TaxTonic Session: Mergers – Permutations & Combinations – Commercial, Regulatory & Tax Considerations!

Episode Duration:
95 minutes

Episode Background:
'TaxTonic', a 'subscriber only' thought leadership series, is Taxsutra's endeavour to consistently deliver top notch technical content to it's readers. The labyrinth of tax rulings on convoluted transactions keeps the world of taxation unpredictable and ever-evolving. This series will feature engrossing presentations, incisive analyses and a deep-dive by the tax experts on burning issues & controversies. So, gear up for a 'tonic' to chisel your tax mind and challenge your wit.

Speaker:
Mr. Binoy Parikh (Katalyst Advisors Pvt. Ltd.)

Moderator:
Mr. Sachin Sastakar (Chartered Accountant)

What shall the episode cover?

Corporate restructuring generally aims to secure various advantages such as economies of scale, avoiding competition, increasing efficiencies, expansions etc. Merger of companies is a statutory recognition to one of such restructuring processes which is codified in The Companies Act 2013. Often the merger process could involve a listed company getting merged with another listed company or an unlisted company merging with a listed company or vice versa, and within that combination of share purchase + merger, or a demerger.

Depending upon various commercial considerations the process could also involve a merger of two unlisted companies and even a listed company getting merged with an unlisted company. All such permutations and combinations create an interesting regulatory and tax challenge. To take an example, consider a case where a listed company intends to acquire an unlisted company, but the listed company does not want to utilize or exhaust its liquidity or leverage its balance sheet as a result of an all-out cash deal for the acquisition of shares of the target unlisted company. At the same time, the shareholders of the target unlisted company may want an assured exit through the sale of shares for cash consideration to ensure a fixed price upon the sale of shares of the target unlisted company.

Taxsutra presents the next episode of TaxTonic to appreciate and comprehend the challenges and mitigation techniques surrounding Mergers. The episode aims to unwind the complexities surrounding the subject and covers the following aspects:

1. Commercial aspects including marker risks for the shareholders
2. Regulatory aspects with more focus on Companies Act, CCI, SEBI
3. Valuation aspects & reconciliation with FEMA guidelines
4. Accounting guidelines under Ind-AS
5. Tax & Stamp duty challenges and possible resolutions