INDIA Law and Practice Contributed by: Anuja Tiwari, Mallika Anand, Pranjal Bhattacharya and Antra Shourya, AZB & Partners
9.4 Independent Outside Advice Independent advice is typically sought on formulating transaction structures. This includes specific advice on tax implications, opinion from legal counsel on compliance with applicable laws and appropriate issuance of shares, and a valuation certificate from qualified independent valuers. The committee of inde- pendent directors, formed to provide recommenda- tions on open offers, is permitted to seek professional advice or consult SEBI-registered merchant bankers. In mergers and demergers involving listed companies, a fairness opinion from a SEBI-registered merchant banker is mandatory before filing the scheme before the NCLT. Specifically in the case of energy and infrastructure transactions, technical advisers are also appointed to ascertain the quality of the assets, the compliance of the assets with performance parameters vis-à-vis industry standards, as well as the overall operation- al life of the assets and the operational risks of the assets.
• the terms of the open offer or valuation are detri- mental to the minority shareholders; or • the minority shareholders not being treated at par with the majority shareholders. A buyer should be aware of the rights of minority shareholders under the articles of association and shareholders’ agreements and anticipate potential claims of oppression or mismanagement if such rights are disregarded. As part of the due diligence process, the buyer should review the minutes of board meet - ings to assess the board’s functioning and reasoning. The buyer may further allocate risks through indem- nities, warranties and escrow arrangements, along with governing law and arbitration provisions in cross- border deals. In addition, obtaining board approval where required and involving independent directors and fairness advisers can enhance the integrity of the process.
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