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Further, the code for independent directors detailed under the Companies Act 2013 imposes an obligation on an independent director to safeguard the interest of all stakeholders, balance the conflicting interests of the stakeholders and acting within his authority, assist in protecting the legitimate interests of the company, shareholders and its employees.

The law imposes no obligation on the controlling shareholders of the company towards the stakeholders. However, balancing provisions have been provided for the minority shareholders to challenge the deal if the same is prejudicial to their interests."
    }
  },{
    "@type": "Question",
    "name": "In what circumstances are break-up fees payable by the target company?",
    "acceptedAnswer": {
      "@type": "Answer",
      "text": "Although break fees are not provided for under the law, they can be contractually agreed between the parties. The Indian Contract Act 1872, allows damages to the non-breaching party to a contract to the extent of losses as may be reasonably foreseeable as a natural consequence from the non-performance of the contract by the breaching party. The commonly agreed instances under which the obligation to pay break-up fees is triggered are as follows:
a. Break-up of the negotiations by one of the parties
b. A seller choosing a different buyer than the one named preliminary agreement
c. When a seller opts to open the investment opportunity to the public instead of the private investor named in the agreement an
d. If a defect is discovered in the target company that had not been previously disclosed. In most cases, the party breaching the letter of intent or memorandum of understanding is required to reimburse the expenses incurred by the other party in connection with the transaction"
    }
  },{
    "@type": "Question",
    "name": "Can conditions be attached to an offer in connection with a deal?",
    "acceptedAnswer": {
      "@type": "Answer",
      "text": "In India, it is open for the parties entering into a deal to negotiate and agree upon the terms and conditions of the deal. Some of the common conditions attached to an offer in connection with a deal are the fulfilment of the conditions precedent and subsequent (findings of the comprehensive due diligence exercise), lock-in period of the securities, restriction on transfer of shares and affirmative voting rights to be provided to the investor. In case of acquisition of a listed company, the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations 2011, requires the acquirer to make an open offer conditional as to the minimum level of acceptance."
    }
  },{
    "@type": "Question",
    "name": "How is financing dealt with in the transaction document? Are there regulations that require a minimum level of financing?",
    "acceptedAnswer": {
      "@type": "Answer",
      "text": "Mergers are generally different from acquisitions in the way they are financed. Mergers are generally cashless and involve share swaps. In case of acquisition of an unlisted company, the law is silent on the level of financing by the purchaser and the acquisition agreement records the terms of financing by the purchaser therein.

In the case of acquisition of a listed company where the acquisition triggers a mandatory public offer under the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations 2011, the said regulations contains provisions for securing the acquirer’s performance of the financial obligations. The acquirer is required to deposit a part of the consideration (as prescribed under the said regulation) payable under the open offer in an escrow account not later than 2 (two) working days prior to the date of the detailed public statement of the open offer for acquiring shares. The escrow account may be created by way of a cash deposit, a bank guarantee issued in favour of the manager to the open offer by any scheduled commercial bank, or a deposit of frequently traded and freely transferable equity shares or other freely transferable securities with an appropriate margin."
    }
  },{
    "@type": "Question",
    "name": "Can minority shareholders be squeezed out? If so, what procedures must be observed?",
    "acceptedAnswer": {
      "@type": "Answer",
      "text": "The Companies Act 2013, contains provisions for squeezing out of minority shareholders form the company.
The Act requires an acquirer holding 90% (ninety percent) or more of the issued equity shares in a company, to make an offer to the minority shareholders to buy the equity shares held by such minority shareholders in the company and the minority shareholders may sell their equity shares to the majority shareholders at the price determined on the basis of valuation by a registered valuer.
The procedure for the same has been detailed here under:

