International M&A Lawyers India 2026: Companies Act, CCI & FDI Checklist

Cross-border M&A activity in India is being reshaped by three simultaneous regulatory shifts in 2026: the Corporate Laws (Amendment) Bill, 2026, which overhauls scheme-of-arrangement procedures and decriminalises a swathe of Companies Act provisions, new CCI merger control thresholds including the Deal Value Threshold (DVT) introduced by the Competition (Amendment) Act, 2023, and evolving FDI sectoral caps under DPIIT’s consolidated policy. For international M&A lawyers India-focused practitioners, general counsel and PE sponsors, these changes demand an updated compliance playbook that connects legislation to SPA drafting, deal structuring and regulatory timelines.

This guide maps every approval trigger, threshold and tax consequence that matters for inbound and outbound transactions closing in 2026, with model clause language and a worked PE-exit illustration drawn from Budget 2026 tax measures.

TL;DR, Three decisions before you sign:

• CCI clearance. Check whether global deal value exceeds ₹2,000 crore (DVT) or whether enterprise/group asset and turnover thresholds under Section 5 of the Competition Act are breached, file pre-closing.
• FDI route. Confirm at LOI stage whether the target sector falls under automatic or government route, government-route approval adds 8–16 weeks and requires a closing holdback.
• Budget 2026 tax impact. Revised buyback taxation, MAT computation changes and tighter interest-disallowance rules may shift exit economics, build tax indemnities and escrow into the SPA.

Quick Compliance Decision: The Three-Step Pre-Signing Test

Before executing a term sheet for any cross-border deal structuring involving an Indian target or acquirer, run this three-step filter:

1. Deal value and local nexus. Does the aggregate transaction value exceed ₹2,000 crore globally and does the target have substantial business operations (SBO) in India? If yes, a CCI pre-merger notification under the DVT is almost certainly required. Separately, do the parties’ combined assets or turnover exceed the Section 5 enterprise or group thresholds? Either trigger demands a filing before closing.
2. Sectoral FDI cap. Is the target in a sector with an FDI cap below 100 %, or one that mandates the government-approval route (e.g., defence above 74 %, multi-brand retail, certain financial services)? If so, DPIIT/RBI approval is a mandatory condition precedent, factor processing time into the long-stop date.
3. Tax and exit structure. Will the transaction involve a buyback, dividend recapitalisation, or leveraged acquisition that engages Budget 2026 M&A tax changes (buyback tax at shareholder level, revised MAT, Section 94B interest caps)? Model the after-tax economics before choosing between a share sale, asset purchase or slump sale.

If any answer is “yes,” the SPA must contain tailored conditions precedent, indemnities and timeline provisions. The sections below unpack each trigger in detail.

Companies Act Amendments 2026: What Changed and Why It Matters for International M&A

The Corporate Laws (Amendment) Bill, 2026, introduced in Parliament in early 2026 and notified via the eGazette, is the most consequential package of Companies Act amendments since the 2020 decriminalisation wave. It touches the Companies Act, 2013 and the Limited Liability Partnership Act, 2008 simultaneously, and several of its provisions have direct implications for merger, demerger and reconstruction transactions.

Schemes of Arrangement, Mergers and Reconstructions, Procedural Changes

The Bill streamlines the NCLT-supervised scheme process in several ways. Threshold revisions for convening shareholder and creditor meetings reduce the number of classes that must separately approve a scheme, shortening the meeting-notice cycle. Timelines for NCLT to pass orders on schemes have been tightened, and the amendments introduce procedural clarity on cross-border mergers involving foreign companies, a gap that had previously been filled only by ad hoc NCLT directions. LLP Act amendments align the conversion and reconstruction framework with the Companies Act, giving PE-backed LLPs a cleaner path to corporate conversion ahead of an IPO or secondary sale.

Industry observers expect these procedural efficiencies to reduce the typical NCLT scheme timeline from 8–12 months to approximately 6–9 months for uncontested matters, though contested schemes will still face appellate risk at the NCLAT stage.

SPA Drafting Flags, Conditions Precedent and Representations

Deal lawyers should update SPA templates in at least three areas. First, conditions precedent referencing “NCLT approval” should now specify the amended procedural pathway and anticipated shortened timelines. Second, representations and warranties on corporate compliance should address the newly decriminalised provisions, the shift from criminal to civil penalties changes the materiality and disclosure calculus for target companies. Third, long-stop dates should reflect the compressed scheme timeline while still including a buffer for NCLAT appeals.

Sources: PRS India, Corporate Laws (Amendment) Bill, 2026 (PDF); eGazette, Corporate Laws (Amendment) Act, 2026; Cyril Amarchand Mangaldas, Client Alert.

CCI Merger Control in 2026, DVT, Section 5 Thresholds and Practical Filing

India’s CCI merger control framework now operates on three parallel notification triggers, each of which international M&A lawyers India deal teams must evaluate at the LOI stage. The Competition (Amendment) Act, 2023 introduced the Deal Value Threshold (DVT) alongside the existing enterprise-level and group-level asset/turnover thresholds under Section 5 of the Competition Act, 2002. A transaction that breaches any one of the three triggers requires a pre-closing combination notice to the CCI.

