[Aishwarya Singh is a lawyer based in Mumbai. The views expressed in the article are personal.] This post discusses the regulatory framework relating to mergers or demergers involving a listed company and an unlisted company, wherein the whole or part of the undertaking, property or liabilities of a listed company, being the transferor company, are transferred to an unlisted company, i.e., the...
Recommendation of Independent Directors in a Takeover: Need for a Relook
[Shreya Goyal is a 4th student at the West Bengal National University of Juridical Sciences, Kolkata] The SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 2011 govern the acquisition of shares in listed companies in India. These Regulations (and their predecessors) have been tested during many corporate takeover battles in India. In the recent takeover episode between L&T...
MCA Clarifies “Appointed Date” in Schemes of Arrangement
In schemes of arrangement, whether by way of a merger, demerger or other form of corporate restructuring, the timing of when the transaction takes effect becomes important. It is from such a date that the financial statements of the companies involved will reflect the effect of the transaction. Given that the transaction may be completed anytime during the course of a financial year, parties have...
Buyback during Pendency of Amalgamation: SEBI Order in the Wipro Case
The SEBI (Buy-back of Securities) Regulations, 2018 states in regulation 24(ii) that a company shall not announce a buy-back when a scheme of amalgamation or compromise or arrangement pursuant to the provisions of the Companies Act, 2013 is pending. Such a proscription against buy-back operates because a scheme of amalgamation is a material transaction and could potentially alter the fundamental...
Negating Negative Covenants: A Deterrence to Private Equity Investment in India?
[Shuchita Goel is a V year B.A., LL.B. (Hons.) student at National Law University Delhi] The Indian corporate landscape is dominated by firms with concentrated ownership, where the controlling shareholders (also known as promoters) play an all-pervasive role in corporate governance.[1] Parties in control of a corporation are in a position to extract private benefits of control that do not accrue...
Linde- Praxair Merger: Competition Assessment in the Industrial Gas Market
[Vaidehi Soni is a 4thYear B.A., LL.B. (Hons.) student at The National University of Advanced Legal Studies, Kochi] Background Linde Aktiengesellschaft (Linde) and Praxair, Inc. (Praxair), both international gasses and engineering companies primarily active in industrial gases, specialty gases, medical gases, related engineering and services sectors, entered into a business agreement wherein the...
Analyzing the Applicability of GAAR to Schemes of Arrangement
[Varun Kannan is a 4thyear student at NUJS, Kolkata]. In a recent post on this Blog, Prof. Umakanth Varottil has elaborately examined the NCLT decision rejecting the proposed scheme of merger of Gabs Investments Private Limited into Ajanta Pharma Limited. In this post, I shall specifically analyze the applicability of the General Anti-Avoidance Rules (“GAAR”) against a proposed scheme of...
NCLT on Scheme of Arrangement and Tax Avoidance
Background Schemes of arrangement have been a useful method of implementing mergers and acquisitions in the Indian context. Historically under the Companies Act, 1956, schemes were supervised by the High Courts, but the Companies Act, 2013 conferred that jurisdiction upon the National Company Law Tribunal (NCLT). Under the regime set forth in the 1956 Act, the High Courts had adopted a largely...
Representations & Warranties Insurance in Mergers & Acquisitions
[Ajay Krishna is a 4th-year B.A. LL.B. (Hons.) Student at The National University of Advanced Legal Studies, Kochi] Mergers and acquisitions (M&A) transactions have been steadily growing in India and some of the most highly negotiated provisions in these transactions are those of indemnities in case of breach of representations and warranties. Globally there has been a rapid growth in the use...
Merger of Public Sector Banks and Competition Concerns
[Kruthika Venkatesh is a 4th year B.B.A., LL.B. (Hons.) student at School of Law, Christ (Deemed-to-be) University in Bangalore] Background The media has reported that the Government of India is all set to ask the Reserve Bank of India (“RBI”) to prepare a list of candidates for merger among the 21 government controlled lenders with the primary agenda of overcoming bad debts. It all began two...
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