Comparative study of the takeover regulations prevailing in different countries

Electronic copy available at: http://ssrn.com/abstract=2139745

Comparative Study of Takeover Regulations in Different Countries

Research Assignment: Set I

Comparative Study of the Takeover Regulations in Different Countries

25th December 2009

BY

RAMNATH SRINIVASAN

GOVERNMENT LAW COLLEGE

SLC ROLL NO: 54

Electronic copy available at: http://ssrn.com/abstract=2139745


ABSTRACTThe author has tried to explain the core differences in the Indian and international takeover regulations and thereby has attempted to point out certain crucial learning that can be incorporated in the Indian Code. The author has critically reviewed the partial open offer triggers and the process in comparison with those in U.K and Singapore. This work suggests scrapping of some redundant regulations to make the law more competitive and business friendly.



THE CONCEPT OF TAKEOVER AND GENESIS OF THE LAW

The term takeover has the potential, like many terms in law, to encompass a wide variety of events and transactions leaving enough room for speculation and ambiguity. Loosely speaking, Mergers are often spoken of in the same breadth as takeovers and little effort is made in common usage to distinguish between them. Strictly speaking, however, they are two different worlds with similar characteristics.

So, what is a Takeover?

Takeover can be simply defined as purchase of one company by another for consideration- cash or non cash or a combination of both. Again, different regulations define it in different ways so as to cover a wide ambit of transactions as may be relevant to the country or with regards to the history of such transactions in the country. However, it is important to note that no law can ever provide an exhaustive definition to something as dynamic as takeovers. As mentioned in The Singapore Code on Takeovers and Mergers, It is impracticable to devise rules in sufficient detail to cover all circumstances which can arise in take-over or merger transactions.

Background

A study on the business activities of US companies revealed that so far there have been five major merger waves in US. First wave (1897-1904); during this period rapid economic growth through concentration was achieved. Expansion of business operations, economies of scale and drive for efficiency & technological changes were the motivating forces. It created monopoly and large companies absorbed smaller ones. For example, US Steel emerged on combination of 785 companies. Similarly, American Tobacco and General Electric emerged after absorbing large number of companies. Second wave (1916-1929); if first wave was the era of horizontal mergers, second wave was the period of vertical and diversified mergers. It created oligopoly. Achieving technical gain, avoid dependence on other firms and to consolidate sales and distribution networks were the driving forces. Third wave (1965-1969; during this period no pervasive motive could be identified. Merger activities were mainly influenced by the Anti-trust policies. Circumventing regulatory provisions, managerial reorganization, product diversity etc. were the governing forces. During this period a large number of firms disappeared from the market. Fourth wave (1981-1989); during this period Companies responded to a common set of environmental/macro factors and assumed an international dimension. Hostile takeovers and LBOS were the primarily acquisition strategy. Fifth wave (1990-2000); this is the era of cross border acquisitions. A number of mega mergers emerged involving companies from different


countries. IT revolution, continued deregulation of the economies, reduction in trade barriers, globalization and privatization led to these mergers.

Indian Scenario

The concept of takeover for India is a borrowed one- one that originated in the west following the wave of mergers & acquisitions. Mergers and takeovers are prevalent in India right from the post independence period. But Government policies of balanced economic development and to curb the concentration of economic power through introduction of Industrial Development and Regulation Act-1951, MRTP Act, FERA Act etc. made hostile takeover almost impossible and only a very few M&A and Takeovers took place in India prior to 90s. But policy of decontrol and liberalization coupled with globalization of the economy after 1980s, especially after liberalization in 1991 had exposed the corporate sector to severe domestic and global competition. This had been further accentuated by the recessionary trends, resulted in falling demand, which in turn resulted in overcapacity in several sectors of the economy. Companies started to consolidate themselves in areas of their core competence and divest those businesses where they do not have any competitive advantage. It led to an era of corporate restructuring through Mergers and Acquisitions in India. While the possibility of takeover of a company through share acquisition is desirable in new competitive business environment for achieving strategic corporate objectives, there has to be well defined regulation so that the interest of all concerned are not jeopardized by sudden takeover threats. In the light of thecircumstances prevalent at the time, the need for some law to regulate takeover was strongly felt.

It is interesting to note that while in most countries including UK, rest of Europe and Singapore, Takeovers and mergers are governed by the same law, in India, mergers and amalgamations are governed by the Companies Act,1956 (Sections 391 to 394) while takeovers are governed by SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997.

This, in my opinion, is a flaw that needs to be corrected at some point in time as feasible. Since the nature of the transactions by themselves is so similar, a common law to govern the same would be the logical step.

I now move on to explore takeover code in its current form in India and juxtapose relevant important provisions from similar regulations around the world. The focus of my research is on how effective are the regulations in really protecting investors’ interest as they claim to whilst comparing the scenario around the world. I would also like to throw light on the relation between the takeover law and ease of doing business which is, among other things, dependent on the regulation governing mergers and takeovers in general.


INTERPRETATION OF CONCEPTS IN DIFFERENT REGULATIONS

The Concept of Persons Acting in Concert

The SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 defines PAC more broadly by using the words “persons who for a common objective or purpose of substantial acquisition of shares or voting rights or gaining control over the target company, pursuant to an agreement or understanding (formal or informal), directly or indirectly co-operate by acquiring or agreeing to acquire shares or voting rights in the target company or control over the target company.” Thus it leaves the agreement implicit or explicit, common intent etc open to interpretation. We have often seen cases that include contesting of this definition hovering around whether there was a “common objective” and implicit agreement for the persons to be referred to as PAC.

The Singapore Code on Take-overs and Mergers defines PAC in a similar fashion too, but notable is the fact that the terms common objective is unique to Indian Code. The same applies mutandis mutatis to THE CITY CODE ON TAKEOVERS AND MERGERS of the UK- where agreement being implicit is a part of the definition, but the terms common objective are not present. A case in point around this definition and its interpretation in the Indian context is Modi Spg. & Wvg. Mills Co. Limited v SEBI.

Concept of Control

The concept of control as laid out in the Indian scenario is as follows: “control” shall include the right to appoint majority of the directors or to control the management or policy decisions exercisable by a person or persons acting individually or in concert, directly or indirectly, including by virtue of their shareholding or management rights or shareholders agreements or voting agreements or in any other manner.


This is a crucial definition and forms the basis for trigger points of the open offer. The Singapore Code too defines control, but being more specific with regards to the percentage threshold that gives control. It is heartening to see the Indian cod a step ahead, as control can be established even when a person has less than 10% of shareholding. Noteworthy is the case of now infamous Ramalinga Raju of erstwhile Satyam. The UK’s city code and EC directive on takeover make no explicit definition of control.

