Once an acquirer makes an open offer under the SEBI Takeover Regulations, it has to meet a high standard (somewhat similar to frustration) before it is allowed to withdraw such an offer. This principle has been laid down by the Supreme Court in two cases, i.e. Nirma Industries/ Shree Rama Multi Tech and Akshya Infrastructure/ MARG, which we have previously discussed on this Blog. Readers may...
Reverse Break Fees on Indian Transactions
Background; Concept Internationally, in negotiated mergers & acquisitions (M&A) transactions, it is customary to incorporate various types of deal protection devices in order to guard against a scenario where the deal falls through before it is completed and parties have in the meanwhile invested significant time and incurred costs. Two such deal protection devices that operate almost...
Squeeze Outs: Analyzing the Cadbury Decision
[Professor Vikramaditya Khanna and I have co-authored the following post] Background In India, several transaction structures are available for controlling shareholders to squeeze out minority shareholders. These include the compulsory acquisition mechanism, scheme of arrangement and reduction of capital. Out of these, the most commonly used method is the reduction of capital. That is not at all...
Paper on Corporate Insolvency Laws in India
Professor Kristin van Zwieten has posted on SSRN a new paper titled “Corporate Rescue in India: The Influence of the Courts”, the abstract of which is as follows: India is poised for significant reform to its corporate insolvency laws, including the introduction of a new rescue procedure. The reforms follow two decades of sustained criticism of the law, critics complaining of lengthy delays and a...
Guest Post: Removal of Directors – The Necessary Numbers
[The author is an Advocate at the Bombay High Court, and can be contacted at [email protected]] Under the Companies Act, 1956 (“1956 Act”), it was settled law that a resolution proposing the removal of a director before expiry of his period of office under s. 284 of the 1956 Act would have to satisfy the numerical requirements prescribed by s. 188 of the 1956 Act (see for example, )...
Guest Post: Critical Analysis of Securities Laws (Amendments) Bill, 2014
[The author is a practicing lawyer in Mumbai. Email: [email protected]] This post is on a slew of legislative changes in Securities Laws through three ordinances and more particularly, Securities Laws (Amendment) Ordinance, 2014 (“2014 Ordinance”) which has been passed by the Lok Sabha as Securities Laws (Amendment) Bill, 2014 (“2014 Bill”). Three ordinances were...
Consequences of Inaccurate Shareholding Disclosures
Both the SEBI (Substantial Acquisition of Shares and Takeovers Regulations), 2011 (the Takeover Regulations) as well as the SEBI (Prohibition of Insider Trading) Regulations, 1992 (the PIT Regulations) require a timely disclosure of acquisition or change in shareholdings beyond certain thresholds by substantial shareholders and promoters. Such disclosure requirements are also captured in clause...
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