Mergers & Acquisitions in India: What You Need to Know

Mergers and Acquisitions (M&A) might sound like fancy boardroom talk, but in simple terms, it’s just companies joining forces or one buying out another. Think of it as a business-level partnership or takeover. Behind the scenes though, there’s a whole lot of legal stuff that has to be sorted before anyone pops the champagne. If you’re a startup founder, a curious business nerd, or just trying to understand how big deals actually go down in India, here’s a quick, no-jargon breakdown of the legal side of M&A.

Fathima Fida KT, 3rd year BBA., LL.B (hons.)

5/1/20252 min read

What Even Is a Merger or an Acquisition?

A Merger is when two companies decide to become one (like a business marriage).
An Acquisition is when one company buys out another (more like a business adoption).

Both come with legal paperwork, government approvals, and a checklist longer than your Netflix watchlist.

Who Makes the Rules in India?

Here’s a snapshot of the main laws and bodies that control how M&As work:

· Companies Act, 2013

This is the big one. It lays down the steps companies need to follow for mergers, especially big ones that need court (NCLT) approval. It covers shareholder meetings, notices, timelines — all the legal admin.

· Competition Act, 2002

If a deal is too big, it needs approval from the Competition Commission of India (CCI) to make sure it won’t mess up market competition. No monopolies allowed!

· SEBI Regulations

If a company is listed on the stock exchange, SEBI steps in. They make sure shareholders are treated fairly, and the public stays informed. Think open offers, fair pricing, and disclosures.

· Income Tax Act

Mergers can get messy with taxes. Thankfully, there are some cool provisions to help companies avoid getting taxed twice — but only if the merger meets certain conditions.

· FEMA (Foreign Exchange Laws)

If foreign money is involved, the RBI and FEMA guidelines will kick in. India loves FDI, but only if you follow the rules around sectors, ownership caps, and money flow.

What Actually Happens in an M&A Deal?

Here’s what the typical process looks like:

Due Diligence
The buyer checks everything: finances, legal disputes, employee issues, licenses — like a full background check on the target company.
Deal Structuring
Lawyers and bankers sit together to decide: Do we buy shares? Assets? Merge completely? Each way has pros and cons.
Paperwork Time
Agreements are drafted: Share Purchase Agreements, Shareholder Agreements, Term Sheets, and more. It’s contract central.
Get the Green Lights
Depending on the deal, you might need CCI clearance, RBI permission, or even NCLT approval.
Closing & Integration
Once everyone signs and pays, the real work begins — merging systems, people, and cultures.

New Trends to Watch

More Scrutiny: Regulators are paying closer attention, especially to big tech and digital economy deals.
Cross-Border Deals: Indian companies are going global, but that means more rules from more countries.
ESG & Ethics: Investors and regulators now care about how green and ethical your business is. It's not just about profit anymore.

Final Thoughts

M&A in India can be a game-changer for companies, but it’s not something you can do on a handshake. The legal side is complex but manageable if you plan it right and get good advisors on board.

If you’re exploring a merger or acquisition, don’t just look at the money, look at the law too. It might save you from a massive headache later on.