Threshold Limits & Open Offer

Threshold limit is the level of holding when holders have to observe certain provisions. Threshold limit is defined for two purposes- first, for the purpose of Disclosure and second, as the trigger point for open offer. In the Indian context, if a person holds 5%, 10% or 14% then at each level, he has to inform to concerned company and stock exchange about the level of his holding. It shows the level of holdings beyond which acquirer have to make open offer for further acquisition of shares or voting right.

The Singapore Code on Take-overs and Mergers has the same trigger specified at 30%, much higher than in India. Also important to reiterate that it is the percentage that defines control in Singapore listed entity. Continual disclosures have to be made from this percent onwards for every percent increase in the holdings.

The City Code on Takeovers in UK also has 30% threshold limit and requires continual disclosures from the potential acquirer once 15% shareholding is crossed. While in the USA, any holding above 10% needs to be reported to the SEC.

Below is a comparison of the major takeover provisions in India, U.K, Singapore and USA that are relevant to my research.

Regulation India U.K Singapore USAWho Regulates SEBI FSA Securities

Industry CouncilSecurities and

Exchange Commission (SEC)

Threshold limit (Initial Acquisition)

15% 30% 30% or 1% creeping

between 30% to 50%

Offers are only voluntary

Creeping Acquisition limit (subsequent acquisitions

for consolidation of holdings)

5% for shareholders

holding 15% to 75%

No 1% in 6 months for shareholders holding shares between 30%

and 50%

No


Public announcement To be made To be made To be made To be made

Letter of offer To be sent To be sent To be sent. To be sent.

Offer size Minimum 20% of the voting share

capital of the target company

For balance shares Regulation Is silent

As much as 5% called “Tender

Offers”

Less than 5% –‘Mini tender offer’

Offer price parameters specified

parameters specified parameters specified

-

Escrow Account 25% of consideration

payable

Confirmation from a third party that there

are resources.

-

Competitive bids allowed Yes Yes Yes -

Can offer be withdrawn Yes, under certain

conditions:-

Yes. If a competitive bid is made at a higher

price.

Yes Regulation Is silent on this

- Refusal of statutory

approvals.

- Death of sole acquirer

- As and when SEBI deems fit

Can shareholders withdraw the

acceptances tendered?

Yes, up to three days before

closure of offer

Yes. Under certain circumstances.

Yes Yes, up to seven days of the copies

of the offer are sent.

Concept of Indirect acquisitions

Present Yes, chain rule is existing subject to

condition of significant shareholding

Yes, Chain principle is there

-

Penalties Civil and Criminal Liabilities

Reprimand, public censure, etc.

Private reprimand or

public censure or deprive the

offender

Civil penalties


temporarily or permanently to

enjoy facilities ofsecurities market.

Data Source: Takeovercode.com, www.mas.gov.sg, Takeover panel, UK

CRITICAL EVALUATION & OPINION ON CORE REGULATIONS AND

SUGGESTIONS FOR IMPROVEMENT IN THE CODE

Now that I have laid out some comparisons between the takeover regulations of the world, I would like to present my opinion on certain regulations backed by intensive research.

I am personally an admirer of the principle of the Code. When the Code was first introduced way back in 1992, it served to remove a major lacuna in the then regulatory structure- Clause 40A and 40B of the listing agreement did not cover a wide variety of people who were brought under the ambit of this code that provided a transparent and orderly framework for substantial acquisition of shares of companies listed on the stock exchanges. However, that by itself doesn’t exempt SEBI’s SAST of its own lacunae. It is one of those regulations that has been making news ever since its proposal and is keeping up the trend till date as fresh amendments are underway.

On Trigger Points

In the last 13-14 years of the existence of the new regulations, there have been almost 20 amendments to the code. And as many experts would agree, as I have seen from the list of amendments myself, many were in areas that did not even require a second look. One look at the existing regulations will outline the level of complexity and consequent bottleneck to its interpretation.

The takeover regulations mandating a compulsory tender offer to public shareholders istriggered on any one of the following thresholds being reached:

1.) Acquisition of shares or voting rights of 15% or more; (inclusive of the shares or voting rights already held by the acquirer or by the persons acting in concert). Thus a person holding no shares can acquire up to 14.99% voting rights and a person holding 10 % could acquire up to 4.99% voting rights. The holding should be such as would entitle the acquirer to exercise 15% or more of the voting rights in a listed company according to Regulation 10.


2.) Regulation 10 implies that a 12% holder of voting equity cannot buy 5% without triggering the tender offer, but a 20% or a 49% holder is exempt from the tender offer on acquiring upto 5%. This convoluted system allows creeping acquisition above 15% but not between 10 and 15% levels of existing shareholding. In addition 15% is the hard boundary, if by acquiring even one share a person reaches or crosses 15%, the tender offer trigger is reached.

3.) Acquisition of more than 5% of shares or voting rights in any financial year ending on 31st March when the acquirer holds 15% or more but less than 55% of the shares or voting rights of the company concerned would also trigger the compulsory tender offer according to Regulation 11(1). This is consistent with the listing agreement for most companies which require aminimum public shareholding of 25% because if a person with 55% acquires a single share andthen is required to make a tender offer for 20%, the acquirer would not be breaching the listing agreement (except by one share).

4.) Where such acquisition is for less than 5% in a year (as defined), then it is exempt in what is known as creeping acquisition exemption under the same regulation 11(1).

5.) Also exempt is acquisition of shares or voting rights up to 5% (one time), where the acquirer already owns or controls between 55 to 75% votes, if the same is the result of buy back of shares by the company or purchases are made through open market purchases as per Reg. 11(2) second proviso. This exemption is subject to an upper holding limit of 75% in case of all companies irrespective of minimum public shareholding requirement under the listingagreement.

6.) Acquisition of even a single shares or voting right where holding is already 55% or beyond the exemption given in 5) above would trigger the tender offer according to Regulation 11(2). Where a person already holds say 60% and acquires further shares, and thus makes a tender offer which is fully subscribed (i.e. 20%), the acquirer would be holding 80 % post tender offer. In such a case, if the acquirer is breaching the listing agreement which imposes a condition of public shareholding of a minimum of 25%, the acquirer must bring down his holding within a time period permitted by the exchange to be again in compliance with its agreement. In the same facts where the listing agreement only requires a minimum 10% public shareholding, the acquirer can continue to hold the 80% shareholding. In another fact scenario of a company with a listing agreement for a minimum of 10% public shareholding, where a person is already in control of 76% voting equity, acquires further voting rights, and the tender offer for 20% takes his holding to 96%, he must again divest his voting rights to below 90% levels within a period prescribed by the exchange.


7.) In a company with a minimum public shareholding of 25%, any acquirer already holding 75% or more would be prohibited from acquiring further shares as it would result in direct breach of the listing agreement except 8) below.

