Squeeze out of minority shareholders of companies has been a controversial area. As a co-author and I had discussed, there are a number of methods by which squeeze outs can be effected in Indian companies. By way of a recent set of notification and rule-making efforts, the Ministry of Corporate Affairs (MCA) has just added another method that would be applicable to unlisted companies. Among the...
Takeover Offer Price and the Valuation Conundrum
Generally, in a takeover or other form of transaction involving mergers and acquisitions (M&A), there could be broadly two types of disputes. The first type arises if the companies involved have failed to comply with the requisite procedures for undertaking the transaction, which ultimately adversely affects the interests of the shareholders. This would give rise to a cause for 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...
Lessons from L&T’s Takeover of Mindtree: Can Differential Voting Rights Aid Promoters in Peril?
[Rongeet Poddar is a final year B.A. LLB (Hons.) student at West Bengal National University of Juridical Sciences] A hostile takeover is a rare occurrence in the Indian market because of the stringent control of promoter-families over companies and concentrated shareholding patterns in India. L&T’s hostile takeoever of IT services firm Mindtree however is an exception to this general trend...
Dissecting the L&T-Mindtree Takeover Battle
Hostile takeovers are rare in India; there have been only a handful of occurrences over the last few decades. Hence, the announcement by Larsen & Toubro (L&T) yesterday that it intends to launch a takeover of Mindtree set the Indian corporate scene abuzz because the promoters and management of Mindtree have sought to aggressively resist L&T’s attempts. It is billed as the first...
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...
SEBI’s Considerations for Granting Exemption from a Takeover Offer (Batliboi)
[Prateek Surisetti is a V Year B.A. LL.B. student at NALSAR University of Law] I write to analyze an Order (dated 5 July 2018) of the Securities and Exchange Board of India (“SEBI”), which exempted a proposed acquirer from complying with regulation 3 of the SEBI (Substantial Acquisitions and Takeovers) Regulations, 2011 (the “Takeover Regulations”). The Order sheds light on the particular...
Analysing Some Insider Trading Implications For M&A Transactions
[Priya Garg is a 5th year student at West Bengal National University of Juridical Sciences (WBNUJS), Kolkata] Consequences of Creating the Due Diligence Exception to the Bar on the Communication of UPSI For the first time, under regulation 3 of the SEBI (Prohibition of Insider Trading) Regulations, 2015 (“PIT, 2015”), communication of unpublished price sensitive information (“UPSI”) per se has...
Proposed New Regulatory Framework for Delisting Companies
[Manal Shah a 4th year student pursuing B.A. LL.B. (Hons.) with specialization in Corporate Law from the National University of Advanced Legal Studies, Kochi] Introduction The delisting process is presently regulated by the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009 (‘Delisting Regulations’). The Securities and Exchange Board of India (‘SEBI’) on 26 July...
Analysis of ‘Bulk Deal’ under the SEBI Takeover Code
[Tanmay Purohit and Mayank Sen are 4th year B.A., LL.B. (Hons.) students at School of Law, Raffles University, Neemrana (Rajasthan)] The Securities Appellate Tribunal (“SAT”) on 28 May 2018, while deciding on appeals against several orders of the Securities and Exchange Board of India (“SEBI”) in Tarun Jiwarajka v. Securities and Exchange Board of India, undertook a comprehensive interpretation...
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