The government is considering to ease regulations related to mergers and acquisitions (M&A) for listed companies to speed-up the process. The Center is discussing to permit listed companies to skip the national company law tribunal’s (NCLT) process once the firms get the nod of financial sector regulators, shareholders, creditors and the Competition Commission of India (CCI), the Mint reported. Various ministries are mulling over the role of NCLT, particularly approval requirements, which are currently mandatory.
The report has come just days after the finance minister, Nirmala Sitharaman, mentioned the government’s plan to fast-track the M&A process as a part of its ease of doing business initiative in India.
“Requirements and procedures for speedy approval of company mergers will be rationalised. The scope for fast-track mergers will also be widened and the process made simpler,” said FM Sitharaman.
Currently, all M&A activities of the companies have to get NCLT’s approval. The compliance process takes time, especially if the firm is a listed entity and most companies reportedly complain that it disrupts the normal functioning of business, impacting all key stakeholders.
“Private company schemes are usually taking 6-9 months, and listed companies over a year. Functioning in a state of suspended animation during the interregnum causes serious commercial issues, including for customers, vendors and employees,” Ketan Dalal told the Business Standard. Dalal is the founder of the tax advisory company, Katalyst Advisors.
This comes at a time when India witnessed the busiest year in 2024 in M&A deals with a record 3.3% increase to 2,756 transactions compared to a year before, the Hindu Business Line reported, citing LSEG Deals Intelligence data. The study stated the number of M&A activities have surged significantly between 2020 and 2024. The number has gone up, but the value of M&A deals dropped 11.4% to $80.5 billion last year compared to 2023 as more activities were carried out mainly by small-to-mid market size companies.
Apart from NCLT, M&A deals in the country require approvals by several regulatory authorities including the Companies Act, securities and exchanges board of India and the CCI. Removing NCLT’s approval has been demanded by the companies for a long time.
