Published On: December 8th 2025
Authored By: Sooraj K.R.
Government Law College, Thrissur
ABSTRACT
Mergers and acquisitions (M&A) are pivotal for corporate expansion, market consolidation, and global competitiveness in India. The liberalisation of the Indian economy in 1991 acted as a catalyst for M&A growth, reflecting the need for companies to achieve economies of scale, technological advancement, and market diversification. This article analyses India’s legal and regulatory framework governing M&A, procedural and compliance challenges, comparative international practices, and proposes reforms to enhance regulatory efficiency, maintain market integrity, and protect investor interests.
Keywords: Mergers, Acquisitions, Companies Act, SEBI, Competition Act, India, Corporate Governance, Regulatory Challenges
INTRODUCTION
Mergers and acquisitions (M&A) are critical strategic tools for corporate growth and competitiveness. Globally, M&A facilitates market consolidation, innovation, and shareholder value maximisation.[1] In India, post-liberalisation reforms of 1991 created a conducive environment for corporate restructuring and cross-border business expansion.[2] Over the last three decades, M&A activity has grown due to competitive pressures, technological integration, and market diversification. High-profile transactions, such as HDFC-HDFC Bank, Reliance Industries-Disney, and Zomato-Blinkit, demonstrate the increasing complexity and strategic importance of M&A in India.[3]
The regulatory framework for M&A in India is multifaceted. It includes the Companies Act, 2013, SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, the Competition Act, 2002, and sector-specific laws like FEMA for cross-border deals.[4] These laws aim to facilitate corporate restructuring while protecting minority shareholders, maintaining competition, and ensuring transparency.[5]
This article examines the evolution of M&A regulation in India, identifies procedural and regulatory challenges, evaluates comparative international practices, and proposes reforms to improve approval processes, compliance efficiency, and investor confidence.[6]
EVOLUTION AND LEGAL FRAMEWORK OF M&A IN INDIA
The legal framework governing mergers and acquisitions (M&A) in India has evolved considerably, reflecting both domestic economic reforms and international best practices. Initially, the Companies Act, 1956, Sections 391-394, provided the statutory basis for mergers and amalgamations through compromises and arrangements.[7] These provisions allowed companies to restructure their corporate operations, absorb losses, or consolidate assets. While pioneering for its time, the framework under the 1956 Act was procedural in nature and often lacked robust mechanisms for safeguarding minority shareholders or ensuring market transparency. The process required approval by the High Court, and any aggrieved party could challenge the merger, which often resulted in prolonged litigation and uncertainty.
The enactment of the Companies Act, 2013, marked a significant shift in India’s corporate regulatory environment. Sections 230-240 of the 2013 Act modernised merger procedures, introducing stricter procedural safeguards, mandating approval by the National Company Law Tribunal (NCLT), and explicitly protecting minority shareholders through voting requirements and fairness audits.[8] The 2013 Act streamlined the merger process by providing a single adjudicatory authority in the form of NCLT, reducing jurisdictional overlaps and expediting approvals. It also incorporated detailed provisions on arrangements between companies and creditors, ensuring that all stakeholders’ interests are adequately represented and evaluated.
In parallel, SEBI introduced the (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, commonly known as the Takeover Code.[9] These regulations created a disclosure-driven framework specifically for listed companies, prescribing rules on pricing, mandatory public announcements, and post-acquisition reporting. The Takeover Code aims to prevent unfair practices, protect minority shareholders, and enhance transparency in the capital markets.
The Competition Act, 2002, addresses mergers from an antitrust perspective. Sections 5 and 6 of the Act require that combinations exceeding certain asset or turnover thresholds obtain prior approval from the Competition Commission of India (CCI).[10] The objective is to prevent market monopolisation, abuse of dominant positions, and anti-competitive practices that could harm consumers or other market participants.
