India Simplifies M&A Rules, Attracting Unicorns Back Home
India has simplified its merger and acquisition (M&A) rules, making it easier for Indian companies to realign with the country. The changes, introduced by the Ministry of Corporate Affairs (MCA), allow certain types of mergers to skip National Company Law Tribunal (NCLT) approval, reducing red tape and costs.
Under the new framework, two or more unlisted companies, mergers of foreign holding companies with their Indian subsidiaries, and mergers of subsidiaries of the same parent company can now bypass NCLT approval. This streamlined process is expected to benefit Indian unicorns, making it simpler for them to return to India.
The Securities and Exchange Board of India (SEBI) has also introduced reforms to encourage startup listings. Founders can now retain their employee stock options (ESOPs) even after listing, aligning startup incentives with market realities. The government aims to make India the default hub for its own startups, removing procedural roadblocks.
Experts warn that successful execution is key. Approvals from the Reserve Bank of India (RBI), cross-border tax considerations, and clarity on shareholder rights will play crucial roles. Despite this, several Indian unicorns like Flipkart, Razorpay, and Dream11 have already used the reverse flip mechanism to realign with India.
The MCA's widened scope for fast-track mergers and SEBI's reforms for startup listings signal a strategic shift in India's corporate policy framework. These changes aim to actively nudge companies back to India, promising easier re-domiciling for founders and a more transparent corporate structure for investors.
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