8.) Regulation 11(2A) read with Reg. 21 (3) provides for a special route of acquisition which does not mandate a 20% tender offer.

9.) Acquisition of direct or indirect control with or without acquisition of shares or voting rights would also trigger the tender offer requirements according to Reg. 12.

As can be seen above, there are a very large number of unnecessary and convoluted trigger points for a compulsory tender offer to be triggered. Complexity devoid of any rationale or philosophy ought to be avoided. There is a need to simplify this unnecessary complexity while keeping the philosophy of the regulations alive.

Suggestion

Firstly, as the Code is being reviewed by the Takeover Review Committee, I would like to suggest that the percentage threshold for open offer be hiked from its current 15% to at least 25%, a suggestion by the Economic Times Bureau (see Refine Takeover Code- Dated 30th Dec 2009) and one that I concur with. The hike will give private equity players a good chance to invest without triggering the code. Subject to compliance with other regulations, this will definitely provide more PE capital to the companies. I propose that Creeping acquisition of 5% be allowed up to 55% without any open offer, and subsequent to that an open offer for all the remaining shares up to 75% as required by the listing agreement should be made. This is consistent with the view of the Finance Ministry that gradually all companies should be mandated to have a minimum of 25% public shareholding. Also, whilst respecting the Listing Agreement, one would also streamline our regulations with those in UK and USA, where there is no creeping limit at all and open offer is made for all the remaining shares. I have also implicitly stated here that the partial open offer of 20% be done away with. I have my reasons to back that “belief” and would explain the same in my analysis of the open offer.

Another change I suggest is with regards to the continual disclosures would be netting of transactions. Currently, though the view of the Bhagwati Committee is not incorporated in black and white that purchases should not be netted off for calculating the acquisition of shares and votes, SEBI has often relied on this view to calculate positions on a gross basis. This means that a person acquiring 4% shares, then selling 3% shares and further buying 2% shares is required to make a disclosure. This is a violation of principle of the code as well as impractical in


that the person never actually acquires “substantial” percentage of shares to trigger the disclosure. This must be made clear in the regulation itself so as to avoid ambiguity.

The Singapore Code disallows netting only in case of reduction/ dilution below 30%.

Open Offer

As I already above have mentioned, the open offer which currently is triggered at different levels in the Indian code should be simplified. There are also certain loopholes that need to be plugged so that the code moves toward the uniform and simplified yet comprehensive version as in regulations around the world. Let us first have a look at the regulations around the world and try to converge our Indian regulations towards the same.

The Singapore Code doesn’t specify any open offer limit and the trigger points are relatively simple. An open offer has to be made when the 30% threshold is crossed or creeping acquisition limit is exceeded (see Rule 14.1). It also has provisions of partial offer but not as complicated as one in SEBI’s SAST Regulations ’97. My objective of quoting these differences will be clear when I discuss the Investment Climate.

The UK Takeover Code says that when the threshold limit of 30% as mentioned in Rule 9 of the Code is reached, or when the offeror approaches the offeree and the resultant speculation causes undue share price movement in the latter’s stocks, an open offer for the balance shares needs to be made.

The Indian Takeover Code has multiple limits with multiple rules. Regulation 10 is the first trigger at 15%, much lower than international standards and a barrier according to the media and industry sources for more Private Equity investment. Then comes the terrible Regulation 11(2) and 11(2A). The two provisions create an unnecessary legal arbitrage between acquiring no shares and acquiring one share, where the choice would determine whether an expensive 20% tender offer is required to be made or a cheaper, say 5%, tender offer is required.

Again, a reading of Regulation 21 causes confusion. For example, one interpretation that can be made is a person can make an offer of 20%, stating that the acquirer will refuse to accept the offer if acceptance is below say 18%. Where a person has acquired shares from the market andtriggered the tender offer, giving such a right to the acquirer would be unfair, and in fact SEBI does not permit such an interpretation. What the regulation is trying to say is that only where acquisition of shares is by way of a memorandum of understanding which can be revoked, can a person make such a conditional offer; because there would not be any acquisition of voting right as the whole tender offer and the primary acquisition could be reversed altogether.


The Code also claims to provide investors with an exit option in case of a takeover and subsequent mandatory open offer. The step is a significant one as it will prevent the clandestine acquisition of shares at high prices from selected shareholders leaving the bulk of the shareholders high and dry. But again, 11(2A) has left me disappointed as it allows open market purchase as an option to creep up 5% shares for holders of more than 55% shares without making an announcement. The typical shareholder has no way of knowing how well the open market operations are succeeding. He is thus faced with a dilemma – should he hold on to his shares in the hope that the acquirer will be forced to offer a better price or should he sell immediately before the acquirer winds up his open market operations?

In this situation, I believe that

a) The small shareholders will be stampeded into tendering shares at low prices

b) The small shareholders, particularly in rural and semi-urban areas will be severelydisadvantaged in availing of the opportunity to sell.

With regard to the open offer size of 20%, as mentioned, not only do I detest the partial offer, but worse detest the principle on which it was formulated. The Bhagwati Committee report mentioned that the offer size is low (20%) because they believed Indians will not have the financial clout to take advantage of any provision requiring offer size greater than 20%. The Bhagwati Committee recommendations have been accepted in full measure in this regard. However,it is interesting to note the acquisitions of Eight O Clock Coffee by Tatas or the famous Tata- JLR deal. The question to be asked is, will the review panel change its view in this regard and accordingly make the open offer a full offer as suggested by me later in this work?

Suggestions

Reg. 11(2A) thus should be deleted in order to remove the unnecessary regulatory arbitrage.The conditional offer should be only available in acquisitions made by way of private agreements which can be reversed if the conditional offer is not satisfied and not in every acquisition of shares from the market which are incapable of being reversed. This is the way SEBI implements the regulation, but the position is different on a literal reading of the regulation. Also, I believe that the open market purchases should not be permitted and allacquirers who seek to cross the threshold shareholding must be asked to follow the opentender offers.

Partial Takeovers & Two Step Takeovers is another area in which more stringent regulation is called for. In one form of this takeover, the acquirer consolidates his position in the first step by acquiring a significant proportion of control, and then makes the next move for a greater


control. In the second form, what is also known as “boot strap” takeover, the takeover is made self financing by the acquirer by diverting the acquiree’s own funds to himself in form or other.