Deal Value Threshold (DVT). A transaction must be notified if the global deal value exceeds ₹2,000 crore (approximately USD 240 million) and the target enterprise has substantial business operations (SBO) in India. The SBO test is designed to establish a local nexus, it captures targets with material Indian revenues, users or operations even where their Indian asset base is small. This threshold is particularly significant for digital-economy and asset-light acquisitions.

Section 5 enterprise and group thresholds. These remain the primary triggers for conventional M&A. Filing is required where the combined entity or group exceeds prescribed Indian and global asset or turnover limits. The thresholds are periodically revised by government notification; the de minimis target exemption (which exempts targets below specified asset/turnover levels) was set with a limited validity period.

When to File: Pre-Closing Obligations and De Minimis Carve-Outs

India operates a mandatory, suspensory pre-closing notification regime. Parties must not close a notifiable transaction until the CCI has approved it or the statutory waiting period has lapsed. The de minimis exemption, which exempts transactions where the target’s Indian assets or turnover fall below specified thresholds, provides relief for small-target acquisitions, but its validity must be confirmed against the latest CCI notification (the current exemption window was set to expire in March 2026).

Corporate Actions That Can Trigger CCI Notification

It is not only conventional share-purchase deals that require filing. Buybacks that alter the shareholding pattern, rights issues that consolidate control, share swaps in group reorganisations, and demergers that create standalone entities with market-facing operations can all cross the CCI’s “material influence” control threshold and trigger a notification obligation. Deal teams should conduct a control-change analysis for any corporate action that shifts voting rights or board composition above the material-influence standard.

Filing Process and Timelines

The CCI’s review follows a two-phase structure. Phase I (prima facie review) typically concludes within 30 working days of a complete filing. If the CCI identifies potential competition concerns, it may initiate a Phase II investigation, which can extend the review by up to 150 working days from the original filing date. In practice, the majority of transactions are cleared in Phase I. Pre-notification consultations (PNCs) with the CCI, while not mandatory, can resolve information gaps early and reduce the risk of Phase II escalation.

Sources: CCI, Filing of Combination Notices; CCI, Notifications; AZB & Partners, Deal Value Threshold; GLE, CCI Merger Control Reforms.

FDI Limits and Sectoral Caps 2026, Inbound Strategic and PE Implications

India’s FDI regime, governed by the Consolidated FDI Policy issued by the Department for Promotion of Industry and Internal Trade (DPIIT) and enforced through FEMA regulations administered by the RBI, imposes sector-specific caps and route conditions on every inbound investment. For international M&A lawyers India transactions, the distinction between the automatic route (no prior government approval required) and the government route (prior approval of the competent authority mandatory) is the single most consequential variable for deal timing.

Most manufacturing, IT/ITeS and e-commerce (marketplace model) sectors permit 100 % FDI under the automatic route. However, sectors such as defence (up to 74 % automatic; above 74 % government route), multi-brand retail (up to 51 % government route), print media, and certain financial services continue to require government-route approval for acquisitions that exceed specified thresholds. Acquisitions from countries sharing a land border with India face additional scrutiny under Press Note 3 (2020) and its successors, which mandate government-route approval regardless of the sector’s standard route classification.

Practical Checks at LOI Stage

Experienced deal teams build FDI route confirmation into the LOI itself. The checklist should include:

• Sector identification. Confirm the target’s primary business activity against the DPIIT Consolidated FDI Policy schedules, a target with mixed activities may be subject to the most restrictive sectoral cap.
• Investor nationality. Determine whether the ultimate beneficial owner resides in a land-border country, triggering government-route review under Press Note 3.
• Downstream investment. If the Indian target itself holds investments in other Indian entities, the downstream investment and indirect foreign investment rules may impose additional caps or compliance requirements.
• Pricing guidelines. FEMA pricing norms, including RBI’s valuation guidelines for share transfers involving non-residents, must be satisfied; non-compliance can void the transaction or trigger enforcement proceedings.
• Reporting and filings. Post-closing filings (FC-GPR / FC-TRS forms via the RBI’s FIRMS portal) have strict timelines, typically 30 days from the date of allotment or transfer.

Sources: DPIIT Consolidated FDI Policy (latest circular); FEMA Non-Debt Instruments Rules, 2019 (as amended); RBI Master Directions on Foreign Investment.

Budget 2026, Key Tax Measures Affecting M&A and PE Exits

The Finance Bill, 2026 contains several provisions that directly alter the after-tax economics of cross-border deal structuring for both strategic acquirers and PE sponsors. Three changes deserve particular attention in the context of Budget 2026 M&A tax planning.

