The Companies Act, 1956 on the statute book is the largest legislation in India but still probably inadequate in terms of dealing with cross border mergers and acquisitions. Corporate Restructuring has been provided for in six sections from Section 390 onwards.¹ Therefore an important question arises as to what kind of law India requires in order to deal with such a situation. Cross border mergers have become an ever increasing phenomenon in the global commercial marketplace. Thus what happens when an Indian company wants to invest abroad or a foreign company wants to invest in India. The legal regime in India provides no answer to such an important question and is therefore in constant search for answer to such a question. Globalization has enabled third world countries to become global giants, and they have been competing with western MNCs like never before. A strong legal regime dealing with cross border mergers is required if there has to be a more equitable spread of world economic power. This is because western MNCs are and will continue to remain global leaders in certain industries but the resurgence of third world MNCs cannot be ignored if one looks at the rise of MNCs from third world countries.² Third world MNCs are gaining ground in various industries, for example, India, in the IT sector.³ Global commercial activity is occurring at a fast pace in today's world due to the ICT revolution which has resulted in significant growth for the economies of many countries worldwide. The phenomenon of global commercial activity has been enhanced and is dependent on the legal or regulatory mechanism in any country. There are commercial activities of various kinds and one amongst them is the buying and selling of business corporations all over the world. Domestic as well as transnational corporate restructuring involves host of legal issues and the parties choice of carrying out the transaction becomes easy when there are well codified laws guiding their conduct.⁴ For India, corporate restructuring is not a new phenomenon and it has been further boosted by takeovers of foreign firms by large Indian multinationals abroad. This augurs well for our country but an important question that arise here is whether India has sufficient laws to deal with cross border mergers and acquisitions. Surely there are provisions in the Indian Companies Act, 1956 dealing with domestic mergers and acquisitions, but is there any legislation or part of it which is concerned with cross border mergers and amalgamations exclusively.⁵ The answer is no. The solution to this problem is sought to be proposed in the paper whereby under the broad theme, the paper would analyze the need for a cross border mergers and acquisitions law for India instead of a few scattered provisions here and there.⁶

A business firm can grow organically as well as inorganically. National economic growth in contemporary times is driven by corporate restructuring of which mergers and acquisitions form a part. Thus the need of efficiently regulating this phenomenon. An effective law on the point could be regarded as an antidote which may allay all fears related to creation of monopolies and its consequential adverse effect on competition.⁷ Global commercial activity demands effective regulation which in turn depends on the domestic legal mechanism influencing the international nature of transactions. Indian law on the topic is scarce as well as scattered in the form of various provisions here and there and does not offer much promise in the long run when the Indian sector in terms of transnational corporate restructuring would start to grow.⁸ Corporate Restructuring entails a diffusion of cultures at various managerial levels. Integration of management presents an onerous task before the merged entity, more so in the era of cross border mergers and acquisitions.⁹ Therefore mergers lead to a situation which could be effectively termed as acculturation and has to be dealt with in an effective and productive manner.¹⁰ Contemporary commercial world requires a well codified law with respect to cross border M&As for India as often it could be seen that companies going in for mergers are not possessed of the same financial weight and therefore the target company may well land up in an awkward situation whereby it may have to take legal recourse to get things in order for itself. However cross border mergers do not necessarily imply the traditional method of merging one entity with the other and can also occur in the form of integration whereby same policy can be followed by two different legal entities implementing a common decision structure.¹¹

The Indian Companies Act, 1956 which is called a carbon copy of the English Companies Act proves its effectiveness in providing immense flexibility both in the conceptual as well as procedural aspects of amalgamation. It is easy to say that Indians can globalize easily by following the seven sections of the Indian Companies Act, 1956 but is it really enough? An analysis of the position prevalent in other countries proves that Indian law will not find favour with the foreign community if it is implemented within the length and breadth of the cross border mergers scenario. In case of any cross border merger or acquisition, a host of legal issues are involved touching upon subjects of corporate taxation, the applicable company law and the relevant competition regime. Different securities laws are yet another issue to be dealt with.¹² Amongst all the abovementioned issues and points, one basic thing that needs to be stressed here is that the rationale behind cross border mergers and acquisitions remains to be the same as that behind domestic mergers. Globalization, maturing markets, industry consolidation and a zest to be global in scale and scope to compete and thrive could be termed as the primary reasons to consolidate in a transnational manner.¹³ In today’s commercial world, cross border M&As involve merging companies in different legal jurisdictions. There are problems presented before the acquirer in the form of a flowback where the target company shareholders are unwilling to hold foreign domiciled equity of the acquirer. Still, there are other aspects of politics and antitrust issues that may hamper the efficient implementation of cross border M&As.¹⁴ Buyers and sellers of firms generally expect an increase in wealth as a result of mergers by way of rise in the market value of the assets of the combined firms and the resultant valuations of the of buyers and sellers with an expectation of gaining from the transactions. There may be gains from a reduction in competition and achievement of business synergies.

Cross border M&As involving large listed corporations have become a salient feature of economic globalization.¹⁵ While some M&As could be termed as an economic necessity, others could be viewed as large economic opportunities for even larger global business firms.¹⁶ Cross border mergers may involve a clash of different capital market cultures with differing analyst philosophies which in turn may influence stock market prices. A merger may receive favorable accounting and tax treatment when its goal fulfils the requirements of a balanced pooling or uniting of interests and is not a one sided reorganization of a target company under the interests of the acquiring company.¹⁷ The varied actors in an M&A market like investment banks, the boards of acquiring or  merging companies, the boards of target companies, the share holders, the accounting firms carrying out due diligence process, etc.¹⁸ Therefore what should the Indian law be? The solution to the problem lies in drawing example from the laws of other countries and thus, an analysis of the legal position in other countries becomes important. This paper would specifically look at the position of the Communist Republic of China, Germany, U.S. law inclusive of the securities regulations and would try to make a suggestion as to the path which Indian legal regime could adhere to.