Several different approaches have been evolved by regulators around the world to deal with this problem:

a) The UK takeover code frowns upon partial takeovers. Attempts to acquire less than majority control are permitted only under special conditions. Attempts to acquire majority but less than total control are allowed only if they are approved by the acquiree’s board and the holders of at least 50% of the voting rights not already owned by the acquirer.

b) Some US states permit partial takeovers but block the second step of the takeover. After the first step is completed, any subsequent merger, asset sale or other similar step requires approval of a majority of the remaining voting rights.

c) Some US states allow shareholders to tender any number of shares at the price at which the acquirer has bought shares in the partial takeover. Under Indian conditions, a total ban on partial takeovers may not be appropriate at this stage. Option (b) above is however more acceptable in the Indian context. We already have some similar provisions in Sections 293 and 314 of the Companies Act. These could be strengthened to bring all second step takeoverstratagems under their ambit and also modified to require a majority not merely of the entirevoting rights but of the voting rights not already owned by the acquirer. If necessary, these stringent provisions could be limited to the first five years after the first step takeover is completed.


DEFENSE MECHANISMS AVAILABLE UNDER ALL REGULATIONS

The term defense mechanism comes into picture in the takeover world only when we talk about a hostile takeover. In friendly takeovers, which occur by mutual understanding and an almost win-win situation of the management of both the companies, and hopefully also for the shareholders. Hostile takeovers were primarily prevalent in the US when the SEC regulation was not adequate to counter such hostile bids. However, the number of hostile bids has gone down considerably since world over, regulatory authorities have stepped in to nip this loophole.

When an acquirer takes the control of a company by purchasing its shares without the knowledge of the management it is termed as a hostile takeover. In short, when an acquirer silently tries to gain control of a company against the wishes of the existing management, the acquirer has triggered what comes to be called as a hostile takeover bid. Hostile takeover is an attempt by outsider to wrest control away from an incumbent management.

Defenses against Hostile Takeovers-Shark Repellents

There are several ways to defend against a hostile takeover. The most effective methods are those where there are built-in defensive measures that make a company difficult to take over. These methods are collectively referred to as "shark repellents".

The classic ‘poison pill strategy’ (the shareholders’ rights plan) is the most popular and effective defense to combat the hostile takeovers. Under this method the target company gives existing shareholders the right to buy stock at a price lower than the prevailing market price if a hostile acquirer purchases more than a predetermined amount of the target company’s stock.

The purpose of this move is to devalue the stock worth of the target company and dilute the percentage of the target company equity owned by the hostile acquirer to an extent that makes any further acquisition prohibitively expensive for him. ‘White Knight’ is another type of defense mechanism. In this case, a third company makes a friendly takeover offer to the company facing a hostile takeover. This is a


common tactics in which the target company finds another company to enter the scene and purchase them out and away from the company making the hostile bid. The several reasons why the companies prefer to be bought out by the third company could be -- better purchase terms, a better relationship or better prospects for long-term success. At times these ‘white knight’ companies only help the target company improve the deal terms with the hostile bidder. A very good example is of Severstal which acted as a ‘white knight’ in the Arcelor-Mittal deal, and causing a 52.5 % increase in the Mittal offer.

Some other types of defenses which are available to the target company are:

# Pac-Man Defense – Pac-Man Defense, which has its etymological roots in the Pac-Man Game, is a strategy wherein a target company thwarts a takeover bid by buying stocks in the acquiring company, then taking the bidder company over.

# Staggered Board:-It is used generally in combination with ‘Shareholder’s Rights’ plan and is considered most effective. This method drags out the takeover process by preventing the entire board from being replaced at the same time. The directors are grouped into classes; each group stands for the election at each annual general meeting. It prevents entire board from being replaced at one go.

# Golden Parachute is a tactics which works in the manner that it makes the acquisition more expensive and less attractive. It is provision in a CEO's contract, which is worded such that the CEO gets a large bonus in cash or stock if the company is acquired.

The Indian Takeover Code makes it difficult for the hostile acquirer to just sneak up on the target company. It forewarns the company about the advances of an acquirer by mandating that the acquirer make a public disclosure of his shareholding or voting rights to the company if he acquires shares orvoting rights beyond 5, 10 or 14% of shares. However, the Takeover Code does not present anyinsurmountable barrier to a determined hostile acquirer.

The Takeover Code, vide Regulation 23, also imposes a prohibition on the certain actions of a target company during the offer period, such as transferring of assets or entering into material contracts and even prohibits the issue of any authorized but unissued securities during the offer period. However, these actions may be taken with approval from the general body of shareholders.

However, the regulation provides for certain exceptions such as the right of the company to issue shares carrying voting rights upon conversion of debentures already issued or upon exercise of option against warrants, according to pre-determined terms of conversion or exercise of option. It also allows the target company to issue shares pursuant to public or rights issue in respect of which the offer document has already been filed with the Registrar of Companies or stock exchanges, as the case may be.


However this may be of little respite as the debentures or warrants, contemplated earlier must be issued prior to the offer period. Further the law does not permit the Board of Director, of the target company to make such issues without the shareholders approval either prior to the offer period or during the offer period as it is specifically prohibited under Regulation 23.

During a takeover bid, it may be critical for the Board to quickly adopt a defensive strategy to help ward of the hostile acquirer or bring him to a negotiated position. In such a situation, it may be time consuming and difficult to obtain the shareholders’ approvals especially where the management and the ownership of the company are independent of each other.

The Takeover Code is required to be read with the SEBI ICDR (formerly DIP Guidelines). They impose several restrictions on the preferential allotment of shares and/or the issuance of share warrants by a listed company. Under the ICDR, issuing shares at a discount and warrants which convert to shares at a discount is not possible as the minimum issue price is determined with reference to the market price of the shares on the date of issue or upon the date of exercise of the option against the warrants. This creates an impediment in the effectiveness of the shareholders’ rights plan which involves the preferential issue of shares at a discount to existing shareholders.

The ICDR also provide that the right to buy warrants needs to be exercised within a period of eighteen months, after which they would automatically lapse. Thus, the target company would then have to revert to the shareholders after the period of eighteen months to renew the shareholders’ rights plan.

Without the ability to allow its shareholders to purchase discounted shares/ options against warrants, an Indian company would not be able to dilute the stake of the hostile acquirer, thereby rendering the shareholders’ rights plan futile as a takeover deterrent.

Also, the FDI policy and the FEMA Regulations have provisions which restrict non-residents from acquiring listed shares of a company directly from the open market in any sector, including sectors falling under automatic route. There also exist certain restrictions with respect to private acquisition of shares by non-residents, under automatic route, is permitted only if Press Note 1 of 2005 read with Press Note 18 of 1998 is not applicable to the non-resident acquirer. This has practically sealed any hostile takeover of any Indian company by any non-resident.

However, for the poison pill strategy to work best in the Indian corporate scenario certain amendments and changes to the prevalent legal and regulatory framework are required. Importantly, a mechanism must be permitted under the Takeover Code and the ICDR which permit the issue of shares/warrants at a discount to the prevailing market price. These amendments would need to balance the interests of the shareholders while allowing the target companies to fend off hostile acquirers.

