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...
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...
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...
Miscellaneous
1. Exemption from Takeover Regulations for Gift of Shares to Family Trust SEBI has granted an exemption to an acquirer from making an open offer under the SEBI Takeover Regulations in the case involving Gujarat Organics Limited (the company). In that case, the promoter Mr. Ashwin S. Dani, owns 71.15% shares in the company, and proposes to transfer...
Amendments to the Combination Regulations
[The following post is contributed by Karan S. Chandhiok, who is the Managing Associate of the Competition Law Team at Luthra & Luthra Law Offices. Karan graduated from Amity Law School followed by a BCL at Oxford. He currently serves as a Member Executive of the Competition Law Bar Association. These views are personal. Karan may be contacted at [email protected] or karanchandhiok@gmail...
Special Circumstances for Exemption from Takeover Offers
In the last few days, SEBI issued two exemption orders and one informal guidance based on requests made by acquirers not to be obligated to make mandatory open offers under the SEBI Takeover Regulations due to the existence of special circumstances. This post briefly discusses each of these situations and the rationale for SEBI’s views. Forfeiture of Shares In an application in the case of Prima...
Scheme of Arrangement – Revised requirements for the stock exchanges and listed companies
[Yesterday, we had the opportunity to provide a brief analysis here on SEBI’s new circular on the topic. In the following post, Yogesh Chande points to some ambiguities regarding the scope of SEBI’s new circular. Yogesh is a Consultant, Economic Laws Practice, Advocates & Solicitors. Views expressed by the author are personal] This post pertains to the circular issued by Securities and...
Stringent Procedures for Schemes of Arrangement Involving Listed Companies
For the last few years, there has been a perceptible concern on the part of the Securities and Exchange Board of India (SEBI) that companies have been utilizing the facility of schemes of arrangement available under Sections 391-394 of the Companies Act, 1956 to effect various types of transactions, some of which may not be in the interest of minority shareholders. SEBI has sought to introduce...
U.S. Ruling on Investment Banker Liability in M&A
Last week, a jury in Boston rejected a claim against Goldman Sachs in its role as investment banker to the sale of Dragon Systems Inc. The deal involved a sale of Dragon to Belgian company, Lernout & Hauspie, in consideration for which Lernout & Hauspie issued its own stock to Dragon’s shareholders in an all-stock deal. The trouble was that the acquirer, Lernout & Hauspie, soon became...
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