While Indian companies are getting more adventurous in taking risks to acquire projects and businesses abroad, many may not weigh the legal and immigration consequences.
Read more in the article below, Bold Indian Companies, Acquiring Businesses, Need to Consider Immigration.
Website source: http://lawquestinternational.com/bold-indian-companies-acquiring-businesses-need-consider-immigration-issues
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Immigration issues faced by Indians acquiring overseas businesses
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As Indian companies get more confident and adept at acquiring companies and businesses overseas
they often ignore an important aspect of such acquisitions. Corporate changes that typically have
immigration consequences are stock or asset acquisitions, mergers, consolidations, initial public
offerings, spin-offs, corporate name changes, changes in payroll source, and the relocation of an
employer or its employees. Acquisitions involve the purchase of assets or stock. In an asset
acquisition, the purchaser may not accept the liabilities of the seller.
The corporate action could be any of those described above but almost always involves a large pool of
employees some of them who may be foreign nationals in the host country. Business lawyers often
overlook the immigration issues relevant to these foreign nationals, which may have serious and
critical consequences. Even on the rare occasions that one thinks of these issues they are often dealt
with after the deal is closed. This results in huge and unexpected expenses and delays and
sometimes in the loss of key personnel. These issues even arise when an Indian entity takes over a
local company that employs foreign nationals.
There are some main concerns relevant to immigration and associated with the closing of a
transaction. First, the visas or pending applications of the employees could potentially be affected by
the deal. Further, employers are generally barred from hiring unauthorized employees and are required
to maintain documentation demonstrating that each of their employees is legally permitted to work in
the particular jurisdiction where they are employed. Finally, companies may also be required to file
additional documents to legalize the status of some of its employees.
For instance, when acquiring a company in the US one may have to face consequences of immigration
issues with multiple government agencies including the U.S. Citizenship and Immigration Services, or
worse, U.S. Immigration & Customs Enforcement, the enforcement bureau of the U.S. Department of
Homeland Security. Similar agencies in countries like the UK, Canada, Australia, European nations
enforce immigration regulations.
Applying for and receiving permanent residence rights in some countries like the US may take several
years of waiting and require a variety of filings with three different government agencies. The effect of
the corporate action on employees depends on the stage of each one’s individual process at the time
the transaction closes. The transfer of pending applications to the acquiring company also depends
on whether it assumes all of the rights, duties, obligations, and assets of the acquired company.
The consequences of employing unauthorized foreign nationals may include fines for missing or
inadequate paper work and criminal action for other violations. The company may also face a
temporary or permanent ban on employing foreign nationals.
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