The ICDR do not stipulate any pricing restrictions on the issue of non-convertible preference shares, non-convertible debentures, notes, bonds and certificates of deposit. Thus, companies may consider structuring a poison pill in place whereby backend rights which permit the shareholders to exchange the rights/shares held for senior securities with a backend value as fixed by the Board, are issued to existing shareholders when the hostile acquirer’s shareholding crosses a predetermined threshold.


As most takeovers are carried out through borrowed funds, the use of backend rights reduces the profitability of the takeover because of the mounting interest rates on borrowings; thus deterring the hostile acquirer and more importantly sets the minimum takeover price, which is the price at which the shares have been exchanged for senior securities.

Another method is where a company puts a provision in its Articles of Associations to the effect that a hostile acquirer who succeeds in taking control of that company and/or its subsidiaries is prohibited from using the company’s established brand name. A live example is of the Tata companies who have put in place a an arrangement with the Tata Sons holding entity, whereby any hostile (or otherwise) acquirer of any of those entities is not permitted to make use of the established “Tata” brand name.

As a consequence, the bidder might be able to take over the target Tata Company but will not be entitled to a significant bite of its valuation — the valued brand name!! 1

Hostility is usually perceived when an offer is made public that is aggressively rejected by the target firm. Consequently, perceptions of hostility are closely linked with takeover negotiations that are far from completion. Often firms engage in confidential negotiations before there is a public announcement of a bid or an intention to bid. In some cases, the first public announcement is of a successfully completed negotiation, which would be perceived to be friendly, even if the early stage private negotiations would have seemed hostile if they had been revealed to the public. In other cases, private negotiations break down and one of the parties decides that public information about the potential bid would enhance its bargaining position.

Other countries

The UK has explicitly rejected managerial discretion in favor of the shareholder-oriented strategy forregulating takeovers. The US Takeover Code is less friendly to shareholders on the other hand.. Managers of a target company are permitted to use a wide variety of defenses to keep those bids at bay. In The US, The managers of a company that has both a poison pill and a staggered board of directors have almost complete discretion to resist an unwanted takeover bid. In contrast, UK takeover regulation has a strikingly shareholder- oriented cast. The most startling difference comes in the context of takeover defenses. UK managers are not permitted to take any “frustrating action” without shareholder consent once a takeover bid has materialized. Poison pills are strictly forbidden, as are anyother defenses, such as buying or selling stock to interfere with a bid or agreeing to a lock-up provision with a favored bidder that would have the effect of impeding target shareholders’ ability to decide on the merits of a takeover offer. To be sure, the “no frustrating action” principle of the UK’s Takeover Code only becomes relevant when a bid is on the horizon. Thus, managers seeking to entrench themselves theoretically could take advantage of less stringent ex ante regulation to “embed” takeover defenses well before any bid comes to light. Such “embedded defenses” range from the fairly transparent, such as the issuance of dual-class voting stock, adopting a staggered board appointment procedure, or the use of “golden shares” or generous golden parachute provisions for managers, to the more deeply embedded, such as provisions in bond issues or licensing agreements that provide for acceleration or termination if there is a change of control. Yet, other aspects of UK law and practice —


including rules that prevent effective staggered boards — mean that embedded defenses are not observed on anything like the scale that they are in the United States.

As per Directive 2004/25/EC on Takeover Bids, Any anti-takeover actions of the target board following the public announcement of the bid (but not before, so for example not any action since the board has become aware of the bid) must be approved by the AGM. Any decisions out of the ordinary course of business are to be approved by the AGM anyway. (Article 9) The application of this rule is optional for companies, at the choice of member states or companies. (Article 12.1)

1 Interesting cases I have seen were filing of suit against a National Marketing Company for fraudulently using Tata brand name for its steel cutlery and the site Oktatabyebye.com. This was a part of drive against misuse of TATA brand name

Chilean tender offer provisions generally prohibit a target company from taking frustrating action during the tender offer period. However, some mechanisms which can potentially be used to fend off a takeover are allowed. For example, there is no obstacle for issuance of shares during the tender offer,though there are limits on increasing debt during a tender offer. Target companies are banned from acquiring their own shares, and of disposing of more than 5% of their assets. More sophisticated anti-takeover tactics, such as poison-pills or preferred stock issuance with redemption rights during a control change are not used. They are not forbidden by law, but would require a general shareholder meeting approval, and may face a review by the securities regulator, on the legal concern of being “detrimental to the interests of the corporation and its shareholders”. Golden parachutes would be objectionable on the same count.

The most common defensive tool of Canadian companies is the shareholder rights plan. Several hundred Canadian companies have adopted rights plans. Shareholder agreement is only required if the pill will be in force for more than 6 months. The basic mechanics of Canadian poison pills are similar to US pills, contemplating that a 'flip-in event' will occur when any person acquires a specified percentage (often 20%) of the securities of the issuer, causing substantial dilution to the acquirer unless a 'permitted bid' is made. However, Canadian regulators will not permit a target company to use a rights plan to shield itself indefinitely, and will often have it removed at the request of the hostile bidder. Institutional investors also favor poison pills of the less potent variety. As a result, poison pills tend to be benign, providing the target board with some extra time to respond to an unsolicited offer. The more exotic pills common in the United States, including 'dead hand' pills, 'no hand' pills and 'chewable' pills have not been widely 50adopted in Canada.

In Germany, the management board needs the approval of 75% of the AGM, either expressly following the news of the takeover threat, or up to 18 months in advance (# 33 German Takeover Code). To further protect minority shareholders who disagree with the shareholder meeting decision regarding the antitakeover measures, a court procedure may be available. In Italy, the anti-takeover regulations subject only certain anti-takeover tactics to the approval of a shareholder meeting ((# 104 Italy CFA). In many countries, a blanket prohibition exists against any actions that would frustrate the hostile tender offer (e.g. Czech Republic and Chile). Such provisions may again prove difficult for a weak court to enforce.


Below is a table of data from Thomson SDC showing that hostile bids are easier and consequently more common in the U.K.

Location Announced M&A (total No.) Hostile Bids Hostile Bids completednumber percent number percent

U.S. 54,849 312 0.57 75 24UK 22,014 187 0.85 81 43

SOURCE: Thomson SDC Platinum database

IMPACT OF TAKEOVER REGULATIONS ON INVESTMENT CLIMATE

My Research is primarily on how proper regulatory framework can help better development of the country. The thought crossed my mind when an article in Economic Times mentioned India’s position on ease of doing business (a World bank report) was 134 while that of Pakistan and other lesser developed nations was at 83. Takeover laws, while not being the only law, definitely play a very important role in developing the capital market and attracting investment from other countries and improving the qualityof takeovers.

I hereby present my point with the help of the case of Chile.

