INDIA Law and Practice Contributed by: Raj Ramachandran and Krutamana Pisipati, JSA
6.12 Irrevocable Commitments In negotiated transactions, principal sharehold- ers provide confirmations to sell their shares by executing binding contracts. There is usually no “out” for a better offer, unless the acquirer breaches the contractual terms or the exclusivity period or long-stop date for the transaction has expired or a condition precedent for the closing cannot be achieved. 6.13 Securities Regulator’s or Stock Exchange Process Companies first issue a draft offer document which is filed with the SEBI. Draft offer docu- ments are available in the public domain includ- ing the portal of the SEBI, the concerned stock exchanges, or concerned merchant banker. The detailed timeframes for the various steps lead- ing up to the listing are contained in the offer document. 6.14 Timing of the Takeover Offer Once made an “open offer” cannot be withdrawn except inter alia in the following circumstances. • Statutory approvals required for the “open offer” or for effecting the acquisition have been refused subject to the requirement for approvals having been specifically disclosed in the detailed public statement and the letter of offer. • Any condition stipulated in the share pur- chase agreement is not met for reasons outside the reasonable control of the acquirer, subject to the conditions having been specifi- cally disclosed in the detailed public state- ment and the letter of offer. • Such circumstances which in the opinion of the SEBI merit withdrawal of the “open offer”. If the acquirer is unable to make the payment within ten working days of the closure of the
“open offer”, the acquirer will be required to pay interest (at a rate specified by the SEBI) to the shareholders of the target company for the delay. If statutory approvals are required for some but not all shareholders, the acquirer can make payment to such shareholders in respect of whom no statutory approvals are required in order to complete the “open offer”.
7. Overview of Regulatory Requirements 7.1 Regulations Applicable to a Technology Company
The Indian Companies Act, 2013 is the primary law that governs companies. For certain specific businesses (payment gateways and payment aggregators, non-banking financial companies), approvals of other authorities such as the RBI are required. Depending on the nature of the proposed busi- ness activity, it can take between eight and 12 weeks to obtain the approval. 7.2 Primary Securities Market Regulators The primary securities market regulator for M&A transactions involving listed entities in India is the SEBI. In a recent change, certain inbound merger approvals are also provided by the RBI. The approval of the National Company Law Tri- bunal would otherwise be required for merger transactions not satisfying the conditions for a fast-track merger. Parties would factor in a certain time period for obtaining the necessary approvals in the documents executed between them. There are also other sector specific and other regulators (like the Competition Commission of India and Insurance Regulatory and Develop-
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