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VOL. 3, ISSUE 3 (2021)
Inbound and outbound demerger dilemma: Loophole still persist in cross border merger legislations
Authors
Kaushiki Brahma
Abstract
There has been an unprecedented surge of overseas mergers and acquisitions in India since the mid-1990s. The overseas investments through FDI inflows have increased by 6 % in India to $42 billion as a result of mergers and acquisitions in services including retail, e-commerce, and telecommunication. The overseas mergers & acquisitions in India have gained popularity since the enactment of Foreign Exchange Management (Cross Border) Regulations, 2018 and other allied legislations for smoothening the procedure of cross border mergers deals in India. Literature in the past debated that the overseas foreign direct investment from emerging markets has grown massively and has become a vital part of global economic growth. The majority of overseas investments are due to cross border mergers and acquisitions. According to the World Investment Report 2019, Asia retained its position to be World’s largest FDI recipient region whereby the FDI inflows in South Asia increased by 4 percent. FDI inflows increased by 6% in India due to cross border M&A in telecommunications, e-commerce, and retail services. The majority of overseas investment is due to cross-border M&A with a fast track growth strategy. Meanwhile, an ambiguity arises under section 234 of Companies Act, 2013 whether cross border demergers to be treated at par with cross-border mergers or not because of two conflicting NCLT orders of cross border inbounds demerger order and cross border outbound demerger order. This research paper will critically examine the situations of cross border demerger under Companies Act, 1956 and Companies Act, 2013.
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Pages:39-43
How to cite this article:
Kaushiki Brahma "Inbound and outbound demerger dilemma: Loophole still persist in cross border merger legislations ". International Journal of Law, Policy and Social Review, Vol 3, Issue 3, 2021, Pages 39-43
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