Equity Crowdfunding in India – Some Lessons from Australia and New Zealand

Akshaya Kamalnath, Lecturer, Auckland University of Technology

Introduction

How would you like to hold a small stake in an innovative start-up? With the space industry being opened up to the public sector for instance, once could imagine holding a stake, however small, in a company in that sector. Presumably enthusiasts would want to invest in such a company, not with the hope of profits, but rather, to be part of the story of a company that does something they find interesting. Equity crowdfunding allows the ordinary person to do this. Equity crowdfunding also allows start-ups to find an alternative funding source.

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Structuring Distressed M&A Deals: Regulating the Unregulated Opportunistic Behaviour

Tanuj Agarwal, Institute of Law, Nirma University, Ahmedabad

All intelligent investing is value investing, acquiring more that you are paying for.

-Charlie Munger

(Vice-Chairman, Berkshire Hathaway)

Merger & Acquisition (M&A) deals have witnessed robust challenges, firmly because of financial distress posed due to the Covid-19 outbreak. Where the companies have observed their all-time high valuations and market capitalisation in a momentous bull market, the Covid-19 pandemic has led to the deterioration of the commercial activities and financial market to a great extent. Many desirable and credit-worthy companies are unable to discharge their financial obligation owing to the economic fallout. This will surge the M&A activity in these financially distressed companies.

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Minority Squeeze Out: Dissecting the Conundrum over Multiple Takeover Routes

Priyanshu Agrawal and Vaishnavi Vyas, NMIMS KPM School of Law, Mumbai

Introduction

In India, squeeze-outs have become an area of increasing interest and scrutiny. The extant legal framework provides for several methods through which squeeze-outs can be effected in Indian companies. On February 03, 2020, a newly notified provision, Section 230(11) of the Companies Act, 2013 (the “Act”) has been introduced to enable minority squeeze-outs in unlisted companies. The new rule enables a majority shareholder holding more than 75% of the stake in a company to make a takeover offer to acquire the minority stake. However, the amendment is a half-baked remedy and provides minimal protection to the minority shareholders. Having said that, the new rules do not envisage any clarity on the existing provisions but merely are an additional tool reflecting hostile takeover in unlisted companies.

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Disclosure Regime: SAT lays down parameters for timely disclosures

Gaurav Pingle, Practising Company Secretary and Renucka Vaiddya, Research Associate, Gaurav Pingle & Associates

The ‘Principles Governing Disclosures and Obligations of Listed Entity’ have been prescribed in Chapter II, Regulation 4 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. According to the provisions, a listed entity shall provide adequate and timely information to recognized stock exchange(s) and investors. However, what is adequate information is not very easy to determine and prescribe. It is very subjective – depending upon the nature of the transaction, the volume of transaction, and the company. Further, the Regulations provide that a listed entity shall refrain from misrepresentation and ensure that the information provided to recognized stock exchange(s) and investors is not misleading. A listed entity shall make the specified disclosures and follow its obligations in letter and spirit taking into consideration the interest of all stakeholders. The listed entity is also under an obligation to abide by all the provisions of the applicable laws including the securities laws and also such other guidelines as may be issued from time to time by SEBI and the recognised stock exchange(s) in this regard and as may be applicable.

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