RECENT CHANGES ANNOUNCED BY INDIA’S SECURITIES REGULATOR
UNSECURED LENDING TRANSACTIONS CAN AMOUNT TO AN ACQUISITION OF CONTROL OF A LISTED COMPANY – A CRITIQUE
BRIGHTLINE TESTS TO DETERMINE CHANGE OF “CONTROL” FOR TAKEOVERS A NO GO
In India, under the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (the “ Takeover Regulations”), there exists a mandatory tender offer regime for acquisition of listed companies. Under this regime, both, the acquisition of a substantial shareholding stake (25%) and the acquisition of “control” are treated equally, and require the acquirer to make an open offer to the public shareholders. Currently, under the Takeover Regulations, the test to determine what constitutes change of “control” is principle-based. Keeping in sync with global norms, in early 2016, the Securities and Exchange Board of India (the “SEBI”) released a discussion paper (the “ Paper”) to explore bright-line tests to determine what constitutes as change of “control.”
INDIA’S SECURITIES REGULATOR ON SHELL COMPANIES, EXEMPTIONS FROM OPEN OFFER
Recently, the Securities and Exchange Board of India (the “ SEBI”) has approved and notified several important changes to Indian securities regulations, including, extending relaxations from open offer and preferential issue requirements to new investors acquiring shares of distressed companies, extending relaxations from open offer requirements to acquisitions made pursuant to resolution plans approved by the National Company Law Tribunal (the “NCLT”) and exemptions from lock-in requirements at the time of initial public offer (“IPO”) to Category II Alternative Investment Funds (“ AIFs”) such as private equity funds and debt funds.