INDIA Law and Practice Contributed by: Anand Lakra, Shivpriya Nanda, Zain Pandit and Ami Shah, JSA Advocates & Solicitors
definitive documents are documents for inspec - tion by the public shareholders in the case of an open offer or during the shareholder approval process in the case of issuance of shares. Additionally, public offer documents, such as detailed public statements and letters of offer, are required to include certain salient features of the transaction documents.
tees are used by companies in ordinary course and not specifically when some directors have a conflict of interest. Generally, directors are bound to the company by their statutory and fiduciary duties to peri - odically disclose such interest and abstain from decision-making processes in its regard. 8.3 Business Judgement Rule While the business judgement rule per se does not exist in India, in accordance with the Act, the board is entitled to exercise all such powers and do all such acts and things as the company is authorised to exercise and do. Courts in India have recognised that they would not generally interfere in the decision making of the board if the board acted reasonably while taking a com - mercial decision that was beneficial for the com - pany. 8.4 Independent Outside Advice It is common for directors to take outside advice during a business combination in India. Statu - torily, directors are required to seek secretarial reports from external parties to ensure compli - ance with the certain SEBI laws during a take private or fairness opinions during a scheme of arrangement. Additionally, the committee of independent directors, while providing reasoned recommendations (as explained in 8.1 Principal Directors’ Duties ), is entitled to seek external professional advice. 8.5 Conflicts of Interest Statutorily, a director is required to act in good faith and in the best interest of the company. Furthermore, the director should not be involved in a situation in which they may have direct or indirect interest that conflicts or may conflict with the interest of the company. In cases where the director is interested in any business, the
8. Duties of Directors 8.1 Principal Directors’ Duties
There are no specific duties that are imposed on the directors in India in a business combina - tion. The directors have a statutory duty to act in good faith and to promote the objects of the company in the interest of all its stakeholders. The director is also required to exercise due and reasonable care and independent judgment. In an open offer or delisting offer, a committee of independent directors of the target is required to provide reasoned recommendations on the open offer/delisting offer. 8.2 Special or Ad Hoc Committees Boards of directors of companies meeting cer - tain specified thresholds and conditions are required to establish committees which accord specialised attention to matters such as audit, stakeholders’ relationship and nomination and remuneration of directors, KMPs and employ - ees. Under the Takeover Regulations, a target company is required to set up a committee of independent directors to opine on the open offer received by its shareholders by way of “rea- soned recommendations” . A similar obligation is also entrusted on the independent directors of the target in a take private. It is common market practice for companies to establish committees of directors for specialised functions such as investments and acquisitions. Such commit -
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