During the 1990s, a wave of changes of control occurred in Chile through private transactions at prices that were 70% higher on average. Minority shareholders did not participate in this upside. Shareholder dissatisfaction peaked during the takeover of Enersis S.A, Chile’s largest private energy conglomerate, by Endesa España (Spain) in 1997. The deal became a landmark case in minority shareholder rights and equitable treatment and prompted the overhaul of Chilean takeover legislation. The case also allows a simple illustration of the rules which would prevent minority rights abuse, as well as a practical view on the exact functioning of different protection mechanisms. Enersis was controlled by a group of five investment companies, known as the Chispas, via 29.04%. All Chispas companies had the same political structure: class A shares had 99.94% of the ownership and elected 4 out of 9 directors (held by pension funds); and Class B shares that represented 0.06% of the ownership but elected 5 out of 9 members of the board (held by Enersis management). Had the country been under a one-share-one vote listing rule, the expropriation of non-voting shareholders (in this case the pension funds and ultimately their retired beneficiaries) would not have occurred.

Even with barely 30%, the Chispas controlled Enersis due to its diluted ownership structure. Thetakeover was preceded by secret negotiations between Endesa Spain and key executives of Enersis S.A, who were promised a handsome price premium in exchange for cooperation on the takeover. Endesa España offered USD 253.34 for each B share and only USD 0.30 for the A shares. A takeover legislation with an equal-pricing rule would have made the deal impossible. The Spanish company also offered


Class B shareholders the option of purchasing up to 5% of Endesa shares at discounted prices, and guaranteed the Enersis managers their positions for at least five years. Strict adherence to good disclosure practices would have revealed this information prior to the tender offer and publicized it, likely increasing the chances for a public outcry prior to the deal. Moreover, Enersis executives would be considered as acting in concert with Endesa España, and therefore the notice would require that they state their intentions to collaborate in a change in control, as well as the sweeteners used by Endesa España to lure their cooperation.

Enersis executives applied pressure and influence to encourage employees to sell their shares. InOctober of that year, details of the acquisition strategy were made public by the press, because Endesa España, which was publicly traded in both the US and Spain, had filed several documents with the U.S. SEC and the Spanish CNMV, explaining the terms of an agreement between Endesa Spain and the Enersis executives. It was only at this point that the Chilean minority shareholders, the pension funds, became aware of the details and decried the planned deal. Had that not happened in time, the pension funds would have been left with non-voting shares and no control over Enersis, which would have gone under the complete control of Endesa España. Had the latter considered taking Enersis private, the pension funds would have lost virtually all value of their shares, an expropriation which will be fully avoided with the new Chilean takeover law, which does not allow squeeze-outs and gives dissenting shareholders appraisal rights in this case.

The new law established that share transactions that result in a person’s or group’s acquisition of control of a corporation must be conducted through a tender offer. Additionally, when the target company has several classes of shares with different voting rights, the tender must be extended to all classes in proportion. Partial offers must be pro-rated. The law also contains a mandatory offer provision, so that a shareholder who reaches the ownership level of 2/3rds of a corporation must tender for all outstanding shares and classes. An optional transitory rule shielded companies for a further three years from the new law, to allow learning, and most firms took advantage of that rule. The details of the law are presented in Appendix C. The securities regulator (Conasev) can enforce takeover law by issuing additional rules, imposing fines for noncompliance, demanding complete information about the transaction, and suspending tender offers procedures, even before they have started, in response to incomplete disclosure or a legal obligation default.

Following the implementation and enforcement of the new law, in 2000 and thereafter, one can note a new wave of IPOs on the Chilean stock market, and a healthy trend of takeover activity after the reform.The average number of takeovers has increased after year 2000 (see figure below). The control premium paid over market prices, 23%, is now shared more equally between controlling shareholders and minorities.

A graph showing improvement in capital markets activity post the launch of the Takeover Code in Chile


The World Bank report commends U.K takeover code as being one of the finest as it doesn’t have any percentage based open offer; i.e. partial open offer. To support my findings that mandatory offer doesn’t always provide a feasible exit option and that it may not be the best of the options, I include the below observation by WB verbatim:

“Mandatory offer rules serve to protect minority shareholders from inefficient control transfers, as repeatedly shown in the academic literature, but also decrease the chance that efficient control transfers occur.17 Beyond the positive effect of the mandatory offer rule on minority rights, there have been no studies on the optimal ownership threshold at which an offer becomes mandatory. To the extent that a lower mandatory offer threshold increases the incidence of sharing the control premium with minority shareholders, we expect a negative relationship between the mandatory offer threshold and better minority shareholders rights.”

Below are some more data and graphs that would help in making the regulations better and on par with the best in the world.




Basic Economic indicators and the takeover index

Country

Income percapita 2004

(USD$)

NO. of listedcompanies,

2004

Market cap oflisted

companies (% ofGDP) 2004

Stocks traded,total value (% of

GDP) 2004Takeover

indexARGENTINA 12,723 129 30.65 5.04 0.33

ARMENIA 4,222 213 0.51 0.05 0.16AZERBAIJAN 4,175 234 . 0.02 0.06AUSTRALIA 30,116 1,649 122.99 81.46 0.95

AUSTRIA 32,176 129 29.58 8.21 0.51BELGIUM 31,009 106 219.64 20.09 0.6

BRAZIL 8,297 367 54.62 15.47 0.51BULGARIA 8,007 342 11.62 2.12 0.31CANADA 31,129 3,756 120.18 66.74 0.97

CHILE 11,487 240 124.4 12.32 0.57CHINA 5,495 1,296 38.79 45.37 0.53

COLOMBIA 7,121 120 25.9 1.5 0.04CZECH Rep 19,381 63 28.83 16.5 0.71ECUADOR 3,885 30 8.52 0.33 0.06

EGYPT 4,103 824 51.25 7.46 0.07FINLAND 29,816 147 98.48 117.93 0.72FRANCE 29,077 772 92.74 65.5 0.65

GERMANY 28,147 715 44.01 51.8 0.45GHANA 2,316 25 30.67 0.76 0.29GREECE 21,954 341 61.57 21.38 0.44

HONG KONG 30,779 968 528.49 269.3 0.92INDIA 3,115 5,644 56.06 54.79 0.51

INDONESIA 3,583 333 28.43 10.7 0.32ISRAEL 24,082 576 81.25 39.33 0.5ITALY 28,162 295 47.21 48.1 0.47JAPAN 29,539 3,058 79.56 74.2 0.72