a. The acquirer holding at least 90% (ninety percent) of the shares will be required to notify the company of their intention to buy the minority shares
b. The majority shareholders will have to make an offer to the minority shareholders to buy their equity shares at the price determined on the basis of valuation by a registered valuer
c. The majority shareholders will have to deposit an amount equal to the value of the equity shares to be acquired by them, in a separate bank account to be operated by the company for payment to the minority shareholder
d. The payment is required to be disbursed to the minority shareholders by the company within a period of 60 (sixty) days which will be continued to be made to the minority shareholders who have not received the payment, for a period of 1 (one) year and
e. The company will be required to deliver the equity shares to the majority shareholders upon receipt of the same
Further, the said Act also gives a right to the minority shareholders to make an offer to the majority shareholders to purchase their shares."
    }
  },{
    "@type": "Question",
    "name": "What is the waiting or notification period that must be observed before completing a business combination?",
    "acceptedAnswer": {
      "@type": "Answer",
      "text": "For the purposes of business combinations, the Competition Act 2002 prescribes the following timelines for various actions to be undertaken by the applicant and the Competition Commission of India:

Notification to the Competition Commission of India by the party proposing to enter into a combination Within 30 (thirty) days of approval of the proposal relating to the merger or amalgamation by the board of directors of the enterprise concerned, or execution of any agreement or other documents for acquisition of shares, assets, voting rights or control, as the case may be.

Order or directions to be issued by the Competition Commission of India Within a period of 210 (two hundred and ten) days from the date of filing the notice with the Competition Commission of India."
    }
  },{
    "@type": "Question",
    "name": "Are there any industry-specific rules that apply to the company being acquired?",
    "acceptedAnswer": {
      "@type": "Answer",
      "text": "The industry specific rules that apply to the company being acquired depends on the particular sector to which the company falls. Typically, the said rules apply to highly regulated sectors or sectors of strategic importance, such as banking, financial services, insurance, media, telecommunications, defence, civil aviation, electricity etc. Accordingly, sector-specific regulators have been established to regulate some of the aforesaid industries, e.g. the Telecom Regulatory Authority of India and the Department of Telecommunications regulate the telecommunications sector, the Directorate General of Civil Aviation regulates civil aviation, the Reserve Bank of India regulates the banking and financial services sectors, the Insurance Regulatory and Development Authority regulates the insurance sector, and the Ministry of Information and Broadcasting regulates the electronic media sector.

Further, the Foreign Direct Investment Policy, the Foreign Exchange Management Act 1999 and its regulations contain industry specific rules such as the permissible limit of foreign investment, entry routes etc."
    }
  },{
    "@type": "Question",
    "name": "Are cross-border transactions subject to certain special legal requirements?",
    "acceptedAnswer": {
      "@type": "Answer",
      "text": "The Companies Act 2013 contains provisions pertaining to inbound and outbound mergers and amalgamations. The provision envisages a scheme of amalgamation providing for, amongst other things, payment of consideration, including by way of cash or depository receipts or a combination of both.

The Foreign Direct Investment Policy provides that foreign investment in India can be made either with or without the approval of the Reserve bank of India. Further, the rules and regulations framed by the Reserve Bank of India under the Foreign Exchange Management Act 1999 will be applicable to cross border transactions in India.

