Legal Question in Business Law in India

Re: Merging/Acquiring a company in another country

If it is an incorporated company, you may enter into an acquisition/ merger of the company with your US company.

If it is pertnership, the best bet will be to ask the partnership to convert into an incorporated company, and then merge with the same.

In any event, for an acquisition/ joint venture, it owuld be ideal to form an new Indian joint venture company,with directors chosen from both entities and distribution of shares among share holders of both entities.

It may not be a good idea to have either a "division"or an "subordinate company".

Re: Merging/Acquiring a company in another country

From name you may get to know nature of organisation. In India, normally, companies incorporated have names ending with Pvt. Ltd. or Ltd., as the case may be. Once you confirm the nature, you can carry out a search in the office of the Registrar of Companies to know exact details of shareholding, management etc. as also financial aspects of the company. Since it is a public record, you need not even specify for which purpose you want to get these details.

As regards merger or acquisition, there are various norms laid down depending on the Industry. Once the nature of company is understood, you can plan further things in that behalf.

Re: Merging/Acquiring a company in another country

Apart from the peculiarities of Indian company law which may affect the deal structure, you have two basic choices to make: either purchase their assets or their shares (or some other ownership interest). This decision is generally driven by the following factors:

1. tax implications for the acquiror;

2. liability (for the target company's debts);

3. ease of assignment of contracts, licenses, etc. (of the target company);

4. need for taking some assets rather than all or other assets (of the target company);

5. whether this is a 100% buyout of equity interests in the target company or a partial share purchase (that would result in a sort of a joint venture);

6. whether there are any regulatory approvals;

7. whether you are paying with cash or with your own company's shares.

The third option (merger) may be feasible as well (depending on the Indian law) but its effects are similar to a stock purchase.

Lastly, there are sometimes reasons for owning a foreign subsidiary through another wholly-owned company (holding company) that have to do with liability, tax and other factors.

The decision is made after the business strategy is determined and then legal review is conducted to see what is feasible and what is desirable. A good business lawyer would be able to advise you and guide you through the choices as you explain what it is you are trying to achieve here.