In addition, with respect to private acquisitions and divestitures involving a non-resident entity, applicable foreign exchange laws (including the Foreign Exchange Management Act of 1999 and related rules and regulations) apply. These laws provide, among other things, for price and advertising obligations. For example, in the case of a non-resident investor acquiring shares of an Indian private company from an Indian resident company, the price of these shares cannot be lower than that which, under an internationally recognized pricing method, is intended for the valuation of such shares duly certified by an accountant. Therefore, any provision of a non-resident agreement with respect to salaries, deposits and trust companies must be consistent with the above-mentioned RBI criteria. If an agreement on income, deposits and trust benefits does not meet the above criteria, the parties must obtain an RBI authorization. However, it is not common for the RBI to grant such an authorization. In India, the RBI recently granted general authorization for the adjournment of the consideration in connection with a transaction between a resident and a non-resident under certain conditions. In the event of a transfer of shares between a resident buyer and a non-resident seller or vice versa, the buyer can pay up to 25% of the total compensation in deferred consideration within a maximum of 18 months from the date of the contract. The provision also provides that, when considering deferring part of the total benefit, the parties may create a trust plan of up to 25% of the total consideration. When the buyer`s total compensation is paid to the seller, this provision allows the seller to pay the buyer compensation of 25% or less of the total compensation for up to eighteen months from the date of payment of the full consideration.
Are pensions and other benefits automatically transferred with the staff of a target company? Do applications for registration or consent have to be obtained from employees when a business or business is acquired? If applicable, the financing of the acquisition of an Indian private enterprise by a non-resident off the coast is structured and withdrawn at the time of closure. As a general rule, the buyer must provide a sufficient number of funds, representations and guarantees for most private acquisitions. In addition, a financial exit for the seller is not acceptable for most transactions, unless it has been the subject of a prior commercial agreement between the parties due to the size or nature of the transaction. There is no obligation to notify or consult employees in connection with a share acquisition, business transfer or asset sale, unless staff employment is affected. However, when recognized unions are involved, there is a memorandum of comparison between employers and unions, in which case these unions should normally be consulted with regard to the impact of a transaction on workers.