Miscellaneous Questions on M&A in India
Regulatory Requirements – Deposit Monies & Third-Party Intermediary
Q1) Is there any mandatory requirement to deposit monies with the third party?
There is no mandatory requirement to deposit monies with the third party; the same depends upon the intention of the parties to the transaction.
Appointment process for changing stockholders (any tax payable) officers and directors
Q2) What is the procedure to appoint directors and any other officer of the company?
New stockholders and directors require approval of the Board of Directors. In some cases approval of the shareholders at a general meeting may also be required for appointment of directors. Other officers are generally appointed by any director/management personnel so authorised by the Board of Directors in this regard.
Powers of the Attorney Restrictions
Q3) What are the limitations of power endowed by a power of attorney?
The powers of the attorney is limited by the terms & conditions contained in the power of attorney.
Evidence of Due Execution – Faxed/emailed Documents Admissible in Court?
Whether a document sent through fax or email admissible in court of law? Yes a faxed/e-mailed document could be admissible in court of law as evidence of due execution subject to the condition that the party submitting it as evidence has the original document in possession.
Digital signatures admitted as evidence of execution?
Q4) Whether digital signature certificates admissible as evidence in court of law?
Strictly Enforced “Undertakings”
Q5) Do lawyers give any strictly enforced undertakings?
Lawyers generally do not give “undertaking” in India.
Required due execution legal opinions, requirements, and rules concerning the giving of opinions?
Q6) Is there a statutory requirement to seek legal opinion before execution of transactional documents or closing of transaction?
It is common for parties to seek legal opinion to ensure that the documentation required to be executed is in order and complies with the closing formalities (representation & warranties on part of the buyer). But there are no specific rules or legislation governing the same.
Non-compete enforceable? If so, how long for?
Q7) Whether a non-compete clause enforceable in India?
Non-compete may be enforceable provided restriction is for a reasonable period. Generally, restrictions for a period from one to two years may be considered reasonable depending on the nature of business.