News detail

03
Feb
2018

Mergers- henceforth cannot be an evading tool.

The recent budget has stopped the games played by the corporate who are into money laundering and diversions through Mergers and Amalgamation. The money siphoning activity by the Indian promoters of profitable companies into shell companies will be forced to change the track. Creative ways used by accountants to cook the book, in a way to escape prosecution, will come to an end now.



The Government, acting as a crusader against black money, fund diversion and use of cash, in it’s recent budget has proposed to levy tax on any payout following an amalgamation even if it is less than the reserves of the profitable company. This will have the ripple effect of avoiding diversifying the profits by the company and shell companies compulsorily filing returns.



All said and done, tax is one of the measures to stop money laundering. Stringent IPR norms, as a due diligence in mergers and acquisitions is much appreciated. It will act as a pro-active step and an en-route towards amalgamation procedures. It further calls for a thorough understanding of the assessment and the valuation of the assets like brand, inventions etc and their role in commercial transactions. Corporate and the partners in industry should be more focused towards the due diligence in IP like investigating party’s ownership, right to use, and right to stop others from using the IP rights in mergers.

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