Closing Mechanism for M&A in India
Closing mechanism (subject to fulfil of outstanding formality)?
Q1) What is the closing mechanism in case of acquisition?
Everything depends on the intentions of the parties. Generally, in a transaction closing is subject to fulfilment of certain formalities or events which may be set as conditions precedent as required by the buyer or the seller. The parties to the transaction can organize the closing in the manner as convenient to them. Equally, there may be certain conditions agreed upon as conditions subsequent to the closing.
Signing/Closing Meetings Documents – Private Company Share Sales
Q2) What are the closing documents in case of acquisition in case of acquisition by way of purchase of shares?
It depends upon the transaction. Generally, the transaction documents include Share Purchase Agreement, disclosures by the seller, resignation from the outgoing key management personnel, closing board minutes, shareholders’ meeting minutes, if required, approving the transfer of shares and other closing activities and other transnational documents such as escrow agreement, asset transfer agreement, if assets are proposed to be transferred.
Acquisitions – Jurisdiction Restrictions (signing/closing) & Advantages
Q3) Whether signing of share purchase or share sale agreement and/or closing of transaction take place outside India?
Signing/closing of the acquisition can take in place in foreign jurisdiction. However, there is no potential benefit in doing so because, once the executed documents are brought to India, they have to be stamped (as proof of payment of stamp duty) as per the requirements of Indian laws.
Gap Requirement between Signing and Closing
Q4) How much gap should be between signing and closing of transaction?
No mandatory gap between signing and closing is required to be followed. It depends upon the modalities of each transaction.