Recently I have started two companies - GmbH (Germany) and pvt ltd (India). I am the owner of both companies. I would like to merge two companies; GmbH as a parent company and pvt ltd as a subsidiary of GmbH. Kindly advise the procedure and regulation.
The question you submitted raises highly complicated issues.
The acquisition of an Indian company by a German company should be prepared thouroughly, as there are legal problems concerning a multitude of legal fields in both countries, for example:
- company law
- foreign investment regulations
- foreign exchange management regulations
- tax law
- competition law
- accounting.
Basic information: http://business.gov.in (www)
The process of acquiring an Indian company even got more difficult as India enforced a new company law (Companies Act, 2013 (http://egazette.nic.in (www))) - but unfortunately only partially (Notification S.O. 2754 Ministry of Corporate Affairs, September 12th, 2013, http://www.mca.gov.in (www)). So, at the moment, you have to consider two sets of company regulations (Companies Act, 1956 and Companies Act, 2013). Both acts are applicable and there is nobody right now who really knows how to cope with this situation. As the new Companies Act has been enforced but two weeks ago, no information explaining the actual legal regime is available at the moment.
As it is, I strongly recommend to seek legal advice. You may find contact details of Indian lawyers and advocates at our website: www.gtai.de (www).
Of course, German law in the areas mentioned above also has to be taken into account. German company law generally allows a GmbH to acquire shares of other companies, if this is within the objective of the enterprise. However, the requirements for the acquisition of the shares may vary depending on the individual situation (e.g. with regard to the decision-making process within the GmbH, taxation matters or reporting obligations pursuant to the German Foreign Trade and Payments Regulation - Außenwirtschaftsverordnung). It is therefore highly recommendable to also contact a German lawyer before concluding any contractual agreements. The contact details of specialized lawyers in Sachsen can be found at a website of the Chamber of Lawyers in Sachsen (www.rak-sachsen.de (www)).
Quelle: Germany Trade and Invest
Gesellschaft für Außenwirtschaft und Standortmarketing mbH
www.gtai.com (www)
September 2013
