Blog Posts
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The True Nature of a Stock Swap
[Posted by Umakanth Varottil] A stock swap is a transaction where an acquirer acquires shares of another company and, instead of paying cash for such acquisition, discharges consideration by issuance of its own shares. Business World has surveyed experts on the question as to whether a stock swap amounts to a “sale”. The response is…
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Competition Commission & Global Mergers
[Posted by Umakanth Varottil] There has been a coordinated and consistent move by industry to ensure that merger regulations that have been proposed by the Competition Commission do not cover global mergers whose implications in India are not substantial. We have discussed this issue in the past on this blog (here, here and here). In…
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Vodafone Income Tax Case
[Posted by Umakanth Varottil] The acquisition of shares in Hutch Essar by Vodafone from Hutchison in a multi-billion dollar M&A deal last year has resulted in a dispute on the taxability of capital gains on the transaction. This dispute is currently pending before the Bombay High Court, with a decision being awaited. The court’s verdict…
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Security for External Commercial Borrowings: Liberalised Regime
[Posted by Umakanth Varottil] The Reserve Bank of India (RBI) has announced a series of measures to liberalise the regime for Indian borrowers to create security in favour of lenders in case of external commercial borrowings (ECBs). Now, borrowers are only required to obtain the ‘no-objection’ from the authorized dealers (AD) rather than to obtain…
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Management Buyouts (MBOs): Possibilities and Challenges
[Posted by Umakanth Varottil] Earlier this week, The Hindu Business Line carried a detailed column on various business and financial aspects of management buyouts (MBOs), particularly as such deals are being witnessed (albeit infrequently) in India. Simply stated, management buyouts involve the acquisition of a division of a company or the shares in a company,…
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Corporate Governance in Banks
[Posted by Umakanth Varottil] With the recent credit crisis weakening the financial position of several banks world-over, the question that is being repeatedly posed is whether the boards of directors of these banks could have foreseen the oncoming crisis or whether they should have taken steps to forestall a slide in their financial position. Fingers…
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Bulk Deals and Order Matching
[Posted by Umakanth Varottil] The availability of income tax exemptions (on long term capital gains) for share transactions that are executed through stock exchanges have caused otherwise negotiated share sale and purchase deals to be implemented through the stock exchange mechanism. This would require parties to bear only the securities transaction tax (STT) at rates…
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Website on Takeover Code
[Posted by Umakanth Varottil] Acquisitions of shares or control of a publicly listed Indian company are governed by the provisions of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (a.k.a. the Takeover Code). Although this piece of regulation is only about a decade old, it has been tested several times in transactions and…
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The Impending FCCB Conundrum
[Posted by Umakanth Varottil] Foreign currency convertible bonds (FCCBs) have been issued by Indian companies, whereby investors have the option to convert these debt instruments into equity. Such conversion would normally occur when the market price of equity shares at the time of conversion is higher than the conversion price. But, with the markets now…
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Differential Voting Rights: Some Further References
[Posted by Umakanth Varottil] In earlier posts (here and here), this Blog had covered the issue of differential voting rights by Indian companies. A recent column by Srikanth Srinivas in the Business World examines the business rationale for the issuance of shares with differential voting rights and also the pros and cons of such instruments.…