INDIA Law and Practice Contributed by: Raj Ramachandran, Varun Sriram, Krutamana Pisipati, Aadhitya Logeshen and Abheejit V, JSA
a foreign holding company and its wholly-owned Indian subsidiary via the fast track process, thereby further expediting the merger process and allowing parties to more definitively estimate the timeframes involved in consummating or closing the transac- tion; and • proposed hikes in Foreign Direct Investment (FDI) limits could spur consolidation and capital inflows (the new automatic FDI route for satellite and space activities makes this an emerging sector for M&A transactions). 1.2 Key Trends One of the key trends in technology M&A transac- tions in India has been the increase in deal values. Deal value in M&A deals in the technology sector has seen (in the second quarter of 2025) a 133% increase from the first quarter of 2025 and a further increase of 239% from the second to the third quarter. Another trend has been the focus on AI platforms and infra- structure-based innovation, technological services, and automation. AI-based deals have been focusing on infrastructure innovation, such as Kluisz AI, which offers an AI-based cloud platform and Maieutic Semi- conductors, which offers AI agent services for increas- ing design efficiency in the semiconductor industry. 2. Establishing a New Company, Early-Stage Financing and Venture Capital Financing of a New Technology Company 2.1 Establishing a New Company Start-up companies previously considered establish- ing their companies or domiciling in foreign jurisdic- tions to ease access to capital and investment, cli- entele, and business and capital markets. The trend of companies consolidating in India or incorporating abroad and then considering “reverse flipping” to India is continuing to grow. A few examples of reverse flip- ping by Indian companies involved in the e-commerce and/or technology sector in recent years include: • in late 2024, Zepto initiated its reverse flipping pro- cess from Singapore to India. Following this move, the company raised USD350 million to restructure
its capital table, increasing domestic and foreign investor representation alike; • Razorpay completed the process of relocating its parent company’s legal domicile from the United States to India in May 2025. This strategic move is intended to align its structure with Indian regula- tions for a potential future IPO. Various reasons for the change in trend and interest include the target market of these companies being primarily in India, better valuation proposition at the Indian exchanges as opposed to exchanges in foreign jurisdictions, considering the valuation of the compa- nies being more conducive for the Indian market, and the general political and economic instability globally being faced by the companies. In a timely move, the government continues to implement several govern- ment and regulatory policies that will help facilitate these commercial moves. It takes approximately two to three weeks to incor- porate a private limited company in India, although the process has been quicker in some cases. Fur- thermore, pursuant to the Indian Companies (Amend- ment) Act, 2015, the minimum capital requirement of INR100,000 (approximately USD1,200) has since been omitted from the Indian Companies Act, 2013. 2.2 Type of Entity Start-up companies have mostly chosen to incorpo- rate as private limited companies, given the familiarity of the structure and the established precedents gov- erning various aspects of law and business opera- tions. This is particularly critical when nuanced struc- tures are required because of the specific nature of the transaction. However, limited liability partnerships (LLPs) are also prevalent amongst newly incorporated entities due to comparatively limited compliance requirements, along with specific tax benefits. For LLPs, taxes are not lev- ied on profit distribution among partners, whereas in private companies, taxes are required to be paid on corporate income by the companies, as well as on dividends by shareholders. Entities also have the option to convert from an LLP to a private limited company and vice versa. The Indian
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