Category: Stakeholder Governance and Stewardship

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…

      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…

          Should Offshore Funds Appoint Directors?

          The issue of director duties and attendant liabilities has been a subject of immense debate as the role of directors evolves in the Indian context. India is perhaps a decade behind the west in this evolution process, though rapidly catching up driven by increasingly proactive proxy advisory firms and institutional capital taking significant positions in Indian companies, though activist funds are still a rarity. Transcendence from ‘complying with their obligations’ to ‘performing their duties’ has probably been most transformational and manifested only in the past couple of years…

          Threat of valuation litigation in Public M&A – Carlyle-PNB Effect! 

          • SEBI floor price prescription in case of fund raises should not automatically dislodge directors’ duty to exercise independent judgment and maximise shareholder value
          • Target boards to proactively consider appointing an independent banker and running a robust auction process for capital raises…

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