Opportunity for practicing CAs – Cross border mergers and acquisition
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Opportunity for practicing CAs – Cross border mergers and acquisition

  • Highlights

  • Ease of rules for M&As

  • Updated Companies Act 2013 to fillip cross border M&As

  • Taxation, a major hurdle in the process

  • Expected big-ticket deals in the future

These are excellent and interesting times if you are in the field of chartered accountancy. The new GST module has spiked the demand for CAs even more. The field of direct and indirect taxation is ever changing, giving CAs the chance to consolidate their practice. However, there is another field which is providing excellent growth opportunity for practicing CAs – cross border mergers and acquisitions (M&As). Let us look at how it is becoming a game changer:

The updated Companies Act 2013

The Ministry of Corporate Affairs (MCA) has recently updated the rules and regulation regarding of The Companies Act (2013). The changes have come in to effect from 13th April, 2017. The changes proposed by the notification presented an array of opportunities for the CAs, including valuation of a surviving entity by way of international standards which should be done by a recognised valuer.

All the changes provide an excellent opportunity to you if you are a practicing CA. The Jet Airways–Etihad deal is an excellent example of cross border M&As. Additionally, Walmart’s controlling stake in Flipkart, resulting in the world’s biggest e-commerce deal, is another example.

Equipped with knowledge, along with the personnel and infrastructure required to facilitate cross-border M&As, the need for liquidity can be fulfilled with a business loan for chartered accountant. This loan can be availed in a flexi format wherein you can make multiple withdrawals and prepayments as and when there’s a business need without applying for a loan again and again. Here you pay interest only on what use thus lowering your EMI by up to 45%. With pre-approved offers, the process of taking a loan has become simpler and quicker. All you need to do is to enter a few basic details to check out your pre-approved offer.

Major hurdles related to taxes

One of the biggest bottlenecks identified by experts in cross border M&As is related to taxation. It’s to be noted that as of now in case of an inbound merger, where a foreign company merges with an Indian firm, the IT Act 1961 provides tax exemption on capital gains accrued to the transferor company.

However, this is not the case in case of an outbound merger where an Indian firm merges with a foreign company. As a practicing CA, you need to assist your client on the specifics of taxation during the process, thereby giving yourself a chance to expand and consolidate your service.

Reverse mergers and acquisitions

So far, we have discussed foreign companies investing in Indian companies but there is a reverse trend as well. Due to various factors like diversification and expanding global footprint, Indian companies are investing in companies overseas. An excellent example of this is Tata Group’s investment in Jaguar Land Rover. With India easing the rules for merger of Indian firms with foreign companies, more big-ticket deals are expected to take place in the coming days.

Unlike in the past, cross-border M&As are happening more frequently, presenting practising CAs the opportunity to oversee such deals, offer expert advice, and ensuring smooth closing of the deals.

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