[This post is contributed by Nitu Poddar of Vinod Kothari & Co. The author can be contacted at [email protected]] Company law imposes certain restrictions on the general powers of directors. Pursuant to section 180 of Companies Act, 2013 (“Act, 2013”), the board of directors of a company can exercise certain powers only with the consent of the members of the company by means of a special...
Papers on M&A Agreements, Woman Director
Professor Afra Afsharipour has posted on SSRN two papers that may be of interest to readers. They are listed below along with abstracts. Legal Transplants in the Law of the Deal: M&A Agreements in India This chapter reviews the transformation of merger and acquisition (M&A) transactions in India. Due to globalization and economic liberalization, India has experienced a significant wave of...
SEBI Order on Delisting Price
Delisting transactions tend to be sensitive as they underscore the conflicts between controlling shareholders (or promoters) and minority shareholders. The promoters are in a position to delist the company at any time they consider appropriate even though the circumstances may not necessarily favour the minority shareholders. Moreover, due to the information asymmetry between the two groups of...
Breach of Representations and Warranties in M&A: A Buyer’s Guide
[The following guest post is contributed by Goda A. Raghavan and Kirthi Srinivas G, who are advocates with HSB Partners, Chennai and can be contacted at [email protected] and [email protected] respectively. Views are personal and do not represent the views of the firm.] Purchase price in a mergers and acquisitions (M&A) transaction is normally fixed after factoring the risks and...
Nature of Consideration in a Scheme of Arrangement
[The following guest post is contributed by Rushab Dhandokia, who is an associate at a reputed law firm. Views are personal] Background The Bombay High Court in re Thomas Cook Insurance Services (India) Limited[1] has dealt with a very interesting question within the domain of Mergers & Acquisitions (“M&A”). The case refers to the sanction of a composite scheme of arrangement and...
SEBI Denied Locus Over Scheme of Arrangement
It is a well-known fact that schemes of arrangement are a popular method to implement mergers and corporate restructuring transactions in India. While they involves an elaborate and cumbersome procedure and the oversight of the court, parties enjoy tremendous flexibility in structuring their transactions. More importantly, such a scheme is binding on the dissenting minority. When this involves...
Voting Agreements and Takeover Regulations
Earlier this week, SEBI issued an informal guidance based on a request by the promoters of Cipla Limited on the implications of voting agreements under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (the “Takeover Regulations”). Background; Facts The brief facts are that Dr. Y.K. Hamied and his family members control a significant stake in Cipla. Historically, all...
Role of the Regional Director in a Scheme of Arrangement
Mergers, demergers and other forms of corporate restructuring are usually effected through a scheme of arrangement that not only requires the approval of different classes of shareholders and creditors, but also the sanction of the relevant court of law. The provisions of the Companies Act, 1956, specifically sections 391 to 394, contain an elaborate framework to give effect to such schemes of...
Supreme Court on Successor Liability
In the past, we have discussed the difficulties of imposing successor liability on the purchaser of a business when such liabilities pertain to those incurred by the seller prior to the sale and purchase transaction. This issue has come up (without satisfactory resolution) in the Bhopal gas tragedy. Now, it appears that there may be some shift in the approach with a decision of the Supreme Court...
New Delisting Regulations – tougher rather than easier
New regulations on delisting have been approved by SEBI. I wrote a column on December 1, 2014 (print edition) of the Business Standard, on how a new element of requiring at least 25% of the public shareholders as of a certain date to have participated in selling their shares, would nudge toward counter-productive outcomes. I have pasted the copy below. Earlier, Umakanth had commented...
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