Mergers and Acquisitions in Indan Industry

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DECODING THE PROPOSED TAKEOVER CODE

Awadhesh Kr.Tiwari
&
Gayatri Mohanti
(Assistt.Professor)
DSPSR - Delhi

Abstract
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It has been realized globally that Mergers and Acquisitions is the only way for gaining competitive and synergical advantage domestically and internationally and whole range of industries are looking to strategic acquisitions within India and Abroad. In the last two decade, many cases related to Mergers and Acquisitions has taken place. In 1994 SEBI had issued maiden guidelines for regulating takeovers in India which was revised in 1997 and since then, the regulations have been known as Takeover Code. In order to provide a transparent legal framework for facilitating takeover activities and to protect the interest of investors, a new text of Takeover has been drafted with substantial changes in the takeover regulations of 1997.

The present research paper have a theoretical background describing the conceptual framework of takeover and overview of existing and proposed takeover code and an attempt has been made to evaluate the proposed Takeover Code. ____________________________________________________________

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Key Words: Takeover Code, SEBI, Acquisition, Open Offer, Company Act, 1956, Offer Price.

Prelude:
History of Takeover Code
A Conceptual Framework of Takeover
Overview of Takeover Regulations
Required Disclosures
Takeover code Trigger
Proposed Takeover CODE
Fundamental Objectives of Proposed Takeover Code
salient features of the proposed takeover regulations
Decoding the Proposed Takeover Code
Concluding Remarks

History of Takeover Code
The laws relating to takeovers in India where not very organized until the year 1994.The guidelines of the Securities and Exchange board of India (Substantial acquisition of shares and takeover) 1994 was a maiden Indian attempt towards an organized set of laws for regulating takeovers in India. The need for changes in the regulation was felt just two years after its inception. A need was certain changes in the regulation had been felt and so a committee under the chairmanship of Justice P.N Bhagwati was constituted to review the regulations and suggest the necessary changes required under the act. The regulations were amended in 1997 and they finally were implementation. Since then the regulations have been known as, Securities and Exchange Board of India(Substantial Acquisition of Shares and Takeover)Guidelines, 1997 or TAKEOVER CODE. TAKEOVER- Its Meaning

Broadly speaking Takeover refers to the acquisition of one company by another company. In the words of M.A. Weinberg one of the pioneers in the formation of law and practice relating to takeovers, it has been defined as “a transaction or a series of transactions whereby a person acquires control over the assets of a company, either directly by becoming the owner of those assets or indirectly by obtaining control of the management of the company. Where shares are closely held (i.e. by small number of persons), a takeover will generally be effected by agreement with the holders of the majority of the share capital of the company being acquired. Where the shares are held by the public generally the take over may be effected by agreement between the acquirers and the controllers of the acquired company, by purchase of shares on the stock exchange or by means of a takeover bid. Takeovers are quite often taken as a prelude to the mergers. Corporates generally embark on acquisition of another company and then take steps to merge or amalgamate the acquired company or merge or amalgamate with the acquired companies and in the process also demerge certain undertakings. Takeover can be either friendly which is done by a mutual agreement between two companies or it can be hostile. Overview of Takeover Regulations

“Takeover” is a transaction...
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