JORDAN 4,571 191 164.2 47.59 0.05KENYA 1,063 51 24.94 2.07 0.36KOREA 20,371 1,563 63.07 94 0.59

LITHUANIA 13,021 48 29.03 2.08 0.55MALAYSIA 9,760 897 161.33 50.84 0.66MEXICO 9,774 159 25.42 6.33 0.39

NETHERLANDS 32,056 180 107.8 104.67 0.47NIGERIA 1,113 200 20.06 2.31 0.36

PAKISTAN 2,210 663 30.17 76.86 0.31


PERU 5,641 197 29.41 1.65 0.16PHILIPPINES 4,558 234 33.49 4.24 0.39

POLAND 12,881 203 29.4 6.85 0.58ROMANIA 8,342 4,484 16.11 1.29 0.42

SINGAPORE 27,273 434 160.6 76.12 0.89SOUTH AFRICA 11,190 426 214.09 76.53 0.76

SPAIN 25,341 2,986 94.88 120.5 0.6SRI LANKA 4,173 244 18.23 2.9 0.37SWEDEN 29,499 278 108.77 119.06 0.62

SWITZERLAND 33,541 258 229.74 202.28 0.59THAILAND 8,179 405 70.58 66.74 0.55

TURKEY 7,710 294 32.55 48.82 0.25UK 30,843 1,701 131.53 173.16 0.94

URUGUAY 9,465 11 2.51 0 0.04USA 39,618 5,685 139.91 165.89 0.76

Components of the takeover law index

Country

Mandatpry Offer Range

Range whereintention tocontrol isknown

Range whereintention totake privateis known

Offexchangepricedisclosed

Rulesapply tonon-listedfirm

Fair priceforminority

Fair pricefor allclasses

Offerdisclosureindex

Fair pricefor nontenderinginvestors

Appraisalrights aftera merger

Sell-outprovisions

Antitakeovertactics


s

Argentina 0.49 0.5 0.25 0 0 1 0 0.25 0 0 1 0.43Armenia 0 0.5 0.25 0 0 0 0 0 0 1 0 0.14Azerbaijan 0 0.5 0 0 0 0 0 0 0 0 0 0.17Australia 0.8 0.8 0.8 1 1 1 1 1 1 1 1 1Austria 0.7 0.7 0.7 n.a. 0 1 1 0.5 1 0 0 0Belgium 0.5 0.8 0.8 n.a. 1 1 1 0.5 1 0 0 0Brazil 0.67 0.95 0.67 1 0 0 1 0.67 1 0 0 0.14Bulgaria 0.5 0.9 0.1 0 0 1 0 0.5 0 n.a. 0 0.43Canada 0.8 0.9 0.9 1 1 1 1 1 1 1 1 1Chile 0.5 0.5 0.5 n.a. 1 1 0 0.5 1 1 0 0.3China 0.7 0.7 0.25 n.a. 0 1 1 0 1 1 0 0.17Colombia 0 0.5 0 0 0 0 0 0 0 0 0 0Czech Rep 0.6 0.6 0.1 n.a. 1 1 1 0.25 1 n.a. 1 0.57Ecuador 0 0.5 0 0 0 0 0 0 0 0 0 0.17Egypt 0 0.5 0 0 0 0 0 0 0 0 0 0.29Finland 0.33 0.5 0.1 n.a. 1 1 1 0.5 1 1 1 0.5France 0.67 0.9 0.9 1 0 1 0 0.75 1 0 1 0.57Germany 0.7 0.7 0.7 1 0 1 0 0.75 0 0 0 0.57Ghana 0.75 0.75 0.25 0 0 1 0 0.25 0 0 0 0.43Greece 0.5 0.5 0.5 n.a. 0 1 1 0.75 0 0 0 0.57Hong Kong 0.7 0.9 0.7 1 1 1 1 1 1 1 1 0.71India 0.85 0.85 0.1 n.a. 0 1 0 0.25 1 1 0 0.57Indonesia 0.75 0.75 0.75 n.a. 0 1 0 0.25 0 0 0 0Israel 0.75 0.75 0.75 n.a. 0 1 0 0.67 1 0 0 0.57Italy 0.7 0.7 0.7 n.a. 1 1 0 0.67 0 0 0 0.43


Japan 0.67 0.95 0.67 1 1 1 1 1 0 1 0 0.29Jordan 0 0.5 0 0 0 0 0 0 0 0 0 0.14Kenya 0.75 0.5 0.5 0 0 0 0 0.75 1 0 0 0.8Korea 0.95 0.95 0.95 1 0 0 1 0.5 0 1 0 0.71Lithuania 0.6 0.6 0.6 1 0 1 0 0.5 0 n.a. 1 0.71Malaysia 0.67 0.67 0.67 n.a. 1 1 1 0.5 0 0 1 0.71Mexico 0.5 0.5 0 0 0 1 1 0.5 0 0 1 0.2Netherlands 0.5 0.5 0.05 n.a. 1 0 1 1 1 0 0 0.17Nigeria 0.5 0.5 0.25 n.a. 0 0 0 0.25 1 0 1 0.43Pakistan 0.49 0.5 0.5 n.a. 0 0 1 0.25 0 0 0 0.71Peru 0 0.5 0.33 0 0 1 0 0 0 0 0 0.14Philippines 0.5 0.95 0.05 n.a. 0 1 0 0.5 0 1 0 0.29Poland 0.75 0.9 0.75 1 0 1 1 0.5 0 n.a. 0 0.5Romania 0.67 0.67 0.67 n.a. 0 1 0 n.a. 0 0 1 0.14Singapore 0.7 0.7 0.7 1 1 1 1 1 1 1 1 0.57South Africa 0.65 0.65 0.65 n.a. 1 1 1 0.75 1 0 1 0.71Spain 0.75 0.5 0.5 1 1 0 0 1 1 1 0 0.43Sri Lanka 0.7 0.7 0.25 0 0 1 0 0.5 1 0 0 0.29Sweden 0.6 0.6 0.1 n.a. 1 1 0 1 1 0 1 0.57Switzerland 0.67 0.67 0.67 1 1 1 0 0.75 1 0 0 0.29Thailand 0.75 0.75 0.75 1 0 1 0 1 0 1 0 0.29Turkey 0.75 0.75 0 n.a. 0 1 0 0.25 0 0 0 0UK 0.85 0.85 0.7 1 1 1 1 1 1 1 1 0.86Uruguay 0 0.5 0 0 0 0 0 0 0 0 0 0USA 0 0.95 0.95 1 1 0.5 0 1 1 1 1 0.71The impact of takeover laws on capital markets and takeover activity

Listed firms to million population Market cap of stock exchange to GDPNo. Ofg Obs 50 41 41 49 41 41R Squared 0.1369 0.4282 0.422 0.3311 0.377 0.34


49.88 63.74 41.68 159.43 163.02 158.63Takeover Law -24.58 -24.83 -22.88 -75.18 -77.35 -61.31

4.17 12.09Eff. Judiciary -2.44 -6.23

5.79 4.22Inv. Protection -3.59 -11.88

2.48 -0.06 6.53 10.54 -2.74 9.51Ln GNI/cap -2.99 -3.35 -3.09 -6.1 -8.75 -6.51

-16.74 -36.97 -70.09 -88.92 -56.59 -84Constant -24.41 -18.41 -28.53 -39.99 -52.4 -73.15

Conclusion

I do not attempt to suggest what numbers are better for the Indian takeover code as far as trigger points or thresholds are concerned. My endeavour throughout this work has been to bring to light some important learning from other regulations, which if implemented might, in my opinion, go a long way in improving the regulation as it I in its current form. I have tried to present how takeover laws around the world have an impact, among other laws of course, on the improvement of capital markets in general and takeover activity in particular. Thus, whatever amendments would be proposed and implemented in the forthcoming regulations, will hopefully consider some important lacunae and learning from regulations in other countries.


