|
Bharat Vasani, group general counsel,
Tata Sons Being a global entity involves
having employees, assets, manufacturing facilities and marketing offices in multiple
countries overseas. If a significant chunk of revenue does not come out of businesses
outside India, a company would only be called transnational. A company is dependent
on the overseas economy when it becomes a global company. The
product quality and pricing of a company must be competitive with those of global
players. A company can call itself globalised only when it meets competition both
inside and outside the country. Within the
Tata Group, Tata Consultancy Services (TCS) has built a reputation in the global
market with its presence outside the country and its international workforce.
TCS attracts talent from companies such as Microsoft. Tata Tea is regarded as
a global company because of the Tetley acquisition. On the other hand, Tata Steel
and Tata Motors have huge exports and Voltas executes huge turnkey projects abroad,
but they are not called global companies. Mergers
and acquisitions (M&A) today is a growing route for businesses to expand globally.
Therefore, lawyers need to be aware of the laws in various jurisdictions. In international
M&A, companies play in a jurisdiction where they are not too familiar with
local regulations and socio-political issues. The due diligence process is very
different. Cultural issues are also significant when one acquires a company in
India as compared to acquiring one overseas. The employees of the acquired company
need to be integrated into the acquiring company. Another
major factor is the environmental risk. If Tata Chemicals were to acquire a chemical
company in India, they would know the environmental pollution laws to comply with.
In the US, they would need to learn more about environmental laws. The viability
of the project can be affected by environmental issues. Issues of tax and transfer
pricing need to be looked at critically before engaging in business overseas. The
arrival of the World Trade Organisation (WTO) has ensured that certain key laws
are uniform across geographies. The customs valuation rules for the valuation
of imported goods have to be the same for all WTO member-countries. Now, for instance,
sitting in India, I can confidently advise my client in Singapore about the anti-dumping
regulation. The WTO is now making a uniform intellectual property rights law across
the globe and India will become a part of it on January 1, 2005. Simultaneously,
local laws are acquiring a global nature. They are aligned to international laws
partly due to WTO and partly due to compulsion of industry. Secondly, as many
multinationals are coming into India, the legal practice is adapting itself to
the changing scenario. Old laws are no longer completely relevant. The approach
of the Indian corporates has changed. Technology has
changed the way in which the legal function works internationally. Getting knowledge
has become easy. If I need to know any law, I can go to any government website
and download the relevant law. Overseas, multinationals
invariably have a lawyer leading the M&A process. In India, a lawyer enters
the picture only after the commercial terms have been agreed upon and the deal
almost finalised. A lawyer cannot make any significant suggestions on structuring
of a deal at such a late stage. This is now changing. Today lawyers play a key
role in commercial negotiations also. That is why they need to be well informed
about international and local laws and have strong commercial orientation. Local
situations are different in each country and lawyers need to understand them all. Other
articles on globalisation: Uploaded on February 18, 2004
|
