Indian honchos should follow US anti-trust laws: report

Wednesday, 28 March 2007, 05:00 Hrs
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New Delhi: As more and more Indian companies get engaged in acquiring US firms in an insatiable urge to grow, they must follow US anti-trust laws to avoid legal hassles, says a leading industry body.

Indian companies that are aiming at deals that exceed $50 million should have their deals approved by the US anti-trust department, the Associated Chambers of Commerce and Industry (Assocham) said in a statement here on Wednesday.

"The Chamber has also advised such corporates who wish to hold a part of ownership in American companies through formation of joint ventures and any other route to subject their transactions through US anti-Trust laws well in advance, before paying off their commercial costs," it said.

"This is necessary to sustain such deals for their longevity as US anti-trust department takes serious note of such mergers & acquisitions after these are concluded," Assocham added.

Companies should also seek advance clearance from US federal anti-trust authority, whenever they plan any large mergers and acquisitions, it said in a report called Doing Business with USA: Trends and Legal Risks.

It, however, also said: "Takeover worth up to $50 million of US companies are exempt from pre-notification to anti-Trust authority of America but any takeover, the cost of which exceeds $50 million, is subjected to pre-qualification from American anti-Trust authority."

Any deal can be declared null and void or can be penalized heavily if it violates the rules laid down by the anti-trust authority of US federal system.

"The laws of virtually all US states provide for and allow the merger of two corporations or their consolidation. These acquisition techniques can, of course, only be used where the purchase already has its own US corporation (or other suitable US legal entity) available to participate in the merger or consolidation," stated the statement.

According to the body, when a company is acquired through the purchase of its stock, the parties to the acquisition agreement are the buyer and the selling shareholders.

"Several US states have enacted anti-takeover laws. Examples are Delaware, New York and New Jersey, though there are many others," Assocham said.
Source: IANS
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