By Aryaman Kapoor and Samriddhi Guha, Second Year Students at Jindal Global Law School
On August 12, 2021, the Board of Directors of Aurobindo Pharma Limited, announced its financial results for the first quarter along with the dividend. At the same time, it also announced its agreement to acquire a majority stake in Cronus Pharma Specialties India Private Limited. After this notice was made public, the stock of Aurobindo Pharma Limited spiraled down by 25% and hit a fresh 52-week low due to a decline in revenue as well as a rejection by the market of the Cronus Pharma acquisition deal due to the low revenue base. After this, on August 20, 2021, there was another notice issued by Aurobindo Pharma in compliance with Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 (‘LODR’), in which it was stated that the agreement to acquire Cronus Pharma was mutually terminated by both the parties and that the Board of Directors approved this termination of the acquisition. After this notice was made public, the stock of Aurobindo Pharma rebounded reflecting a positive reaction of the investors towards the termination of their plan to acquire Cronus Pharmaceuticals.
Continue reading “The Unreported Case of Aurobindo Pharma’s Non-Compliance”
Anisha Sarkar, Student at SNDT Women’s University Law School
The primary advantages of integration of Indian securities market with the global capital market are two-fold— firstly, it offers companies alternative jurisdictions, beyond their domestic sphere, to raise capital, garner a global presence in the world economy and access sophisticated market participants; secondly, it creates a geographically diversified investment portfolio for investors across the globe that enables the mitigation of systematic investment risks. While the outcome of such internationalization is favorable, it presents a series of legal challenges, hence thrusting the herculean task of framing regulations upon the financial regulatory authorities, that provide liberty to Indian companies to list their stocks across jurisdictions without compromising on the country’s domestic interests.
Continue reading “India’s Bid Towards the Revival of Equity Overseas Listing”
Tanuj Agarwal, Institute of Law, Nirma University, Ahmedabad
“All intelligent investing is value investing, acquiring more that you are paying for.”
(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.
Continue reading “Structuring Distressed M&A Deals: Regulating the Unregulated Opportunistic Behaviour”
Priyanshu Agrawal and Vaishnavi Vyas, NMIMS KPM School of Law, Mumbai
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.
Continue reading “Minority Squeeze Out: Dissecting the Conundrum over Multiple Takeover Routes”
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.
Continue reading “Disclosure Regime: SAT lays down parameters for timely disclosures”