Exertion HR Merger / Demerger / Closure services
A legal merger is a transaction where two or more companies combine to form a single legal entity.
- A demerger is the separation of activities of a group, where the original shareholders become shareholders of the separated companies.
- Merger involves joining two or more companies to form a new entity or absorbing one or more companies into another, resulting in the amalgamating company losing its existence and shareholders becoming shareholders of the new company.
- We offer due diligence services for PF/Social Security/Employee Benefits in the context of mergers, demergers, or closure.
- Our assistance includes transferring past benefits to the new entity and guiding closure proceedings with EPFO, ESIC, and the Labour Department.
- We also handle registrations and help set up pension plans for the new entity.
FAQ'S
How does the due diligence process assess the impact of a merger or demerger on Provident Fund (PF) contributions and compliance?
- Due diligence process assesses PF contribution and compliance impact through examining contribution records, evaluating legal compliance, identifying potential liabilities, and ensuring transition and compliance continuity. This includes reviewing contribution history, analyzing legal compliances, and addressing PF-related concerns to manage contributions during and after the merger/demerger.
How are employee benefits and welfare schemes reviewed during due diligence in a merger or demerger?
- They are reviewed during due diligence in a merger or demerger by examining their accuracy and compliance, assessing the financial and legal obligations, understanding liabilities, and considering employee relations. This involves verifying scheme documents, analyzing financial and legal implications, identifying liabilities and potential risks, and evaluating the impact on employee morale and legal requirements to ensure a smooth transition and compliance continuity.
How does due diligence address the communication of changes in PF, social security, and employee benefits to affected employees?
- Firstly, the existing communication protocol is thoroughly assessed, including policies and procedures, to evaluate its effectiveness in conveying information. Transparency is prioritized during the transition, with clear and accurate information provided about the changes and their implications. Potential communication gaps are identified, allowing for the development of appropriate strategies and tools to ensure timely and consistent information delivery to affected employees. The objective is to maintain employee satisfaction by addressing concerns and providing clarity on the changes, along with offering support mechanisms. This effective communication approach helps mitigate disruptions and ensures a positive employee experience during the transition.
How are employee stock options (ESOPs) or equity-based benefits managed during a merger or demerger?
- Generally, ESOPs are managed through comprehensive reviews conducted in the organization, reviewing the stock options, and new strategies aligned to employee incentives, ensuring a proper flow on transitions/changes in ESOPs.
What steps are taken to transfer employee benefits accrued under existing pension or gratuity schemes to the new entity?
- Legal Compliance Assessments: As part of the transfer process, legal compliance assessments are conducted. This involves a thorough examination of the existing pension or gratuity schemes to ensure that they comply with the applicable laws and regulations in India. The objective is to verify that the schemes adhere to requirements regarding eligibility, contribution amounts, vesting periods, and other pertinent guidelines prescribed by Indian labor and pension laws.
- Due Diligence: The due diligence process plays a crucial role in the transfer of employee benefits. It involves a comprehensive review of the existing pension or gratuity schemes, including the evaluation of scheme documentation, trust deeds, and adherence to legal requirements. This ensures that the schemes are accurately documented and enforced, and that the transfer of benefits is carried out in accordance with the Indian Legal framework.
- Smooth Communication Policy and Protocol: Effective communication is key when transferring employee benefits. It is essential to have a clear communication policy and protocol in place to inform employees about the transfer process, the impact on their accrued benefits, and any necessary actions they need to take. This policy ensures that employees have a good understanding of the transfer and can voice their concerns or queries promptly. Additionally, transparent communication helps build trust and maintain a positive relationship between the employer and employees during the transfer process.