For cross-border M&A, the Foreign Exchange Management Act (FEMA), 1999, governs foreign investment, setting sectoral FDI limits and ensuring compliance with currency control regulations.[11] Sector-specific regulators further add layers of oversight: the Reserve Bank of India (RBI) regulates banking mergers; the Insurance Regulatory and Development Authority of India (IRDAI) oversees insurance company acquisitions; and the Telecom Regulatory Authority of India (TRAI) regulates telecom mergers.[12] Tax considerations under the Income Tax Act, 1961, particularly concerning capital gains and tax-neutral mergers, also significantly influence structuring decisions.[13]
Overall, this multi-layered legal framework seeks to balance corporate growth with investor protection, competition safeguards, and financial market integrity. By combining procedural clarity, regulatory oversight, and sector-specific compliance, India has created a comprehensive, albeit complex, environment for M&A activity.[14]
REGULATORY APPROVALS AND PROCEDURAL CHALLENGES
M&A transactions in India require multiple regulatory approvals, often resulting in procedural delays and increased costs. Under the Companies Act, 2013, mergers require submission of a formal scheme to the NCLT, notice to creditors and shareholders, and opportunities for objections.[15] SEBI mandates detailed disclosures for substantial acquisitions, including pricing guidelines and post-acquisition reporting.[16]
CCI reviews mergers to prevent anti-competitive practices. Transactions exceeding thresholds must pre-file with CCI, which may impose conditions or block the merger.[17] Cross-border M&A must comply with FEMA regulations, including sectoral caps and government approvals for strategic sectors.[18] Tax implications also play a key role; tax-neutral mergers are permissible under the Income Tax Act, 1961, provided statutory conditions are met. Otherwise, capital gains taxation applies.[19] GST and stamp duty requirements further increase compliance complexity.
Multiple approvals can create uncertainty, delays, and higher transaction costs. Jurisdictional overlaps between Companies Act, SEBI, and CCI approvals affect deal timelines and financing arrangements.[20] Coordinated action among regulators is essential to maintain smooth and legally compliant M&A execution.[21]
KEY LEGAL AND REGULATORY CHALLENGES
Despite India’s comprehensive legal and regulatory framework for mergers and acquisitions (M&A), several persistent challenges hinder the efficiency and predictability of transactions. One of the foremost issues is the overlap of regulatory jurisdictions. M&A in India is governed primarily by the Companies Act, 2013, SEBI’s Takeover Regulations, 2011, and the Competition Act, 2002.[22] While each of these laws serves a distinct purpose, their concurrent application often creates procedural uncertainty. For instance, a merger involving a listed company not only requires NCLT approval under the Companies Act[23] but also entails compliance with SEBI’s disclosure requirements and pricing guidelines under the Takeover Code.[24] Simultaneously, combinations that exceed certain asset or turnover thresholds must obtain CCI clearance.[25] The result is a multi-layered approval process where overlapping timelines, inconsistent procedural requirements, and differing documentation standards can significantly delay transactions. Such delays increase financing costs, reduce deal certainty, and can jeopardize time-sensitive strategic objectives.
Competition concerns represent another critical challenge in India’s M&A landscape. The Competition Commission of India (CCI) rigorously evaluates combinations to prevent anti-competitive practices, including monopolistic structures, abuse of dominant positions, and adverse effects on consumer welfare.[26] A key difficulty lies in defining the relevant market and accurately assessing market concentration. In several instances, CCI has imposed conditions or structural remedies to maintain competitive balance, which may complicate deal execution or necessitate post-merger divestitures. The absence of clear thresholds for certain sectors, coupled with evolving jurisprudence on dominance and market power, adds to regulatory uncertainty.
A further area of concern is minority shareholder protection. Although the Companies Act and SEBI regulations provide mechanisms for minority representation and fair valuation, practical enforcement remains inconsistent.[27] Minority shareholders often face challenges in securing exit opportunities or obtaining an equitable share price in mergers, especially in closely held or promoter-driven companies. Inadequate valuation safeguards, procedural delays, or lack of transparency in negotiations can undermine investor confidence, deterring both domestic and foreign investment.
Cross-border M&A introduces additional layers of complexity. Transactions involving foreign investors must comply with FEMA regulations, adhere to sectoral FDI caps, and often require prior government approval in strategic industries.[28] Further, differences in foreign taxation laws, withholding obligations, and currency repatriation procedures necessitate careful structuring, often involving extensive legal and financial advisory support. Multiple jurisdictions and overlapping international regulations can also create compliance burdens, delaying deal closure and increasing transaction costs.
Another challenge arises from corporate restructuring through shell companies or related-party arrangements.[29] While such structures may be used legitimately for tax planning or operational integration, they are susceptible to misuse. Instances of improper asset transfers, undervaluation, or attempts to circumvent regulatory approvals have raised concerns about transparency and investor protection.
