :: ACCOUNTING STANDARDS :: ARTICLES ON INPUT TAX CREDIT IN VAT :: TDS :: VAT Audit :: TAX RATES - GOODS TAXABLE @ 4%
Mergers and Acquisitions »
 In M&A, ratings soft-pedal risks in borrowing binge
 Harvard Business School To Examine Mergers And Acquisitions In New Executive Education Program
 India Inc In Deal-Making Mode; Mergers & Acquisitions Lead The Way
 S&P 500 Futures Rally on Major Mergers and Acquisitions
 The Role Of Brand In Petroleum Mergers And Acquisitions
 Mergers and Acquisitions: What Happens After the Announcement?
 Agency mergers and acquisitions continue to be strong for first-half 2016
 The Intricacies Of Financial And Legal Relationships In M&A
 3 integration considerations for Mergers & Acquisitions
 Mergers and acquisitions take centre-stage as funding for start-ups dries up
 Mergers and Acquisitions reach highest quarterly value in India

Tougher scrutiny of sensitive sector M&As
November, 06th 2009

The National Security Council (NSC), the apex body handling sensitive issues related to security, has called for enhanced scrutiny of all mergers & acquisitions in sensitive sectors like defence, telecom, space and atomic energy to make sure that M&A deals do not result in change of ownership or control of key companies that could play a vital role from the national security point of view.

The Council has suggested that foreign investors should be asked to inform the government about all M&As which involve ownership of Indian companies changing hands and the security agencies should scan such deals. In a detailed communication which has been circulated to top government officials, the Council has suggested that the ministry of corporate affairs should refer all such M&A deals to the home ministry and the security agencies.

The suggestion to add a detailed national security scan to M&A clearance means that government approval for such deals in sensitive sector may take longer.

As of now, companies apply to high courts for clearance of M&A deals and the courts refer them to the government. The ministry of corporate affairs looks into M&A deals in terms of Section 394A of the Companies Act, but there is no specific vetting even for proposals relating to sensitive sectors.

When foreign investment proposals related to stake sale in Indian companies are referred to the Foreign Investment Promotion Board (FIPB), specific reference is made to the home ministry only in the case of some sensitive sectors like defence and telecom.

The Council feels that all cross-border M&A deals involving Indian companies should be screened from the national security angle. The move follows increasing fears about cross-border terrorism and the apprehension that terror funding and money laundering by anti-nationals through business channels has not been sufficiently plugged.

The NSC has cited the example of ISRO, Department of Atomic Energy (DAE) and DRDO which could face constraints if supply of critical components is disrupted. Vendors should be asked to undertake a commitment they will inform the government of all M&A deals which will result in ownership change. These vendors should be monitored constantly for change in foreign investment patterns, the Council has suggested.

Moreover, in relation to defence procurement, concerns have been expressed that mergers/acquisitions may render supply of critical components in the supply chain vulnerable, highly-placed government sources quoted the Council as saying.

In the case of organisations like DRDO, the Councils view is that contracts with vendors should invariably contain a clause binding the supplier to give notice of any proposed change in constitution/pattern of shareholding, the sources said.

The suggestions of the Council are now being discussed by various government departments. Final decisions would be taken on the basis of the views of the home ministry, the law ministry, the finance ministry and the department of industrial policy & promotion (DIPP), the sources said. On its part, the Council has made a strong pitch to scan M&As more vigorously.

While the high courts, in terms of Section 394A of the Companies Act notifies the government about a proposed merger/acquisition, no security vetting is done even for proposals related to sensitive sectors, they sources quoted the Council as saying.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Our Team

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions