Since 2013, the Securities and Exchange Board of India (SEBI) has exercised oversight in respect of schemes of arrangement proposed by listed companies, including schemes such as amalgamation, demerger, reduction of capital and the like (see here and here). Such oversight has now been enshrined in regulations 11, 37 and 94 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations...
ESOP Shares and the Computation of Open Offer Triggers
Under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (“Takeover Regulations”), an acquirer must make a mandatory open offer to acquire the shares of the remaining shareholders when the acquirer acquires shares (with voting rights) beyond prescribed thresholds. Since the triggers are based on the acquisition of shares with voting rights, questions could arise whether...
Withdrawal of Open Offer: A Debate Rekindled?
[The following post is contributed by Saumya Bhargava & Prateek Suri, who are Associates at AZB & Partners, New Delhi. Views expressed are personal.] [In an earlier post dated August 5, 2016, we had discussed an order relating to the open offer of Jyoti Limited in the context of circumstances under which an open offer is allowed to be withdrawn in India] Public announcement of an open...
Non-compete Fee: A Bane for Minority Shareholders
[The following post is contributed by Soham Roy & Akhil Nene, who are 5th year students at the National Law University Odisha] A non-compete fee is paid to exiting promoters or founders of a company to ensure that they do not compete for a certain period of time with the company they are exiting. Recently, there was considerable controversy surrounding the HDFC Life-Max merger as a result of...
Takeover Regulations and the Banking Sector
Two separate but recent developments underscore the need to treat the banking sector differently when it comes to compliance with the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (the “Takeover Regulations”). While the first relates to the applicability of the Takeover Regulations to capitalization of banks, the second relates to restructuring debts of borrower...
The Need for Cyber Security Due Diligence in M&A Transactions
[The following post is contributed by Prajoy Dutta, a third year B.A.,LL.B (Hons.) student at Institute of Law, Nirma University, Ahmedabad and Srinivas Raman, a fourth year B.A.,LL.B (Business Law Hons.) student at National Law University, Jodhpur] Introduction In the rapidly expanding mergers and acquisitions (“M&A”) environment, companies often overlook the finer aspects of due diligence...
Withdrawal of an Offer under SEBI’s 2011 Takeover Regulations
Once a takeover offer is made, it is generally treated as sacrosanct. It is extremely difficult for acquirers to withdraw from the offer. This position has been clarified in a number of decisions of courts and appellate tribunals, including the Supreme Court. We have previously discussed the cases of Nirma Industries v. Securities and Exchange Board of India (2013) and SEBI v. Akshya...
Scheme of Amalgamation: Leeway on Appointed Date and Effective Date
[The following guest post is contributed by Bhavika Gohil, who is working with a multinational consulting firm in Mumbai] The Madras High Court by way of its order dated 6 June 2016 (accessible through Judis) permitted petitions filed by Equitas Micro Finance Limited (“Transferor Co. 1”), Equitas Housing Finance Ltd. (“Transferor Co. 2”) and Equitas Finance Ltd. (“Transferee Company”) (“the...
Wilful Defaulter Provisions: A Spanner in the Works for M&A Transactions?
[The following post is contributed by Malek Shipchandler, a lawyer at Shardul Amarchand Mangaldas & Co. Views expressed herein are solely that of the author and do not in any way represent the views of his organization] The Indian securities regulator, the Securities and Exchange Board of India (SEBI) recently notified an amendment to the SEBI (Substantial Acquisition of Shares and Takeovers)...
RBI Permits Deferment of Consideration and Escrow Mechanism Under Automatic Route
[The following post is contributed by Abhishek Dubey who is a Managing Associate with BMR Legal, Delhi. The views expressed here are personal.] In continuation of its policy to rationalize the existing regime under the Foreign Exchange Management Act and to promote the ease of doing business, the Reserve Bank of India (RBI) has amended the Foreign Exchange Management (Transfer or Issue of...
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