Public M&A Governance - Resolut Partners

Public M&A Governance - Resolut Partners

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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