Are Reverse Mergers Efficient?

  • Manthan Agarwala and Sarthak Sharma
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  • Manthan Agarwala

    Student at O.P Jindal Global University, India

  • Sarthak Sharma

    Student at O.P Jindal Global University, India

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Abstract

In recent years, there has been an increase in the number of reverse mergers involving Indian corporations. There have been numerous examples of cross-border reverse mergers between Indian and US corporations, in which Indian companies have bypassed existing domestic rules and accessed the US capital market through the back door. In light of this, the purpose of this study is to critically assess the performance of India's reverse merger regulatory framework and to identify major issues and flaws. The authors claim that the current regulatory framework does not effectively safeguard public shareholders and exposes the capital market to corporate governance failures. This paper delves deeper into international trends in cross-border reverse mergers, with a focus on emerging countries, and examines the fundamental drivers and obstacles behind this phenomena. The report finishes with a warning to Indian companies considering cross-border reverse mergers, based on lessons learned from the failure of Chinese reverse mergers in the United States, and then lays out the regulatory reforms that will be required in the future The author's goal in this endeavor is to Explore the international development in cross border reverse mergers, analyze the efficacy of the regulatory framework governing reverse mergers in India, highlight the critical issues and lacunae in the legal framework, critically examine how reverse mergers affects shareholders in long run, critically analyze the drawbacks for opting reverse mergers in long run, how reverse merger has opened doors for backdoor delisting, how reverse mergers serves as a pathway for cross border entrance for Indian Companies , explore the motives of reverse mergers apart from getting listed, and Critically analyze salient features of the regulations passed by SEBI in 2017.

Type

Research Paper

Information

International Journal of Law Management and Humanities, Volume 4, Issue 5, Page 814 - 830

DOI: https://doij.org/10.10000/IJLMH.111981

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