INDIA Law and Practice Contributed by: Kunal Chandra, Kabeer Mathur, Chinmay Bilgi, Sharnam Vaswani and Rajdeep Mukherjee, Trilegal
Unlisted Company Acquisitions Conversely, acquisitions of shares in companies whose shares are not listed are largely insulated from these mandatory transparency norms, relying instead on contractual disclosures negotiated by the target.
Regulatory Filings • Filing obligations and triggers: In acquisitions requiring CCI approval, the acquirer (or parties, in the case of mergers/amalgamations) must notify the CCI upon execution of binding documents – interpreted broadly to include documents evidenc - ing an intention to acquire control – and prior to transaction completion. Notifications filed with the CCI entail disclosure of substantial transaction- related information – including party details, trans - action structure, shareholding, governance rights – and business-related particulars – including an assessment of relevant market(s), the prevailing competitive landscape, and the underlying com - mercial rationale for the transaction. Some of this information, particularly material details of the transaction, are typically reproduced in the CCI’s approval orders, which are publicly available. Par - ties may request confidentiality for commercially sensitive information, but must submit a non- confidential version of the filing with appropriate redactions and commercial justifications for such redactions along with a supporting affidavit cum undertaking specifying the date on which the con - fidential treatment is to expire. Typically, the CCI reviews such requests and grants confidentiality for a limited period. • NCLT filings: In transactions implemented through NCLT-approved schemes of arrangement – typi - cally mergers, demergers and restructurings – copies of scheme documents and related filings also enter the public domain when applications are filed before the NCLT. The final orders of the NCLT generally capture key elements of the transac - tion, including the structure of the scheme, share exchange ratio, treatment of assets and liabilities, accounting treatment, and observations on regula - Market participants typically maintain strict confidenti - ality during the early stages of negotiations, and non- disclosure agreements are commonly used to pro - tect commercially sensitive information while parties conduct preliminary discussions and due diligence. In transactions involving listed companies, the dis - closure obligations are linked to the occurrence of a material event, typically board approval of the transac - tory and stakeholder approvals. 5.2 Market Practice on Timing
5. Negotiation Phase 5.1 Requirement to Disclose a Deal
Disclosure obligations of targets in respect of M&A transactions in India depend primarily on whether the target entity is listed or unlisted, as well as the regula - tory approvals required for the transaction. Listed Companies For listed companies, disclosure obligations are gov - erned by the SEBI LODR. Listed entities must dis - close material events relating to acquisitions, dispos - als, agreements or other arrangements that affect the management, control or obligations of the company. Fundraising transactions undertaken by listed compa - nies are also subject to prescribed disclosure require - ments and timelines. As a general principle, the dis - closure of an M&A transaction by a listed company is triggered upon the approval of the transaction by the board of directors and must be made within 30 minutes of the board meeting. A listed entity must also disclose material events or information as soon as reasonably possible, including where confidential information relating to a transaction has been leaked or where there are unusual price movements that may indicate the existence of undisclosed material infor - mation. Unlisted Companies Unlisted targets have no obligation to publicly dis - close negotiations or completed acquisitions, though certain information – such as revisions to share capi - tal, director appointments and changes in sharehold - ing pattern – is publicly available through corporate filings. The articles of association of every company are publicly available – these are typically updated upon deal completion to include governance provi - sions but not commercial terms.
580 CHAMBERS.COM
Powered by FlippingBook