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'Build market institutions to speed up M&As'

New Delhi, July 15 (IANS) Mergers and acquisitions (M&As) process can be moved faster by building market institutions, Insolvency and Bankruptcy Board of India (IBBI) chairperson M.S. Sahoo said here on Saturday.

“We have not completely moved to market model as of now but IPO (initial public offering) is a complete model hub market, takeover almost. I think if we can build institutions of market probably that will all help the M&As to move faster,” said Sahoo while addressing an Assocham conference on M&As.

Highlighting how the M&A resolution process should be in the hands of market participants, Sahoo said the Insolvency and Bankruptcy Code (IBC) has segregated the commercial aspects of insolvency from the judicial aspects.

“The IBC has put the commercial aspects in hands of stakeholders and judicial aspects with tribunal and with all that it has put a timeline with firm consequences. It says if you do not do that in 180 days time, the company will compulsorily go into liquidation,” said Sahoo.

The IBBI chief said M&As are very important activities for economies of scale, economies of scope, from micro and macro point of views and it affects the rights and interests of two sets of people.

“It does readjustments of financial rights of an enterprise, equity holders or debt holders and it also affects the rights of the consumers of the products produced by an enterprise,” he said.

Talking about three very high-level principles in the M&A sector, Sahoo said: “It should gel well with current reforms of last three years in Indian economy whereby we have almost moved on many matters so that decisions are taken by the parties themselves (and) not by any third person, government or court.”

“We are looking at such regulations and facilitations, regulations essentially to protect interests of various stakeholders while in case of acquisitions we look at the people who would be exiting they get a fair opportunity to exit and exit at the highest possible price and all those who exit they get the same price but with least disruption to business,” he added.

Sahoo pointed out that there must be enough legal protection, clarity for those coming in, least possible financial and regulatory burden with tax and it should be completed in an orderly and time-bound manner and not linger for years.

Amardeep Singh Bhatia, Joint Secretary in the Ministry of Corporate Affairs, said more benches and members would be joining the National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT).

“Increase in capacity is a work in progress and that will happen over the course of next couple of months and you will have more benches, more members joining in,” said Bhatia.

Bhatia said creation of national company law tribunals is the foremost thing that has happened, as the cases have shifted from the courts.

“That is a huge change as it provides the opportunity to all the professionals, it has widened the scope for chartered accountants and company secretaries to practice before the tribunal.”

Bhatia added that the tribunals have also been entrusted with the responsibility of ensuring that the processes are completed in an efficient manner.

Post Source: Ians feed

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