INDIA Law and Practice Contributed by: Anand Lakra, Shivpriya Nanda, Zain Pandit and Ami Shah, JSA Advocates & Solicitors
5. Negotiation Phase 5.1 Requirement to Disclose a Deal In the case of unlisted companies, there is no obligation to disclose the deal in the pub - lic domain. In the case of a tribunal approved merger, the deal may become public once the application is filed with the NCLT. Alternatively, once the deal has concluded, one can access the public records of a company on the data - base of the MCA to access the details of the directors appointed, the shareholding pattern (filed on an annual basis) and the details of the share issuance, if any. In so far as listed entities are concerned, dis - closure requirements are governed by the List - ing Regulations. A listed company is required to mandatorily disclose events in relation to M&A, agreements entered into, inter-alia by the share - holders, promoters, promoter group entities, related parties of the listed entity, which impact the management or control of the listed entity or impose any restriction or create any liability upon the listed entity. Additionally, any fundraising to be undertaken by the listed entity is also required to be disclosed within the specified timelines. Any disclosure regarding a deal is only required to be made when definitive agreements/binding term sheets are executed. However, it should be noted that as per the recent amendments to the Listing Regulations, companies exceeding a certain market capitalisation are required to confirm, deny or clarify, upon any material price movement, any reported event or information in the mainstream media which is not general and in the nature of a rumour of an impending event or information. Such clarifications are required to be made within 24 hours from the trigger of material price movement.
investment policy and pricing conditions in rela - tion to cross-border acquisitions. 4.4 Dealings in Derivatives Dealings in derivates are allowed in India. In fact, the National Stock Exchange of India is one of the largest stock exchanges in the world in terms of volume of equity derivative trading. There are various types of derivatives in the market such as, futures, forwards, options, swaps, foreign currency derivatives and credit derivatives. 4.5 Filing/Reporting Obligations Risk disclosures on derivatives are required to be displayed by intermediaries such as brokers who facilitate dealings in derivatives. Addition - ally, in terms of the Insider Trading Regulations, an “insider” is required to disclose its dealing in derivatives above the prescribed thresholds within two trading days from the completion of the trade. The Competition Act governs acquisition of con - trol, shares, voting rights or assets, or merger or amalgamation. If a proposed transaction falls outside the scope of the former, the Competition Act will not be applicable. 4.6 Transparency In so far as listed companies are concerned, the shareholders intending to acquire control must disclose the purpose and their intention in ten - der offer documents. Additionally, the acquirer will have to also disclose its intentions regarding the future business of the target together with its strategic plans for the target and their likely repercussions on employment and the locations of the target’s places of business. In so far as unlisted entities are concerned, the acquirer is not required to make any such dis - closure.
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