INDIA Law and Practice Contributed by: Anand Lakra, Shivpriya Nanda, Zain Pandit and Ami Shah, JSA Advocates & Solicitors
2.2 Primary Regulators There is no single regulator that governs M&A activity in India. The jurisdiction of regulators depends on various factors, such as the struc - ture of the transaction, the sector in which the target operates, whether the target is publicly traded and the identity of the acquirer. Key laws and regulations governing M&A activ - ity are: • the Companies Act, 2013 (the “Act” ), Limited Liability Partnership Act, 2008, and the Indian Partnership Act, 1932, which govern compa - nies, limited liability partnerships and partner - ship firms, respectively; • the Indian Contract Act, 1872, which governs aspects of contractual relationships in M&A deal activities; • the Foreign Exchange Management Act, 1999, which governs aspects of foreign exchange control in Indian M&A; • the Income Tax Act, 1961, which governs aspects of taxation in relation to Indian M&A deal activities; • the Goods and Services Tax Act, 2017, which applies to the sale of assets; and • the Competition Act, 2002 (as amended) (the “Competition Act” ), which governs competi - tion law aspects of M&A deals. The principal regulators governing the Indian M&A landscape are: • the Securities Exchange Board of India; (SEBI) • the Reserve Bank of India; • the Registrar of Companies under Ministry of Corporate Affairs; • the National Company Law Tribunal (NCLT) • the Competition Commission of India (CCI);
• the Central Board of Direct Taxes/Income tax department; • the Central Board of Indirect Taxes and Cus - toms/GST department; • the Department for Promotion of Industry and Internal Trade under the Ministry of Com - merce and Industry; • stock exchanges, eg, the Bombay Stock Exchange or the National Stock Exchange; and • specific regulators, eg, the Insurance Regu - latory and Development Authority of India, Telecom Regulatory Authority of India, and the National Housing Board. 2.3 Restrictions on Foreign Investments India is still not a fully capital convertible econ - omy and, with respect to cross-border acqui - sitions, conditions exist that regulate pricing of equity shares, the nature of equity instruments, the percentage stake that can be acquired by foreign investors, the quantum of considera - tion that can be deferred, etc. A brief overview of India’s foreign investments regime is set out below. Routes Foreign investment in India is permitted through two main routes: the “automatic route” where no governmental approval is required, and the “approval route” , where prior approval of the government is required as a pre-condition to making the foreign investment. Typically, gov - ernment approval is required where there are sensitive sectors such as media, defence and banking. Sectoral Caps Certain sectors have been restricted from any form of foreign investment such as lottery, gam - bling and cigarettes. In other sensitive sectors like defence or media, foreign investors are per -
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