Published On: 22nd December 2025
Authored By: Kunal Aswani
Symbiosis Law School, Noida
Abstract
Mergers and acquisitions (M&A) represent a vital instrument for strategic expansion and restructuring in both global and Indian business environments. As Indian industries become increasingly integrated into the international marketplace, the legal and regulatory framework for M&A has grown substantially in depth and complexity. This article provides a holistic examination of the core legal and regulatory hurdles that shape Indian M&A practice, exploring statutes, regulatory authorities, and the lived experience of practitioners and business leaders. The analysis covers the legal framework anchored in the Companies Act, 2013,[1] the role of regulatory bodies including the National Company Law Tribunal (NCLT), Competition Commission of India (CCI), Securities and Exchange Board of India (SEBI), and Reserve Bank of India (RBI), and examines persistent challenges including regulatory delays, valuation disputes, minority shareholder protection, cross-border complexities, competition law concerns, taxation issues, and emerging risks related to technology, data, and intellectual property.
I. Introduction
Mergers and acquisitions (M&A) represent a vital instrument for strategic expansion and restructuring in both global and Indian business environments. As Indian industries become increasingly integrated into the international marketplace, the legal and regulatory framework for M&A has grown substantially in depth and complexity. The contemporary regulatory regime is characterized by a robust layering of legal standards that require careful navigation, astute planning, and rigorous compliance. This article provides a holistic yet incisive examination of the core legal and regulatory hurdles that shape Indian M&A practice, exploring not only statutes and authorities but also the lived experience of practitioners and business leaders.
II. The Legal Framework
Indian law governing M&A is anchored in the Companies Act, 2013, which sets the formal requirements for mergers, amalgamations, and arrangements.[2] The Act empowers the National Company Law Tribunal (NCLT) to approve M&A schemes, supplanting earlier roles of High Courts and the Company Law Board. Procedures for amalgamation under Sections 230–234, dematerialization of shares, and fast-track mergers are all governed by this Act.
However, legal compliance does not end here. The Competition Commission of India (CCI), through the Competition Act, 2002, provides a parallel regime to scrutinize deals for anti-competitive effects, especially under its revised Combination Regulations.[3] The Securities and Exchange Board of India (SEBI) plays an equally critical role for listed companies, mandating open offers, takeover disclosures, and continuous listing obligations through its Takeover Code and Listing Regulations.[4] Meanwhile, the Foreign Exchange Management Act (FEMA) and guidelines issued by the Reserve Bank of India (RBI) control the terms, structure, and legality of inbound and outbound cross-border mergers, making regulatory coordination indispensable.[5]
Further layers arise with the Income Tax Act and local stamp duty laws, both of which shape deal valuation, cost, and post-deal integration, especially given the historical disputes over retrospective amendments or double taxation in complex structures.
III. Major Legal and Regulatory Challenges
A. Regulatory Delays and Multi-Agency Clearances
Perhaps the most persistent challenge in Indian M&A is regulatory delay, as the need for clearances from multiple agencies (NCLT, SEBI, CCI, RBI, sector regulators) inevitably breeds uncertainty and cost escalation. M&A practitioners must sequence, harmonize, and sometimes even parallelize these clearance steps to avoid deal fatigue and mitigate pre-closure business disruption.
B. Valuation Disputes
Valuation remains another vexed issue. The absence of a unified, industry-agnostic valuation norm means disputes routinely arise over fair market value in deals involving intangibles, high-growth startups, or assets with uncertain future incomes. Recent SEBI and CCI guidance have attempted to instill transparency, yet the quantum and subjectivity of valuations remain an enduring point of contention—often resulting in judicial intervention.
C. Minority Shareholder Protection
Protecting minority shareholders continues to be a high-stakes priority. SEBI’s Takeover Code mandates open offers for acquisitions beyond 25% control, but the practical implementation of exit pricing and procedural fairness has been scrutinized in numerous judicial forums. Meanwhile, Section 236 of the Companies Act, which allows majority buyouts of minority stakes under NCLT oversight, offers formal safeguards but also raises real anxieties about the abuse of power and information asymmetry.
D. Cross-Border M&A Complexities
Cross-border M&A adds significant layers of complexity. FEMA and RBI circulars demand detailed reporting, sectoral cap compliance, and elaborate documentation for foreign-exchange transactions—rules subject to regular revision. Sensitive sectors such as defense, telecom, and financial services face additional levels of scrutiny from ministries or sector regulators, further prolonging timelines and limiting structuring options.
The 2020 introduction of cross-border merger rules under Section 234 was intended to ease proceedings, but barriers such as post-merger nationality restrictions, local director requirements, and ongoing RBI oversight remain. Recent global events, such as geopolitical tensions, have only added to uncertainty, as regulators reserve the discretion to block, review, or unwind transactions that threaten “public interest.”
E. Competition and Antitrust Risks
Competition and antitrust risks have become more prominent post-2017, with the CCI expanding its inquiry into market concentration, especially in digital, tech, and pharmaceutical sectors. The amended Combination Regulations (2024) bring high-value digital and platform deals within regulatory reach via deal value thresholds, requiring far more thorough economic and competitive impact analysis. For parties involved in major consolidations, this necessitates sophisticated competition law planning, extensive data submissions, and possible remedies (divestitures, behavioral conditions) even for deals previously considered routine.