LIST OF REFERENCES

FOR TAKEOVER LAWS OF VARIOUS COUNTRIES REFERRED HEREIN:

CANADA STATE SECURITIES ACTS: ONTARIO 1987, QUEBEC 1987, BRITISH COLUMBIA 1985,MANITOBA 1988,ALBERTA 1988,

CHILE LAW 18.045 ON THE SECURITIES MARKET, LAW 19.705 ON PUBLIC OFFER FOR ACQUISITION

OF SHARES. STOCK EXCHANGE REGULATOR: CHILEAN SECURITIES AND INSURANCE SUPERVISOR. CZECH REP. COMMERCIAL CODE.STOCK EXCHANGE REGULATOR: CZECH SECURITIES COMMISSION. GERMANY TAKEOVER CODE (2002), SECURITIES TRADING ACT (1998 AS AMENDED BY 2001),

STOCK CORPORATIONS ACT, SECTION 305, BORSENGESETZ (EXCHANGE LAW) (1896), REVISED

1989, BORSENAUFSICHTSBEHORDE 1,2 (1) OF THE EXCHANGES ACT, 3 OF RULES AND REGULATIONS

OF THE FRANKFURT STOCK EXCHANGE. STOCK EXCHANGE REGULATOR: FEDERAL FINANCIAL

SUPERVISORY AUTHORITY. HONG KONG HONG KONG CODE FOR TAKEOVERS AND MERGERS 1975 AND AMENDMENTS BY 2002,

COMPANIES ORDINANCE, SECURITIES ORDINANCE, SECURITIES AND FUTURES COMMISSION

ORDINANCE, STOCK EXCHANGES UNIFICATION ORDINANCE, RULES OF THE EXCHANGE. STOCK

EXCHANGE REGULATOR: SECURITIES AND FUTURES COMMISSION. INDIA SECURITIES CONTRACT ACT (1956), SUBSTANTIAL ACQUISITION OF SHARES AND TAKEOVERS

REGULATIONS (1997 AS AMENDED BY 2002), BUY BACK OF SECURITIES REGULATION (1998). STOCK

EXCHANGE REGULATOR: THE SECURITIES AND EXCHANGE BOARD OF INDIA

ITALY LAW 149/1992, DECREE 58 OF 1998, PART IV, REGULATION 11971 OF 1999, PART II AND

III ON PUBLIC TENDER OFFERS, MERGERS, AND DISCLOSURE STOCK EXCHANGE REGULATOR: STOCK

EXCHANGE COUNCIL (CONSIGLIO DI BORSA, UNDER CONSOB - COMMISSIONE NACIONALE PER LE

SOCIETA E LA BORSA). SINGAPORE COMPANIES ACT (AMENDED BY 1998), SECURITIES INDUSTRY ACT (2000), SECURITIES

INDUSTRY REGULATIONS, SECURITIES AND FUTURES ACT (2001), PART VIII, SINGAPORE CODE ON

TAKEOVERS AND MERGERS (2002). STOCK EXCHANGE REGULATOR: MONETARY AUTHORITY OF

SINGAPORE

SOUTH AFRICA COMPANIES ACT 1973, AMENDED 1989: SECTIONS 314 TO 321, CHAPTER XV AND

XV, AND SECTION 440C OF THE AMENDED ACT, SECURITIES REGULATION CODE ON TAKEOVERS AND

MERGERS 1991, RULES OF THE SECURITIES REGULATORY PANEL 1991, STOCK EXCHANGES CONTROL

ACT 1 (1985), RULES AND DIRECTIVES OF THE EXCHANGE. STOCK EXCHANGE REGULATOR: STOCK

EXCHANGE COMMITTEE. UNITED KINGDOM- COMPANIES ACT 1989, CITY CODE ON TAKEOVERS AND MERGERS, FINANCIAL

SERVICES AND MARKETS ACT 2000, SCHEDULE 11, RULES GOVERNING SUBSTANTIAL ACQUISITION OF

SHARES STOCK EXCHANGE REGULATOR: FINANCIAL SERVICES AUTHORITY


UNITED STATES SECURITIES ACT OF 1933, SECURITIES EXCHANGE ACT OF 1934, REGULATION 13D-G: SECURITIES OWNERSHIP, REGULATION 14D: DISCLOSURE REQUIREMENTS AND MINIMUM TIME

FOR TENDER OFFERS, REGULATION 14E: TENDER OFFER RULES, REGULATION M-A: MERGERS AND

ACQUISITIONS, RULE 13E-3: GOING PRIVATE TRANSACTIONS, RULE 13E-4: TENDER OFFERS BY

ISSUERS, SCHEDULE TO: TENDER OFFER STATEMENT UNDER SECTION 14(D)(1) OR 13(E)(1) OF THE

SECURITIES EXCHANGE ACT OF 1934, DELAWARE GENERAL CORPORATION LAW STOCK EXCHANGE

REGULATOR: U. S. SECURITIES AND EXCHANGE COMMISSION

WORLD BANK REPORT ON INVESTMENT CLIMATE 2006 TAKEOVERCODE.COM

THE HINDU BUSINESS LINE ONLINE ARTICLES

THE ECONOMIC TIMES ONLINE ARTICLES

WHY CONTINENTAL EUROPEAN TAKEOVER LAW MATTERS- DISCUSSION PAPER NO. 454OF THE HARVARD LAW SCHOOL

THE DIVERGENCE OF US AND U.K TAKEOVER REGULATION- BY JOHN ARMOUR, UNIVERSITY OF

OXFORD AND DAVID A. SKEEL, JR., UNIVERSITY OF PENNSYLVANIA LAW SCHOOL

LUTHRA & LUTHRA CASE STUDY ON COMBATING HOSTILE TAKEOVERS IN INDIA

P.N. BHAGWATI REPORT 2002 WORKING PAPERS OF THE INDIAN INSTITUTE OF MANAGEMENT, AHMEDABAD BY PROF SANDEEP

PAREKH- NOVEMBER 2009 W.P. NO. 2009-11-06.

Education

Comparative study of the takeover regulations prevailing in different countries