Illustrative judicial and regulatory cases demonstrate these challenges. In CCI v. Bharti Airtel Ltd.,[30] the CCI extensively analyzed the potential anti-competitive effects of the merger, including market share calculation, competitive constraints, and downstream impacts on consumers. Similarly, approvals by the NCLT for conglomerate mergers, such as Reliance Industries Ltd.–Reliance Petroleum Ltd.,[31] highlight the procedural rigor required for large-scale corporate combinations, as well as the potential for stakeholder disputes and litigation.
Overall, these challenges underscore the need for regulatory reform, enhanced inter-agency coordination, and procedural streamlining. Improving clarity on jurisdictional roles, standardizing approval timelines, and strengthening minority shareholder safeguards would significantly enhance the efficiency of M&A transactions in India.[32] Additionally, developing guidelines for cross-border transactions, coupled with strict monitoring of restructuring through related entities, would improve transparency and investor confidence.[33] Addressing these challenges is essential to ensuring that India’s M&A ecosystem remains competitive, efficient, and aligned with global standards while safeguarding market integrity and protecting stakeholder interests.[34]
COMPARATIVE / INTERNATIONAL PERSPECTIVE
The regulation of mergers and acquisitions (M&A) internationally offers India valuable benchmarks for improving procedural efficiency, competition safeguards, and investor protection. In the United States, the Hart-Scott-Rodino Antitrust Improvements Act, 1976, mandates pre-merger notification for transactions exceeding specified asset or value thresholds.[35] Under this regime, both the Federal Trade Commission (FTC) and the Department of Justice (DOJ) conduct antitrust reviews to evaluate potential effects on market competition, including considerations of market concentration, barriers to entry, and potential abuse of dominant positions. The U.S. framework provides for clear timelines, standard documentation requirements, and a defined waiting period, reducing uncertainty and enabling parties to plan transactions effectively. Additionally, the U.S. system imposes significant penalties for “gun-jumping,” i.e., implementing merger agreements before obtaining regulatory clearance, thereby reinforcing compliance and market integrity.
In the European Union, mergers are regulated under the EU Merger Regulation (EUMR).[36] Transactions that exceed established turnover thresholds require approval by the Directorate-General for Competition (DG COMP). The EU framework emphasizes the protection of consumer welfare and market competition by assessing relevant markets, market shares, and potential anti-competitive effects. DG COMP may impose structural or behavioral remedies, such as divestitures or access commitments, to address concerns regarding dominant market positions. Like the U.S., the EU framework incorporates strict timelines and clear procedural rules, which enhance predictability for cross-border transactions within the single European market.
The OECD provides overarching principles for cross-border M&A regulation, stressing transparency, regulatory coordination, and competition safeguards.[37] The OECD highlights the importance of harmonizing national laws, encouraging pre-merger consultations, and sharing information between jurisdictions to prevent anti-competitive practices while facilitating international business activity. It also emphasizes that clear enforcement guidelines and penalties for non-compliance enhance regulatory credibility and market confidence.
For India, several lessons emerge from these international frameworks. Firstly, the implementation of a single-window clearance system that integrates NCLT, SEBI, CCI, and sector-specific approvals could reduce delays and avoid duplication of regulatory requirements.[38] Pre-merger consultations with regulators, as practiced in the U.S. and EU, can clarify compliance obligations, identify potential competition concerns early, and allow parties to structure deals efficiently. Secondly, India can adopt stricter penalties for regulatory non-compliance (gun-jumping), which would deter premature deal implementation and protect the interests of minority shareholders and market integrity. Thirdly, enhanced coordination between multiple regulatory agencies, including standardization of documentation, timelines, and thresholds for review, can reduce uncertainty and improve procedural efficiency.
Such international comparative analysis underscores that while India’s legal framework for M&A is robust, it lags in procedural efficiency and inter-agency coordination.[39] By adopting best practices from the U.S., EU, and OECD principles, India can streamline its approval processes, encourage cross-border investment, and enhance transparency in M&A transactions. Aligning domestic practices with international standards would not only increase investor confidence but also promote a fair and competitive corporate environment, facilitating sustainable corporate growth and integration into the global market.
