SEBI vs Hindenburg: Separating The Law From The Noise
- SEBI issues show-cause notice to Hindenburg, alleges violation of securities laws and fraud
- Hindenburg in its public response calls SEBI’s notice as ‘non-sense’ and lacking substance ….
The Road To Take-Private In India: What’s The Most Efficient Route For Deal-Making?
- Fixed price delisting debuts as an alternative to RBB, but lackluster in the absence of counter-offer ability
- Reverse Book Building (RBB) made a bit more palatable with easing of counteroffer mechanics, yet route continues to remain inadequate ….
Public M&A: JV’s with exclusivity under SEBI’s scanner – The Linde Case
- Independent Directors must pay closer attention to transactions with related parties. They should ask- are there any non-price factors that are not reflected in the transaction price? If yes, what is the value of these factors? Can they trigger the materiality threshold and need shareholder approval?
- Non-price factors could be a non-compete clause, especially crucial in case of hive-off or joint venture transactions…
ICICI Securities Delisting: What really are the issues?
- ICICI Bank is delisting ICICI Securities through the first court driven delisting in India
- Reverse book building process avoided – taking a specific exemption under Regulation 37 intended for companies in ‘same line of business’ – why did SEBI grant the exemption? ….
Public M&A: New Delisting Norms – What is the Excitement Really About?
- SEBI’s Consultation Paper proposes a comprehensive review of counter-offer mechanism, counter-offer price discovery mechanism, fixed price mechanism, floor price and reference date
- Fixed price delisting, largely regarded as a welcome move, fails to excite us and appears lackluster against the present reverse book building mechanism due to absence of a counter-offer mechanism
Public M&A: Does SEBI’s Market Rumour Proposal Offer the Much-Needed Price Protection?
- In June 2023, SEBI introduced “rumour verification requirements” requiring listed companies to address market rumours; trigger for “materiality” pegged to “expected impact”on turnover, net worth, or value of profit/loss after tax
- SEBI’s December 2023 Consultation Paper now proposes to (a) peg materiality…
Public M&A: Are Warrants attractive price protection instruments?
- Recent SEBI informal guidance to Paramount clarifies ambiguity on holding periods for warrants
- Though warrants could be listed, listed warrants are almost non-existent
- Unlisted warrants cannot be transferred (no matter how long they’ve been held for)
- Shares received upon conversion of warrants are locked-in for 6 months, but unlike
other convertibles, the…
Public M&A: Do List Cos Really Need Omnibus RPT Approvals?
- There seems to be an overlap between regular RPT approvals and omnibus approval routecreating ambiguity on what type of approvals must be procured for long term related partycontracts?
- Listed companies often enter into long term contracts with…
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…