Govt plans MHA scanner for foreign deals

With the National Security Council (NSC) raising concerns about security issues in cross-border mergers and acquisitions,the corporate affairs...

With the National Security Council (NSC) raising concerns about security issues in cross-border mergers and acquisitions,the corporate affairs ministry has said it is viewing the option of consulting the ministry of home affairs (MHA) in such mergers,and asking companies to obtain some kind of no-objection before giving them the go-ahead for the transactions.

Informally,they (NSC) have discussed the issue of M&As in the sensitive sectors with us. They have said there should be safeguards in the sector. We are thinking over the safeguards we can incorporatewe are open and ready to do what National Security Council wants. We want foreign funds in the country but without having any effect on security, ministry sources told The Indian Express.

Sources said the basic issue raised by the NSC was the source of funding. According to the NSC,foreign participation in mergers and acquisitions should be kept on a watchlist and vetted with extra care for the fear of terror funding and anti-national activities. The NSC had proposed that the ministry should consult the home ministry and security agencies in suspicious transactions and cases,and the MCA was weighing the option,the sources added.

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The definition of what is suspicious and sensitive will be framed by the NSC, the sources said. At present,the companies have to approach High Court for the clearance of mergers and acquisitions,which are then forwarded to the corporate affairs ministry Section 394A of the Companies Act.

The NSC is the body that deals with the security concerns of the country. It has raised concerns about cross-border deals and deals in sensitive sectors such as telecom,defence and space. According to the NSC,the sources said,the money for many transactions might be coming from sources indulging in anti-national activities.

The main issue is how to ensure the source of funding and rule out the possibility of terror funds coming to India through such deals. This is what the government is looking at, said sources. If we need some amendment in the law to scrutinise such mergers,we will work on that option too, the sources said.