[Arjim Jain and Shruti Asati are 4th Year B.A., LL.B. (Hons.) students at National Law University, Odisha] In a ruling in July, the National Company Law Tribunal (‘NCLT/Tribunal’) rejected a proposed merger scheme involving three interconnected entities, citing concerns that the scheme was not in the public interest. Unlike other cases where the NCLT typically focused on ensuring compliance with...
Whether a “Sale of Shares” Amounts to a “Sale of an Undertaking”: Has the Conundrum Been Resolved?
[Bharat Vasani is Senior Advisor – Corporate Laws and Varun Kannan an Associate in the General Corporate Practice, both at the Mumbai office of Cyril Amarchand Mangaldas. An earlier version of this post was published on the Cyril Amarchand Mangaldas Blog] “What would constitute an ‘undertaking’ of a company” has been among the most hotly debated topics in the history of India’s company law regime...
Dodging Criminal Liability Through Mergers & Amalgamations
[Suraj Chaudhary and Ravishekhar Pandey are practising advocates at the Bombay High Court, and specialise in commercial disputes] Netflix’s Railway Men this November has refreshed the public memory of the Bhopal Gas Tragedy in 1984. In March this year, given its limited curative jurisdiction, the Supreme Court had no choice but to reject the application for enhancement of compensation to the...
Critiquing SEBI’s Narrow Interpretation of the Inter-Se Transfer Exemption
[Simran Sharma is a fourth year B.A.,LL.B (Trade and Investment Law Hons.) student at National Law University, Jodhpur} The Securities and Exchange Board of India (SEBI) provided informal guidance in June this year on the interpretation of the “inter se transfer exemption” under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (“Takeover Code”). This post aims to...
Capital Reduction: Tax Conundrums
[Sumit Bansal (Partner), Shivani Chhabra (Associate) and Taranjeet Singh (Associate) are with S&R Associates, Advocates] Capital reduction refers to the technique of reducing a company’s share capital in any form. It is a mechanism usually adopted by companies for re-modelling their capital structure, amongst other means (viz., buy-back of shares and redemption of preference share capital)...
A Bank’s Post-Merger Liability for Pre-Merger Crimes
Earlier this month, the Supreme Court in Religare Finvest Limited v. State of NCT of Delhi (2023INSC819) considered the question whether the transferee bank in a merger can be fastened with corporate criminal liability for offences committed by the officials of the transferor bank prior to a merger of the two entities. The Court answered in the negative given the specific facts and circumstances...
Decoding “Ordinary Course of Business” in M&A Transactions
[Rajat Sethi is a Partner and Oorja Chari an Associate at S&R Associates] In common parlance, transactions entered in the “ordinary course of business” include transactions carried out in the day-to-day course of business to further the company’s business, in line with its charter documents. Black’s Law Dictionary defines ordinary course of business as “normal routine in managing trade or...
NCLT Order in Zee-Sony Merger Reiterates High Onus on Objectors
The proposed merger of Zee Entertainment Enterprises Limited with Sony’s India operations (through its entity Culver Max Entertainment Private Limited) has attracted considerable attention. This is essentially due to some governance and financial circumstances surrounding the Zee group. Zee Entertainment was the subject matter of shareholder activism spearheaded by an institutional investor...
Stricter Framework for Sale, Lease or Disposal of Undertaking by a Listed Entity
[Nitu Poddar is a Partner at Vinod Kothari and Company, and can be reached at [email protected]] Disposal of an undertaking (whole or substantially the whole) can be carried out either as part of a scheme of arrangement or otherwise by way of slump sale or business transfer agreement (‘BTA’). Disposal, other than by way of scheme of arrangement, has so far been regulated according to...
The Remedy for a Corporate Break-Up: A Framework for Cross-Border Demergers in India
[Ishika Garg is a 4th year B.A., LL.B. (Hons.) student at the NALSAR University of Law] Navigating the legalities associated with cross-border demergers (‘CBDs’) has always been a tricky task. The Indian position on this subject has been especially muddled, with a lack of sufficient clarity from both the legal enactments and judicial forums. A post on this Blog has previously noted how the...
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