Vedanta’s takeover offer for Cairn Energy has raised some questions because it comes in the wake of impending changes to the SEBI Takeover Regulations that may make it potentially difficult for acquirers to structure transactions. Commentators have argued that the timing of the acquisition would help the acquirer take advantage of two beneficial provisions under the current regime (that may not...
NALSAR Student Law Review: New Issue
The latest issue of the NALSAR Student Law Review (which is available online) carries a number of articles that may be relevant to readers of this Blog. Here is a list of those: – Regulation and Responsibility of Credit Rating Agencies vis-a-vis the Current Economic Crisis- A Comparative Analysis – Rethinking the Linkages Between Foreign Direct Investment and Development: A Third...
Guidance on Due Diligence
M&A Law Prof Blog has a link to JeffreyWeiner’s Due Diligence in M&A Transactions: A Conceptual Framework which provides an overview of the due diligence process and its objectives in an M&A transaction. It will be a particularly useful reading for corporate lawyers who are starting out this season.
UK: Consultation Paper on Takeover Bids
While the SEBI Takeover Regulations in India are a subject-matter of detailed review, elsewhere in the U.K. there are proposals for amending certain aspects of the City Code on Takeovers and Mergers. These changes have been necessitated on account of the widespread debate that followed the takeover of Cadbury plc by Kraft Foods Inc. early this year. Towards that end, the Code Committee of the...
Proposal for Streamlining Stamp Duty on Mergers, etc.
The issue of applicability of stamp duty to a scheme of arrangement (merger/ amalgamation, demerger, reconstruction or otherwise) effected with the sanction of the High Court under sections 391 to 394 of the Companies Act, 1956 has always been a vexed one. As regards stamp duty legislation more generally, several states have enacted their own stamp duty laws while the remaining states are...
Bits of Interest
1. Regulation of Credit Rating Agencies Drawing lessons from the role of credit rating agencies (CRAs) in the recent financial crisis, SEBI has imposed additional transparency and disclosure norms for the Indian CRAs. SEBI’s circular issued on May 3, 2010 covers issues such as maintenance of records of the rating process, dealing with conflicts of...
End to Accounting Jugglery in Mergers?! – SEBI amends listing agreement to end deviation through disclosure
SEBI has directed, vide circular dated 5th April 2010, the modification of the listing agreement focusing on certain deviations from Accounting Standards commonly carried out as part of Schemes of mergers, demergers, etc. SEBI has done this cleverly and indirectly but with apparently with more effect than it would have done it directly. It has also attempted to kill several birds with one stone...
Stamp Duty on Amalgamations
The Mint has a column by Heena Singhvi that discusses the often contentious issue of whether stamp duty is payable on an order the High Court sanctioning a scheme of amalgamation between two or more companies. Of greater relevance is the discussion of the Delhi High Court decision in Delhi Towers Ltd. v. G.N.C.T. of Delhi (MANU/DE/3152/2009), delivered on 4 December 2009, where the court held...
Overseas Acquisitions and the Impact of National Pride
In the context the proposed overseas acquisitions by Reliance Industries (of LyondellBasell Industries) and Bharti Airtel (of Zain), the M&A Law Prof Blawg has a interesting take on the impact of national pride generated through press attention on such deals. The Blog refers to a recent paper The Cost of Pride: Why Do Firms from Developing Countries Bid Higher?, which concludes that “firms...
Corporate Restructuring and the Business Purpose Rule
In 1935, the House of Lords famously observed that “every man is entitled to order his affairs” in order to minimise his liability to tax (IRC v. Duke of Westminster, [1936] AC 1). This is the dictum that is often cited as the source of the rule that while tax avoidance is legal, tax evasion is not. The distinction between the two, while not always clear, is regarded by some as especially thin...
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