ArchiveMay 2013

Supreme Court on Withdrawal of a Takeover Offer

Background The Supreme Court earlier this month issued its decision on the takeover offer by Nirma Industries Limited to the shareholders of Shree Rama Multi Tech Limited (SRMTL). The court concurred with the view of the Securities Appellate Tribunal (SAT) and the Securities and Exchange Board of India (SEBI) in disallowing the withdrawal of the offer by Nirma. In a column appearing on CNBC’s The...

Agreements to Agree

As we have noted on this blog, the common law generally imposes no duty on a contracting party to negotiate in good faith. This is so even when parties ‘agree’ to agree, that is, purport to conclude a contract leaving certain (sometimes essential) terms to be agreed in the future. The House of Lords held in the well-known case of Walford v Miles [1992] AC 128 that such an agreement imposes no...

Defining “Control” in Takeover Regulations

The question of what constitutes “control” under the SEBI Takeover Regulations of 2011 is a vexed one. This is because an acquirer could acquire less than the mandatory offer threshold of 25% and still be required to make an offer if it is said to be in control of the target company. Control is defined in an inclusive manner and could result in some amount of subjectivity in its determination...

SEBI Clarifies on Schemes of Arrangement

Following SEBI’s circular of February 4, 2013 imposing stringent requirements for oversight of schemes of arrangement, there were certain issues that required clarification (discussed here and here). Now, by way of another circular dated May 21, 2013, SEBI has clarified some of the outstanding issues and also made some modifications to the previous circular. In this post, we discuss some of the...

Public Shareholding Norms: Consequences of Non-Compliance

The June 2013 deadline for compliance by listed companies with the minimum public shareholding of 25% is looming closer. The deadline for compliance by public sector (government) listed companies to comply with the 10% minimum public shareholding will follow in August. Over the last few months, several companies have already reduced their promoter shareholding to meet with these norms. This has...

Madras High Court on SEBI Circular for Scheme of Arrangement

A few months ago, I had discussed SEBI’s circular of February 4, 2013, which imposes more stringent oversight by SEBI and the stock exchanges on different types of schemes of arrangement. Shortly thereafter, our guest contributor Yogesh Chande has pointed to issues relating to the scope of the SEBI circular, and specifically whether the circular applies only to such schemes that require exemption...

Enforceability of Put and Call Options: Reality Soon?

Although put and call options are quite common in investment agreements, its enforceability under Indian law has been in serious doubt due to age-old provisions in securities laws which have not been updated to meet with the requirement of the times. I have discussed the issue in detail in this paper and also called “for a reconsideration of the legal regime so that physically settled options...

Papers published on BALCO

Ironically, the judgment of the Constitution Bench in BALCO may turn out to be as significant for domestic arbitration as it is for finally shattering the misconception that the omission of the word “only” in section 2(2) of the Arbitration and Conciliation Act 1996 was designed to expand the jurisdiction of the Indian courts in relation to foreign arbitration. Some of these questions...

Call for Papers – Journal on Governance

[The following announcement is posted on behalf of the Center for Governance, National Law University, Jodhpur] Center for Governance, National Law University, Jodhpur, proposes the VII issue of “Journal on Governance,” its annual publication.  Journal on Governance offers a forum for critical research on interplay of contemporary corporate governance issues with other disciplines...

Extension of Date for Implementation of Modified ESOP Rules

Earlier this year, SEBI had announced the implementation of amended rules for the issue of employee stock options (ESOPs), which restricted the types of schemes to only those that comply with SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. Particularly, curbs were imposed on the acquisition of shares in the secondary markets by ESOP trusts. The rationale...

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