Public M&A Governance

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

6 Sep, 2022

Key takeaways

  • 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
  • Such premature disclosures circumvent SEBI’s intention to ensure information symmetry in the market

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

5 Aug, 2022

Key takeaways

  • 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 liabilities
  • Judicial precedents have implicitly endorsed a more practical view, where the nominee director protects the nominating shareholder’s interests

Revamped Overseas Investment Regime (Part II) – Overseas Debt Investments Rationalized

26 Aug, 2022

Key takeaways

  • Control threshold introduced for offshore debt – a shift of focus towards strategic growth
  • Offshore private credit and special situation funding now permitted 
  • Debenture trustee’s introduced to encourage offshore funding to an Indian entity
  • Financial commitment limits liberalised for funding availed by an Indian entity
  • Computation of networth to be on a standalone basis – clarifying the ceiling on financial commitment

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

9 May, 2022

Key takeaways

  • 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

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

31 Mar, 2022

Key takeaways

  • 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.

  • Investors should strategise for high stakes valuation litigation by shareholders failing which the entire transaction could be potentially derailed…read more 

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We regularly write on Fund Formation, PE, PIPE and M&A, Structured Finance, Fund Litigation, Governance and Stewardship. Stay tuned.