Corporate/M&A
September 11, 2017

BRIGHTLINE TESTS TO DETERMINE CHANGE OF “CONTROL” FOR TAKEOVERS A NO GO

In India, under the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (the “ Takeover Regulations”), there exists a mandatory tender offer regime for acquisition of listed companies. Under this regime, both, the acquisition of a substantial shareholding stake (25%) and the acquisition of “control” are treated equally, and require the acquirer to make an open offer to the public shareholders. Currently, under the Takeover Regulations, the test to determine what constitutes change of “control” is principle-based. Keeping in sync with global norms, in early 2016, the Securities and Exchange Board of India (the “SEBI”) released a discussion paper (the “ Paper”) to explore bright-line tests to determine what constitutes as change of “control.”

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Corporate/M&A, Securities Law
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April 26, 2017

INDIA – CROSS-BORDER MERGER PROVISIONS NOTIFIED

The erstwhile Companies Act, 1956 (the “1956 Act”) contained provisions for the merger of a foreign company with an Indian company but not vice versa. The Companies Act, 2013 (the “ 2013 Act”) made a significant change and introduced enabling provisions for merging an Indian company into a foreign company. The provisions relating to both inbound and outbound mergers along with the corresponding amendments to the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, have been notified on April 13, 2017.

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Corporate/M&A, Foreign Investment
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April 3, 2017

THE TARGET TEST EXEMPTION UNDER INDIA’S MERGER CONTROL REGIME TWEAKED

The Competition Act, 2002 read with the Competition Commission of India (Procedure in Regard to the Transaction of Business relating to Combinations) Regulations, 2011, deal with the merger control regime in India. On March 27, 2017, the Indian government issued a notification (the “ Notification”) changing the target test exemption.

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Competition, Corporate/M&A
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January 20, 2017

PENALTIES IN COMPETITION LAW VIOLATIONS IN INDIA

In June 2011, the Indian government implemented the merger control regime under the Competition Act, 2002 (the “Act“) and the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011 (the ” Regulations“). While the Competition Commission of India (the “CCI“) is a fairly young regulator, over the years, the jurisprudence on Indian competition law and the merger control regime has developed substantially.

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Competition, Corporate/M&A
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December 16, 2016

MINORITY SQUEEZE OUT UNDER THE COMPANIES ACT, 2013

On December 7, 2016, the Indian government notified several provisions of the Companies Act, 2013 (the “2013 Act”), including provisions on variation of shareholders’ rights, reduction of capital, mergers and amalgamations, winding up by the National Company Law Tribunal, and  appointment of official liquidators, all effective from December 15, 2016.   With this, Sections 235 and…

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Corporate/M&A
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December 9, 2016

SEBI AMENDS NORMS FOR INVESTMENTS BY ANGEL FUNDS AND FPIS; IMPOSES RESTRICTIONS ON COMPENSATION AGREEMENTS

Introduction On November 23, 2016, the Securities and Exchange Board of India (the “SEBI”) approved several important changes to Indian securities regulations, including, an amendment to the SEBI (Alternative Investment Fund) Regulations, 2012 (the “AIF Regulations”) to ease the requirements for investment in start-ups by angel funds, an amendment to the SEBI (Foreign Portfolio Investor)…

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Corporate/M&A
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November 17, 2016

CHANGES TO THE FOREIGN INVESTMENT AND BORROWINGS REGULATIONS

Introduction This update discusses certain key changes to India’s foreign exchange regulations implemented recently. Foreign investment in financial services Recently, the Reserve Bank of India (the “RBI”) notified an amendment to the Foreign Exchange (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 (the “Foreign Investment Regulations”) permitting 100% foreign investment…

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Corporate/M&A, Private Equity and Venture Capital
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November 9, 2016

INDIA DEMONETIZES INR500 AND INR1000 NOTES – MOVING TOWARDS A CASHLESS ECONOMY

Major Reform In a big bang reform, effective midnight of November 9, 2016, the Indian government has banned INR500 and INR1000 currency notes (the “Banned Notes”).  The decision has been taken to root out fake currency and cash (black) money and eliminate corruption, terror funding and money laundering, which has been hurting India’s economy for decades….

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Corporate/M&A, Tax
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October 17, 2016

SIMPLIFIED PROCESS FOR INCORPORATING COMPANIES

Introduction In the last couple of years, the Indian government has taken many initiatives to ease the process of incorporating a company in India and reduce the time frame to establish a business in India.  On October 1, 2016, the Ministry of Corporate Affairs of the Government of India (the “MCA”) amended the Companies (Incorporation)…

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Corporate/M&A
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September 16, 2016

SEBI CAUTIONS ONLINE CROWDFUNDING PLATFORMS; CLARIFIES APPLICABILITY OF INSIDER TRADING REGULATIONS

This update discusses the implications of a recent cautionary notice issued by the Securities and Exchange Board of India (the “SEBI”) in respect of equity funding websites catering to the capital requirements of Indian start-ups. Further, this update also discusses an informal guidance order issued by the SEBI to HDFC Bank Limited (“HDFC Bank”) in…

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Corporate/M&A
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September 7, 2016

INDIAN TAX BENEFITS ON AMALGAMATIONS APPLIED TO FOREIGN COMPANIES – AN IMPORTANT DEVELOPMENT

Introduction  In a recent ruling in the case of Banca Sella SpA (AAR No. 1130 of 2011 dated August 17, 2016), India’s Authority for Advance Rulings (“AAR”) has held that, although the Indian branch office (“IBO”) of a foreign company is a capital asset for tax purposes, the transfer of a branch office in a…

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Corporate/M&A, Tax
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July 28, 2016

THE INDIAN REAL ESTATE SECTOR: AN OVERVIEW

Introduction  The real estate sector is the driving force behind the growth of the Indian economy.  It is the second largest employment generator and GDP contributor in the country.  In the most generic sense, real estate business means buying and selling of properties (residential and commercial), which consist of land, buildings, natural resources attached, etc….

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Corporate/M&A
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June 17, 2016

INDIAN MERGER CONTROL THRESHOLDS REVISED

Introduction The Competition Act, 2002 (the “Act’) read with the Competition Commission of India (Procedure in Regard to the Transaction of Business relating to Combinations) Regulations, 2011 deal with the merger control regime in India.  Recently, the Indian government has issued notifications to revise the de minimis and merger control thresholds, and has extended certain…

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Competition, Corporate/M&A
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June 15, 2016

RBI PRESCRIBES LIMITS ON DEFERRED CONSIDERATION AND INDEMNITY IN CROSS-BORDER TRANSACTIONS

Introduction M&A transactions often include escrow and indemnification provisions. Recently, the Reserve Bank of India (the “RBI”) has amended the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000, permitting parties to defer the payment of a certain portion of the consideration and open escrow accounts (to deposit…

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Corporate/M&A, Foreign Investment
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May 12, 2016

IMPACT OF THE INDIA – MAURITIUS PROTOCOL

Introduction Under the bilateral double taxation avoidance agreement between India and Mauritius (the “Mauritius DTAA”), any capital gain arising from the sale of shares can be taxed only in Mauritius and not in India.  India has been attempting to renegotiate the Mauritius DTAA over the past decade to check round-tripping of funds and treaty abuse….

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Corporate/M&A, Tax
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