SEBI’s Proposed Disclosure Regime: Impact on Public M&A and Directors’ Liabilities

  • Most proposals are well thought through – unintended impact in a few cases
  • Mandatory clarification of media rumours – M&A dealmaking compromised and potential creation of a false market?…

    Unexplored Strategies in the Fortis Saga: Public shareholders and IHH Healthcare exposed to significant collateral damage?

    • Latest SC judgement uncovers Daiichi’s new approach – Fortis, IHH and, public shareholders under the gun for liabilities of Fortis’ erstwhile promoters
    • Public shareholders will need to brace for impact and be proactive – else risk getting the short end of the stick
    • Legal sanctity of the ‘theory of attribution’ possibly misplaced in the Fortis context…

      SEBI orders public disclosure at M&A negotiation stage: Compromises deal certainty and amplifies directors’ liabilities

      • Listed companies forced to publicly disclose deal details pending finalization of negotiations
      • Investors bereft of price and deal certainty, may even face reputational damage
      • Directors of listed companies may be liable for market manipulation and exposed to litigation if they publicly disclose a deal which then falls through…

        Decoding Boardroom Dilemmas (Part III): Can Nominee Directors Share UPSI with Nominating Shareholders?

        • No express framework exists for nominee directors to share UPSI with nominating shareholders
        • Natural expectation that nominee directors should represent their nominators’ interests – not permitted under law
        • Since nominee directors’ fiduciary duty remains towards the company and stakeholders, nominee directors are paradoxically placed and exposed to significant…

          Decoding Boardroom Dilemmas – Hiving Off to Fundraise Through Subsidiaries – Commercial Wisdom or Short-Changing Public Shareholders?

          • Transferring a majority-revenue generating business into a private subsidiary (hiving off) and raising funds at the subsidiary level is increasingly seen as a preferred alternative to direct listed acquisitions or slump sales
          • Hiving off may result in a ‘holding company discount’ and public shareholders lose out on value…

            Private Funds: SEBI holds AIF investors in breach of insider trading norms for AIF’s investments decisions

            • SEBI holds investors of AIFs having UPSI/ MNPI in breach of insider trading norms for investment decisions of AIFs
            • Investors into pooled investment vehicles exposed to substantial risk for actions beyond their control and visibility
            • Compliance seems rather impractical and creates complications for both the AIF and its investors – bad law that needs to studied for its potential implications…

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