List of Abbreviations
➢ CLB: Company law Board
➢ Comp Cas: Company Cases
➢ Comp L J: Company Law Journal
➢ FAQ: Frequently Asked Questions
➢ Ltd: Limited
➢ PA: Public Announcement
➢ PAC: Persons Acting in Concert.
➢ QB: Queens Bench
➢ Reg: Regulation
➢ Rs.: Rupees
➢ SEBI: Security and Exchange Board of India
➢ Sec: Section
➢ Spl.: Special
➢ UK: United Kingdom
➢ v: Versus
This is to specify that the research methodology adopted throughout the project is doctrinal. Materials have been referred to in general sense. The sources for the project consist of on are Articles, Books, Internet Sources, and Magazines. My experience and my observations in this aspect are an integral part of this project. Introduction and Scope of Project
Takeover is a well accepted corporate strategy for growth and expansion. It has been a very appealing instrument, as the only need for a takeover is to be financially sound. Further it is also a lucrative instrument to persons other than a company, which wants to make it big. They have now become a part and parcel of modern corporate scenario. There exists an ever innovating world of takeovers which consists of acquisition, takeovers and defences to such takeovers.
In this project, the researcher has tried to provide an overview the takeover law, with specific reference to the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997. The project starts with distinction between mergers and acquisitions. Then it moves on to discuss basic concepts of takeovers and acquisitions, like history, kinds, consideration, etc. after that it discusses the United Kingdom’s position with respect to Takeovers. Then, the Indian Scenario is discussed. Here, the specific importance is given to the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 with just a brief mention of other laws as and when required. Then, the broadly accepted defences to hostile takeovers are discussed. And finally the project ends with conclusion.
Distinction between Mergers (amalgamation) and Acquisitions (takeovers) Mergers and acquisitions have been effectively used by corporates as strategic methods of expansion as well as consolidation. But there is distinction in basic nature of two which needs to be discussed at outset. Merger is necessarily concerned with loss of existence of either one or more of the companies and merging it into a single existing company, or all the companies loose their existence and form an entirely new company. On the other hand, acquisition is concerned with buying of shares, voting rights or control of the target company in any other manner. When such acquisition is with the intention of taking over the control of the target company, it is loosely called takeover. Thus as distinguished from merger, there is no loss of existence of the target company in acquisition. Both remain a separate legal entity. The only change which is effected is in the control of the target company.
The History of Mergers and Acquisition
The corporate historians classify the phases of mergers and acquisition in 5 phases: ➢ 1st Merger & Acquisition Wave – 1897-1904 – ”Merging and acquiring for Monopoly” Underlying factors: Technological developments, Innovations in production process, Rapid Economic Expansion, Corporation laws relaxed, Voluntary code of ethical behaviour, Characteristics of 1st wave mergers: Horizontal mergers, Heavy manufacturing industry, Reasons for ending 1st wave: Majority of mergers failed – didn’t achieve increase in efficiency, Economic recession in 1903, Stock market crash in 1904 ➢ 2nd Merger & Acquisition Wave – 1916-1929 – ”Merging and acquiring for Oligopoly” Underlying Factors: Post-World War I economic boom, Technological developments, Characteristics of 2nd wave mergers...
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