F. Taxation and Stamp Duty Challenges
Taxation and stamp duty present another minefield. While the Income Tax Act grants conditional exemptions in approved amalgamations or demergers, the fine print—such as holding requirements, continuity of ownership, or shareholding structure—brings litigation risk. The fiscal impact is heightened by non-uniform and often hefty state-level stamp duties, which can materially affect transaction value. Historic disputes, such as those over Vodafone’s capital gains tax liability, underscore the importance of deep legal structuring and ongoing policy monitoring.
G. Due Diligence and Compliance Standards
Due diligence and compliance are the backbone of legal risk management. Modern deals incorporate environmental, social and governance (ESG), labor law, anti-bribery, and cyber security diligence, in addition to traditional financial and legal review. Regulators, especially SEBI and CCI, now frequently examine whether proper diligence was done—not just whether disclosures were timely—adding exposure for both parties and their legal advisors. Failures in diligence are not just penalized post-facto but threaten transaction reversal or punitive damages.
IV. Protecting Minority Interests and Stakeholders
Protecting minority interests remains a balancing act for regulators and dealmakers alike. The regulatory paradigm ensures that all significant M&A transactions affecting control must trigger open offers, ensuring minority shareholders have the opportunity to exit at a prescribed price. However, practical issues like price manipulation, delays in offer closure, loopholes in triggering thresholds, and complicated scheme arrangements occasionally dilute these safeguards.
Recent NCLT and Supreme Court judgments have clarified that squeezeouts and restructuring schemes must withstand substantive fairness review and provide genuine, timely exit options. Activist litigation, often under Sections 241–244 of the Companies Act for oppression and mismanagement, is on the rise, making effective minority engagement and transparency central to modern practice.
V. Cross-Border and Sectoral Considerations
India’s aspiration as a global investment destination means cross-border M&A is vital and increasingly regulated. Recent amendments to FEMA and new RBI notifications streamline, but do not eliminate, hurdles for foreign participants. Sector-specific policies in banking, insurance, telecom, and digital platforms coexist with broader M&A law, creating a patchwork which dealmakers must navigate with granular accuracy. Each transaction’s structure is dictated by the target company’s sector, public or private listing status, participation of foreign shareholders, and the nature of assets involved.
VI. The Rise of Technology, Data, and Intellectual Property Risks
As digital and intellectual property-intensive industries account for a higher proportion of M&A activity, new legal questions about the ownership, transfer, and protection of data and IP assets have emerged. The Digital Personal Data Protection Act, 2023, requires Indian and cross-border acquirers to deal explicitly with personal data transfer, consent, and localization.[6] Simultaneously, the intersection of M&A with anti-money laundering norms and cyber security policy means due diligence has to be even more granular, and deal documentation more robust.
VII. Judicial Developments and Regulatory Trends
Indian courts and tribunals have increasingly engaged with M&A law, clarifying, refining, and occasionally constraining regulatory practice. Landmark decisions, such as Sahara India Real Estate Corp Ltd v. SEBI[7] and Amazon NV Investment Holdings LLC v. Future Coupons Pvt Ltd,[8] have reaffirmed judicial commitment to procedural fairness, investor protection, and transparency in M&A transactions. The NCLT and CCI play a key role in balancing commercial interests with public good—sometimes blocking or mandating modification of deals to prevent concentration or abuse of dominance.
Periodically, regulators update and revise compliance protocols—such as CCI’s sectoral guidelines for digital mergers, SEBI’s Listing and Takeover Regulations, and RBI’s foreign investment circulars—to reflect market realities, international best practices, or new areas of risk. Each reform attempts to strike a balance between fostering deal-making, ensuring competitive markets, and protecting key stakeholders.
VIII. Best Practices and the Way Forward
What emerges from this evolving tapestry is that legal awareness, advance planning, and comprehensive diligence are prerequisites to successful M&A in India. Parties should map all relevant approvals early, consult sector and competition counsel, engage transparently with shareholders, and preempt integration challenges. Documentation must be clear, thorough, and anticipatory of disputes or regulatory intervention.
For cross-border deals, special effort is needed to harmonize Indian and foreign rules, address currency and tax implications, and negotiate effective dispute resolution. Addressing ESG, data, and technology risks early in the process will only become more critical as India’s economy becomes more sophisticated, digital, and internationally integrated.
IX. Conclusion
M&A practice in India is intricate, multi-dimensional, and increasingly dynamic. While recent reforms have improved transparency and efficiency, significant regulatory, procedural, and substantive challenges endure. Coordination among agencies, legal advisors, and decision-makers is critical—not only to close deals but to create value and avoid post-merger complications. As the market matures and new trends like digital consolidation and internationalization proliferate, strategic legal counsel and compliance sophistication will be the hallmark of not just successful deals, but resilient, future-ready enterprises.
References
[1] The Companies Act, 2013, No. 18 of 2013, INDIA CODE (2013).
[2] Id. §§ 230–234.
[3] Competition Act, 2002, No. 12 of 2003, INDIA CODE (2003), §§ 5–6.
[4] Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, reg. 3.
[5] Foreign Exchange Management Act, 1999, No. 42 of 1999, INDIA CODE (2000).
[6] Digital Personal Data Protection Act, 2023, No. 22 of 2023, INDIA CODE (2023).
[7] Sahara India Real Estate Corp Ltd v. SEBI, Misc. Application No. 133 of 2013 and Appeal No. 206 of 2013 (SAT Feb. 4, 2014).
[8] Amazon NV Investment Holdings LLC v. Future Coupons Pvt Ltd, C-2020/08/768 (CCI Nov. 18, 2021).
