Tag: Mergers and Acquisitions

capital reduction

Permissibility of Selective Capital Reduction Under the Companies Act, 2013 and the Wider “Take Private” Question

Insights | November 20, 2024 | Practice Area: ,

In a departure from existing precedents, the National Company Law Tribunal, Kolkata bench (NCLT), pursuant to its order dated September 19, 2024, rejected a petition for reduction of capital under Section 66 of the Companies Act, 2013 filed by Philips India Limited, an unlisted company, to cancel and extinguish the equity shares held by the non-promoter shareholders. The rejection was on the basis that the company’s main objective was a buy-back of equity shares from the minority public shareholders and that the reduction of share capital was only incidental to the company’s main objective. This note analyzes the permissibility of selective capital reduction under the Companies Act, 2013 in light of the decision of the NCLT in Philips India and the wider question on ‘take private’ transactions.

ports sector in India

M&A in the Ports Sector in India: Key Regulatory and Contractual Considerations

Insights | November 15, 2024 | Practice Area: , , ,

The Indian ports sector is witnessing increased private sector participation, particularly by way of Public-Private Partnerships (“PPP”). The government has facilitated private sector participation by adopting investor friendly PPP models and streamlining tender processes and concession agreements for major ports. Due to multiple regulatory authorities and differing practices of port authorities, mergers and acquisitions in the ports sector in India are associated with unique considerations that potential acquirers should bear in mind. This note discusses the key regulatory and contractual considerations relevant to mergers and acquisitions in the ports sector in India.

india-uae bit

The New India-UAE BIT: Changing the Model BIT by BIT

Insights | November 6, 2024 | Practice Area: , , ,

The new bilateral investment treaty (“BIT”) signed by India and the United Arab Emirates (“UAE”) earlier this year replaces the 2013 India-UAE BIT and entered into force on August 31, 2024. The 2024 India-UAE BIT seeks to stimulate investment across a broad range of sectors and marks a key policy shift in India’s foreign investment protection regime. Importantly, the new treaty departs from India’s Model BIT in several significant aspects. These include extension of investment protection to portfolio investments, reduction in the timeline for exhaustion of local remedies before commencing arbitration, and a blanket prohibition of third-party funding.
In this note, we analyze some of the key features of the 2024 India-UAE BIT, including the indications, if any, regarding India’s position on its Model BIT and what this may signify for ongoing negotiations on other BITs.

competition act 2002

Key Changes to the Competition Act, 2002

Legal Updates | October 3, 2024 | Practice Area: ,

The Ministry of Corporate Affairs, Government of India, and the Competition Commission of India (“CCI”) have introduced certain amendments to the Competition Act, 2002 (“Competition Act”) and the regulations framed thereunder. These include introduction of deal value thresholds to the Competition Act, relaxations for open offers and implementation of stock exchange purchases, changes to certain exemptions to test the notifiability of transactions, and changes to the CCI review timelines. This note describes the changes introduced to the Competition Act and the regulations framed thereunder.

share swaps

Cross-Border Share Swaps: Amendments to Regulatory Framework

Insights | September 12, 2024 | Practice Area: , ,

In order to simplify cross-border share swaps and address certain challenges under the existing regulatory framework, the Government of India has recently amended the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019. The amendment became effective on August 16, 2024. Previously, permissible share swaps were restricted to issue of equity instruments by an Indian entity to foreign residents in exchange for equity instruments of another Indian company. The amendment now allows secondary share swaps and exchanges of equity instruments for equity capital of foreign companies. However, certain ambiguities persist, such as limitations on swaps involving Indian resident individuals and lack of guidance on downstream investments by Foreign Owned Controlled Companies (“FOCCs”) using share swaps. Further, Indian tax laws do not grant tax neutrality to swap structures unless conducted via merger or demerger, making such transactions taxable unless covered by a tax treaty benefit.

foreign investment in india

Foreign Investment in India from Bordering Countries: A Case for Review

Insights | August 29, 2024 | Practice Area: ,

Press Note No. 3 (2020 Series) (“PN3”) was introduced with the primary objective of “curbing opportunistic takeovers and acquisitions of Indian companies due to the COVID-19 pandemic.” However, the circumstances that prompted introduction of PN3 have changed significantly. There is a need to reflect on PN3’s impact on India’s FDI landscape. This note discusses certain key issues in relation to PN3 and the way forward for foreign investments from China and other countries that share land border with India.

investing in ai

Investing in AI in India (Part 2): Tracking the Regulatory Landscape

Insights | August 28, 2024 | Practice Area: , , , ,

Prospective investors in Indian artificial intelligence (“AI”) companies should familiarize themselves with the Indian government’s initiatives in AI regulation and the direction of future regulation. This note, the second of a multi-part series on investing in the Indian AI sector, outlines some of the key developments in AI in the country. However, it is important to keep in mind that India’s approach to AI governance may change in the future, given the rapidly evolving nature of technology as well as the country’s dynamic regulatory trajectory, including with respect to data, intermediary liability, digital technologies, telecommunications and digital competition, as discussed in this note.

AI in India

Investing in AI in India (Part 1): Key Considerations

Insights | July 23, 2024 | Practice Area: , , , , ,

While investments in the AI sector in India present significant opportunities, they also present a unique set of risks within an evolving legal and regulatory landscape.
Before making an investment decision, investors should consider IP issues, data-related rights and compliance, any industry-specific concerns, the then-applicable regulatory framework as well as potential developments in AI regulation. In addition, investors should evaluate operational and contractual arrangements, undertake a technical due diligence, and assess potential liabilities and risks. Such risks include product and professional liability, algorithmic bias and discrimination, cybersecurity and data breaches, market and reputational risks, along with concerns related to transparency and explainability.
 

slump sale

Smooth Transitions: Navigating Succession in Business Transfers on Slump Sale Basis!

Insights | July 11, 2024 | Practice Area: ,

Succession of a business, in simple words, implies a change in ownership of a business from one person (“the predecessor”) to another (“the successor”). Section 170 of the Act deals with the provisions relating to income tax liability in the case of succession of business pursuant to any business restructuring – transfer of business, amalgamation, demerger, etc. This note discusses the tax implications that may arise pursuant to succession of a business by way of slump sale.