- in United States
- with readers working within the Law Firm and Construction & Engineering industries
- within Corporate/Commercial Law, Technology and Consumer Protection topic(s)
- with Senior Company Executives, HR and Inhouse Counsel
The authors from Chuo Sogo are:
Katsuya Hongyo - https://www.clo.jp/english/lawyers/60/
Takashi Oguchi - https://www.clo.jp/english/lawyers/63/
Daigo Kawano - https://www.clo.jp/english/lawyers/617/
Over the last several years, India has emerged as a credible and attractive jurisdiction for Japanese corporate and financial sponsors pursuing crossborder M&A opportunities, as evidenced by recent marquee transactions such as Mitsui's investment in Bharat Insecticides and Hayashi Telempu Corporation's joint venture with NDR Auto Components. This trend is underpinned by two critical factors:
- Geostrategic and socio-economic considerations that have elevated India as a priority investment jurisdiction beyond the United States and Europe.
- Regulatory clarity and liberalisation of the Foreign Direct Investment (FDI) regime, which have streamlined approval processes and created an enabling environment for inbound deals from Japan.
From the Japanese perspective, cross-border M&A involving Japan has also been steadily expanding. Looking ahead, as India's economy continues to grow, we expect India-to-Japan investment to become increasingly active, in light of several tailwinds that are at work:
- A sustained Yen-weakness that has made Japanese assets comparatively attractive to overseas buyers and sponsors.
- A broader global trend of alternative investment capital flowing into Japan.
- Ongoing relaxation of asset-management rules alongside a generally predictable and not overly onerous FDI screening environment.
Even though the legal and regulatory framework underpinning the two countries' transaction ecosystems is aligned on several vital aspects, there are significant practical and cultural differences in deal and contract practice between the two jurisdictions. As an example, while deal structuring in India requires careful alignment with the country's foreign investment regime, exchange control framework, and corporate and securities law requirements, Japan's foreign investment and exchange-control regimes are comparatively stable and not unexpectedly stringent.
From a transaction lawyer's perspective, the following aspects typically require significant negotiations between parties:
- Earnout and holdback structures
- Press Note 3: Investment by border-sharing country entities
- Representations, warranties, and indemnities
- Legal due diligence
- Conditions precedent
This note offers practical insights – from both an Indian and a Japanese POV – for effectively managing deal risks and helping counterparties navigate matters that most often affect timelines, valuation, and risk allocation in Indo-Japanese M&A.
To view the full article please click here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