The Foreign Direct Investment Policy prescribes certain conditions for making investments in India in different sectors, such as maximum permissible limits on investment by a foreign party, pricing guidelines to be adhered to for making the investments, lock-in requirements of such foreign investment, etc."
    }
  },{
    "@type": "Question",
    "name": "How will the labour regulations in your jurisdiction affect the new employment relationships?",
    "acceptedAnswer": {
      "@type": "Answer",
      "text": "Where the ownership or management of an undertaking is transferred, every workman who has been in continuous employment for not less than 1 (one) year in that undertaking immediately before such transfer must be given a notice of transfer. Also, every such workman is entitled to 1 (one) month written notice or salary in lieu of notice and retrenchment compensation in accordance with the provisions of the Industrial Disputes Act 1947. Retrenchment compensation shall be an average pay of 15 (fifteen) days for every completed year of continuous service and a notice has to be served in the prescribed manner on the appropriate government or such authority as specified by the appropriate government.
No such compensation shall be payable by the employer to a workman in any case there has been a change of employer by reason of the transfer, if
a. the service of the workman has not been interrupted by such transfer
b. the terms and conditions of service applicable to the workman after such transfer are not in any way less favourable to the workman than those applicable to him immediately before the transfer and
c. the new employer is, under the terms of such transfer or otherwise, legally liable to pay to the workman, in the event of his retrenchment, compensation on the basis that his service has been continuous and has not been interrupted by the transfer"
    }
  },{
    "@type": "Question",
    "name": "Have there been any recent proposals for reforms or regulatory changes that will impact M&A activity?",
    "acceptedAnswer": {
      "@type": "Answer",
      "text": "Foreign Exchange Management (Cross Border Merger) Regulations 2018 (“Merger Regulation”) was notified by the Reserve Bank of India on 20th March, 2018 which regulates the cross-border mergers in India. Cross border mergers are categorised as:
a. ‘In bound merger’ when an Indian company (“IC”) acquires assets and liabilities of a foreign company. Some of the essentials of an Inbound Merger are
i. Merger Regulations allow transfer of securities to a foreign shareholder, subject to compliances applicable to a foreign investor under the foreign direct investment regulations (“FDI Regulations”)
ii. Where the cross border merger results in transfer of securities of a joint venture (“JV”) or a wholly owned subsidiary (“WOS”) of an IC, situated in a foreign jurisdiction, the same is subject to compliance, such as pricing of shares in a specified manner, any outstanding’s owed to the IC being cleared prior to such transfer, etc. set out under the Foreign Exchange Management (Transfer or Issue of Any Foreign Security) Regulations 2004)
iii. If the cross-border merger results in acquisition of a step-down subsidiary (situated in a foreign jurisdiction) of the JV/WOS, by an IC, then certain additional conditions laid down in the Foreign Exchange Management (Transfer or issue of any foreign security) Regulations 2004 will have to be complied with
iv. The IC has to ensure that the overseas borrowings of the foreign company, proposed to be taken over by it, are compliant with the provisions of the overseas borrowing Regulations (“Overseas Borrowing Reg.”) under Indian law within a period of 2 (Two) years from the date of sanction of the scheme pertaining to such cross-border merger by the relevant authority. However, the IC cannot remit any monies from India for repayment of such overseas borrowings

v. Further, it is to be noted that the Overseas Borrowing Reg. inter-alia stipulates specified interest rates, maturity, end use restrictions, on borrowings, from overseas, by an IC (however, end use restrictions are not applicable to an IC per the Merger Regulations)
b. ‘Outbound Merger’ when a foreign company (“FC”) acquires assets and liabilities of an IC. Some of the essentials of an Outbound Mergers are
i. In such cases the law applicable in the jurisdiction where the FC is situated will regulate such cross-border merger
ii. Merger Regulations also stipulate certain conditions by which guarantees that outstanding borrowings of the IC shall, as a result of such cross-border merger, become guarantees or borrowings of the FC. This however is subject to the FC not acquiring any such guarantee or outstanding borrowing, in rupees payable to Indian lenders, non-compliant with the relevant foreign exchange law in India."
    }
  }]
}
</script>

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<p style="text-align:justify">We are amongst the leading Mergers & Acquisitions Law Firms in India. We work with in-house legal counsels, investment banks, and accounting firms for Strategic Corporate Restructuring, demergers, acquisitions, and buy-outs. <br />
 <br />
The lawyers at the firm assist companies pursuing Mergers & Acquisitions in Restructuring of Capital, Conversion of a Public Company to a Private Company, Takeover of Business Divisions, Winding up Proceedings, and vice versa in M&A transactions.<br />
 <br />
Singhania & Partners assist the clients in statutory compliances, court proceedings, merger sanctions, structuring the transaction, business / asset transfer agreement, non-compete agreements, and earn out models for management. The firm represents clients for regulatory compliances, the scheme of arrangement between the company and its shareholders or between shareholders.</p>

<p style="text-align:justify">In M&A transactions, we strive not only to achieve objectives of the client but also ensure that the deal is fair to the other party too. Based on our experience, we also provide value addition on practical business aspects in the transaction. We have been successful in retaining our clients for over two decades by achieving their trust and confidence through our professionalism.</p>

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