Regulatory Framework for Integration

Indian law imposes specific requirements on M&A transactions. Under the Companies Act, 2013, any scheme of amalgamation or merger must be sanctioned by the National Company Law Tribunal (NCLT) with approval of a majority of shareholders and creditors.

Notably, new “fast-track” provisions allow certain cross-border mergers: for example, a foreign parent may now merge into its wholly‑owned Indian subsidiary if over 90% of shareholders and creditors agree, subject to solvency declarations and mandatory Reserve Bank of India (RBI) approval under Foreign Exchange Management Act (FEMA). Competition law is also important: the Competition Act, 2002 now requires mandatory Competition Commission of India (CCI) filing if an acquisition exceeds ₹2,000 crore in deal value and the target has substantial Indian business.

Foreign investment rules have been relaxed as well, for instance, in January 2025 RBI clarified that foreign-owned Indian companies can invest downstream in Indian subsidiaries via the automatic route in sectors permitting 100% Foreign Direct Investment (FDI), and share-for-share swap deals between Indian and foreign affiliates are now permitted without fresh capital infusions.

Recent budgetary changes (such as limiting carry-forward of losses after April 2025 and abolishing the angel tax) also affect M&A deal structuring. In sum, any legal integration plan must align with these statutory frameworks obtaining necessary NCLT/CCI approvals, ensuring FEMA compliance, and adhering to tax and securities regulations.

Due Diligence and Integration Planning

Effective post-merger planning begins with thorough due diligence. Indian counsel should review all corporate and statutory records for example, incorporation documents, board/shareholder resolutions, and major contracts to uncover liabilities and compliance gaps.>

Key areas include change-of-control clauses in vendor and client agreements, regulatory licenses in each jurisdiction, and any anti-competitive obligations. Intellectual property must be audited as part of integration. Employment due diligence is equally important: lawyers should assess each employee contract, bonus and provident fund liabilities, and any labor disputes.

This exercise helps identify overlapping functions early. In fact, integration advisers emphasize flagging duplicate departments during diligence so that post-merger restructuring can eliminate redundancies. By mapping out these elements, contracts, IP, compliance and workforce, the combined company can design an integration roadmap that realigns roles, harmonizes policies, and sets a clear governance structure for the unified legal department.

Combining In-House Legal Teams

Once transaction terms are set, attention must turn to merging the in-house legal functions. Leaders should begin by auditing both legacy teams: catalog the lawyers’ practice areas, rank, and workload to identify which roles overlap and which skills are unique. The merged legal head must then establish a clear vision and organizational plan from day one. For example, PwC advises determining the post-merger legal entities and any consolidation of corporate structures while assessing regulatory or antitrust implications. Operationally, this means defining a new reporting hierarchy, assigning practice areas to each lawyer, and ensuring any necessary Board or shareholder approvals are obtained on the new structure.

Transparent communication is critical during this phase. Merger integration can create uncertainty, so managers should “communicate early and often” about new processes, timelines, and roles. This includes notifying team members of any policy changes, as well as discussing how the combined department will support the new business. Employees will naturally wonder how the merger affects their jobs; the leadership should pre-empt concerns by meeting individually to explain any role changes and how performance will be evaluated.

It is important to avoid the appearance of favouritism: a leader “must treat everyone even-handedly” regardless of which legacy firm they came from. Recognizing each person’s experience and creating new professional development plans can help retain talent. In fact, engaging each lawyer with a growth plan for the merged entity rather than forcing them to adapt to one legacy approach builds loyalty.

Equally, building team spirit aids integration. Many experts recommend organized team-building: for instance, pairing lawyers from both companies on a challenging transaction or community project to foster camaraderie. Small gestures like social events or brainstorming sessions on the new department’s goals can unite the group around common objectives. Over time, these steps help the legal department coalesce into a single, high-functioning unit. In the words of integration specialists, the aim is that the “new department is ultimately stronger, more cohesive, and more effective than what came before”.

Technology and Process Integration

In parallel with personnel integration, the merged legal department should harmonize its tools and workflows. This means consolidating contract management and document systems so that all agreements are searchable in one repository, and defining firm-wide protocols (for example, who may sign contracts or file trademarks) that apply uniformly.

The PwC integration guide notes that teams should “develop plan for migrating contract management systems” and set consistent authorization thresholds and document retention policies. Such alignment avoids confusion – for instance, there should be one central compliance calendar for Board filings and one process for managing litigation.

It also means choosing one set of law firms and external providers, if applicable, to streamline outside counsel relationships. By unifying these operational processes early, the company can prevent the common pitfall of having two conflicting methods for tasks like approvals or data storage. Ultimately, a harmonized set of tools and a shared knowledge base enable the legal team to work together seamlessly under the new organizational structure.

Employment and Compliance Considerations

Restructuring the legal department also involves careful handling of employee matters. Indian labor law does not generally permit an “automatic” transfer of employees outside of very limited cases. Under Section 25-FF of the Industrial Disputes Act, 1947, a ‘workman’ (essentially wage‑hour staff) may transfer to the buyer when a business is sold on a going-concern basis – but only if service continuity is maintained, terms remain at least as favorable, and prior service is counted for seniority.

In practice, most in-house legal professionals would be classified as non‑workmen. For them, transfers must be effected by new employment agreements with their consent. Hence, the acquirer typically enters into tripartite transfer agreements or issues fresh appointment letters to move lawyers to the new entity. Failing to meet the above conditions for any remaining workmen would amount to retrenchment, triggering notice and compensation obligations on the seller.

Moreover, India has just consolidated many labor laws into four new codes. In any case, the merged employer should review all applicable obligations under labour and employee benefit laws. This includes ensuring provident fund, gratuity, bonus and other statutory entitlements for each transferred lawyer are intact.

Any necessary labor notifications or work permit transfers for foreign in-house lawyers should be completed. Given the complexity of these requirements, companies often involve HR and legal specialists to manage the handover of employees.

Conclusion

Merging or restructuring a company’s legal department is as much a legal process as a management challenge. It requires aligning with Indian statutes (Companies Act schemes, CCI and FEMA filings, labour laws) while also following best practices for team integration. The merged entity can build an effective unified legal function by combining thorough due diligence with clear leadership, evaluating legacy legal teams, defining new roles, and communicating openly.

Adhering to compliance requirements (such as Scheme approval under the Companies Act and employment provisions under Section 25-FF) ensures the process is lawful. When done correctly, post-merger legal department restructuring yields a coherent, efficient team ready to support the consolidated business.