REFORMS AND WAY FORWARD
Streamlining regulatory approvals is critical. A unified M&A portal integrating NCLT, CCI, SEBI, and sector-specific approvals could reduce delays.³⁵ Fast-track procedures for certain mergers and pre-filing consultations can improve predictability.³⁶ Digital transparency, e-filing, and real-time reporting can strengthen compliance.³⁷ Minority shareholder protections regarding valuation and exit rights should be enhanced.³⁸ Harmonising competition and corporate laws would simplify deal execution.³⁹
For outbound M&A, liberalised FDI norms and simplified FEMA procedures can encourage international expansion while safeguarding domestic interests. Tax-neutral mergers must be administered efficiently to incentivise corporate restructuring without adverse tax implications.
CONCLUSION
Mergers and acquisitions are vital to India’s corporate strategy, fostering growth, efficiency, and global competitiveness. However, challenges such as jurisdictional overlaps, procedural delays, minority shareholder protection, and cross-border complexities remain. Comparative international experiences highlight the importance of streamlined processes, digital transparency, and regulatory coordination. Implementing reforms will strengthen India’s M&A ecosystem, enhance investor confidence, ensure fair competition, and support sustainable corporate growth.
REFERENCES
[1] Author analysis, 2025.
[2] Liberalisation and Corporate Growth, Indian Economic Review, 2022.
[3] Id.
[4]MCA Report on M&A Trends in India, 2023.
[5] Companies Act, 2013; SEBI Regulations, 2011; Competition Act, 2002; FEMA, 1999.
[6] Id.
[7] Companies Act, 1956, §§ 391–394
[8] Companies Act, 2013, §§ 230–240
[9] SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011
[10] Competition Act, 2002, §§ 5–6
[11] Foreign Exchange Management Act, 1999
[12] IRDAI (Insurance Regulatory and Development Authority of India), Guidelines on Amalgamation and Transfer of Insurance Companies, 202
[13] Income Tax Act, 1961
[14] MCA Discussion Paper on Corporate Combinations, 2023
[15] Companies Act, 2013, § 230.
[16] SEBI Takeover Regulations, 2011
[17] Competition Act, 2002, § 6.
[18] FEMA, 1999.
[19] Income Tax Act, 1961.
[20] Journal of Corporate Law Studies, 2021.
[21] MCA Annual Report, 2023.
[22] Companies Act, 2013, §§ 230–240; SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011; Competition Act, 2002, §§ 5–6.
[23] Companies Act, 2013, § 230.
[24] SEBI Takeover Regulations, 2011
[25] Competition Act, 2002, §§ 5–6; CCI Guidelines on Combinations, 2021.
[26] Competition Act, 2002, §§ 5–6; CCI Orders on Merger Review.
[27] Companies Act, 2013, § 236; SEBI Takeover Regulations, 2011, Regs 23–25.
[28] FEMA, 1999; FDI Policy Guidelines, Department of Promotion of Industry and Internal Trade (DPIIT), 2023.
[29] RBI Master Directions on Mergers of Banks, 2020; IRDAI Guidelines on Insurance Company Mergers, 2021; TRAI Guidelines on Telecom Mergers, 2019.
[30] CCI v. Bharti Airtel Ltd., (2019) Comp. App. (AT) No. 1/2019.
[31] Reliance Industries Ltd.–Reliance Petroleum Ltd. NCLT Approval, 2010.
[32] OECD, “International Merger Control Regimes,” 2024.
[33] MCA Discussion Paper on Corporate Combinations, 2023.
[34] Journal of Corporate Law Studies, “Regulatory Challenges in Indian M&A,” 2021
[35] Hart-Scott-Rodino Antitrust Improvements Act, 1976, 15 U.S.C. §§ 18a–18c; Federal Trade Commission & Department of Justice Pre-Merger Notification Guidelines, 2023.
[36] EU Merger Regulation (Council Regulation (EC) No. 139/2004); DG COMP Guidelines on Merger Control, 2022.
[37] OECD, International Merger Control Regimes: Best Practices for Transparency and Competition, 2024.
[38] MCA Discussion Paper on Corporate Combinations, 2023; SEBI Consultation Paper on Takeover Code Reforms, 2022.
[39] Journal of Corporate Law Studies, “Comparative Analysis of International M&A Regulation,” 2021.