Buyback taxation at shareholder level. Following the shift in the taxation of buyback proceeds, where buyback distributions are now taxed in the hands of the shareholder rather than the company, PE funds exiting via a buyback route must model the effective tax rate on their distribution receipts. The change eliminates the previous arbitrage where buybacks offered a more tax-efficient exit than dividends, and it brings the buyback exit closer to parity with a secondary share sale in terms of tax treatment.

Minimum Alternate Tax (MAT) computation. The Finance Bill, 2026 refines the MAT computation under Section 115JB, with adjustments to the treatment of book profits that affect companies carrying forward accumulated losses or claiming specific deductions. For acquisition targets with significant deferred tax assets, the revised MAT computation can change the valuation of those assets and, consequently, the price-to-earnings multiple used in deal negotiations.

Interest disallowance, Section 94B. The tightened thin-capitalisation rules limit the deductibility of interest payments to associated enterprises. For leveraged buyouts structured through Indian acquisition vehicles, the effective cost of debt financing increases where interest payments to non-resident affiliated lenders exceed the prescribed threshold (typically 30 % of EBITDA). This may push deal teams toward equity-heavier structures or third-party acquisition financing to preserve deductibility.

Worked PE Exit Illustration: Share Sale vs Buyback

Consider a PE fund holding a 30 % stake in an Indian target valued at ₹1,000 crore. Under a share sale to a strategic buyer, the fund realises capital gains taxed at the applicable long-term or short-term rate depending on the holding period (long-term capital gains on listed shares above ₹1.25 lakh are taxed at 12.5 %; unlisted shares at 12.5 % with indexation benefits). Under a buyback, the ₹300 crore proceeds are now taxable at the shareholder’s applicable rate, with cost of acquisition available as a deduction. The likely practical effect is that share sales will remain the preferred exit route for most PE sponsors, with buybacks reserved for specific restructuring scenarios where they offer other commercial advantages.

Practical Deal Structuring Responses

To manage Budget 2026 tax risk, SPAs should include a tax indemnity covering any increase in tax liability arising from legislative changes enacted after signing but before closing. Escrow sizing should account for potential MAT adjustments on the target’s book profits. Where a leveraged structure is contemplated, model the interest-disallowance cap under Section 94B into the acquisition financing plan and obtain lender sign-off on the structure before signing.

Sources: Finance Bill, 2026 (indiabudget.gov.in); PRS Billtrack, Corporate Laws (Amendment) Bill, 2026.

Practical Deal Checklist and SPA Drafting Clauses for International M&A Lawyers India

The following model clause blueprints are designed for adaptation, not verbatim adoption, in SPAs for cross-border transactions involving Indian targets. Each addresses a specific regulatory approval India deal teams must manage.

CP, CCI Clearance:

“Closing shall be conditional upon the CCI issuing an unconditional approval or the statutory waiting period lapsing without objection.”

CP, FDI Government-Route Approval:

“Where government-route approval is required, the Purchaser shall file within 15 business days of signing; the long-stop date shall extend by the approval processing period.”

Tax Indemnity, Budget 2026 Changes:

“The Seller shall indemnify the Purchaser for any incremental tax liability on the Target arising from amendments to Sections 115JB or 94B enacted after the date hereof.”

Additional clauses to include:

• Material adverse change carveout. Specify that changes in law (including the Corporate Laws Amendment Bill 2026 provisions) enacted after signing do not constitute an MAC entitling the buyer to terminate.
• Escrow and liability cap. Size the escrow at a minimum of 10–15 % of deal value to cover tax, regulatory and warranty claims; set a liability cap aligned with the indemnity basket structure.
• Filing cooperation. Obligate both parties to cooperate on CCI filings, provide information within specified timescales, and attend pre-notification consultations jointly.

Key Comparison Tables and Regulatory Timelines

Conclusion

The 2026 regulatory environment for cross-border M&A in India is more layered than at any point in the past decade. The Corporate Laws (Amendment) Bill, 2026 creates procedural efficiencies but also demands updated SPA templates. CCI merger control, now operating with the DVT alongside Section 5 thresholds, widens the net of notifiable transactions. FDI sectoral caps and route requirements remain a gating factor for inbound deals. And Budget 2026 M&A tax changes alter exit economics in ways that must be modelled before term sheets are signed.

International M&A lawyers India practitioners who build these regulatory approvals India requirements into their deal architecture from day one, rather than retrofitting compliance after signing, will close transactions faster, with fewer surprises and stronger commercial outcomes. For tailored guidance, find an international M&A lawyer in India through the GLE directory.

Sources

1. PRS India, Corporate Laws (Amendment) Bill, 2026 (PDF)
2. eGazette, Corporate Laws (Amendment) Act, 2026
3. India Budget, Finance Bill, 2026 (PDF)
4. Competition Commission of India, Filing of Combination Notices
5. Competition Commission of India, Notifications
6. PRS Billtrack, Corporate Laws (Amendment) Bill, 2026
7. Cyril Amarchand Mangaldas, Client Alert: Corporate Laws (Amendment) Bill, 2026
8. AZB & Partners, Deal Value Threshold
9. Global Law Experts, CCI Merger Control Reforms