Analyzing Reverse Merger in India: Ease in Tax Implication
Priyanka Bhattacharyya, Amity Law School, Kolkata.
ABSTRACT:
Over the last decade, there has been an increasing number of reverse merger deals involving Indian companies and there also have been several cross-border reverse mergers involving Indian firms. In this era of globalisation, the corporates have understood there are a lot more ways to become a public company rather than through the conventional IPO (initial public offering). making it easier for more firms to benefit from their public status Because public firms' investments are more liquid, it is easier to attract investors than private corporations. By this liquidity, public corporations can utilize their shares to fund acquisitions and reward executives more effectively.[1] The increase in options to go public has been advantageous to both the Small and the Large Companies, majority of them do not meet the traditional profile used by investment banks while determining whether companies will be able to successfully complete an IPO. Reverse mergers (including mergers with special purpose acquisition companies, or SPACs) and self-filings are the two most popular alternatives to IPOs. The Reverse merger is the most preferred way for a company to become public as it also accounts for numerous tax benefits and creates an ease to tax implication.
[1] David N. Feldman and Steven Dresner, Reverse Mergers: And Other Alternatives to Traditional IPOs, (2009)
