1. MERGERS AND ACQUISITIONS UNDER COMPANIES ACT, 2013 – SEBI’S PERSPECTIVE Anubhav Roy, Assistant Legal Adviser, SEBI 1

2. Companies Act, 2013  Chapter XV (Ss. 230-240)  Other relevant provisions – Ss. 66 (Reduction of Capital) and 68 (Buy-Back)  Few provisions:  Notice and other documents - SEBI/SEs/News Papers – for placing on website [230(3)]  Objection by 10% - Shareholder and 5% - debt holder  Notice – Various regulators – for giving representation within 30 days 2

3. Companies Act, 2013  Order sanctioning scheme to be filed with RoC within 30 days  Special provisions for M&A of small companies/holding- subsidiary/such other class or classes of companies as may be prescribed  Indian company can also be merged with foreign companies of notified jurisdictions and vice versa  Reduction in capital can be in terms of sanctioned scheme but any buy-back has to be in accordance with the provisions provided there for 3

4. Companies Act, 2013 4  Transferee company to remain unlisted till it becomes listed  If the shareholders of transferor company decides to opt out of the transferee company, Tribunal may provide for payment to such shareholders of the value of their shares in accordance with a pre-determined price formula or after valuation  Power to acquire shares of shareholders dissenting from scheme or contract approved by majority  Provisions for purchase of minority shareholding  Liability for offences to continue even after merger/amalgamation/acquisition

5. SEBI’s Perspective  To protect the interest of investors and develop and regulate securities market  Scheme/arrangements should be fair and transparent  Scheme of arrangement of Sterlite Industries Limited  Introduction of 24(f), (g) and (h) in the Equity Listing Agreement  Prior filing of schemes/petitions with SE for approval  Scheme/petition not in violation of Securities Laws/SE requirements 5

6. Process for seeking exemption Co. submits Scheme with SEs SEs grant NOC to Scheme Co. submits the Scheme with Hon’ble High Court Meeting of shareholders convened as per directions of Hon’ble HC Pursuant to shareholders approval, Hon’ble High Court approves Scheme Co. submits approved Scheme with the SEs SEs recommend the application of the Co. and submit the same with SEBI for exemption 6

7. SEBI’s Perspective  Judicial treatment of Amendments made to Equity Listing Agreement in some cases  Cornershop Entertainment Co. Pvt. Ltd. (Bom. HC)  Chemidye Manufacturing Co. Pvt. Ltd. (Bom. HC)  Clause 8.3.5 of DIP Guidelines (since rescinded)  Circular dated 03.09.2009  Scheme submitted with SEBI after approval by Hon’ble High Court.  Demerger of divisions, wherein core business transferred to subsidiary. 7

8. SEBI’s Perspective 8  Related Party Transactions  Increase in promoter shareholding.  Resultant company listed solely on RSEs  Voting – present and voting.  Lack of disclosures – Scheme, Valuation report, financials of unlisted company not disclosed in public domain

9. SEBI’s Perspective 9  SEBI Circular dated 04.02.2013  Circular dated 21.05.2013  All schemes of arrangement under Part IV and Chapter V of Part VI of the Companies Act, 1956  Filing of Draft Scheme with Designated Stock Exchange along with recommendation Report of Audit Committee based on the valuation report of an independent CA  Draft scheme also to be placed on the website of listed company and of SEs where shares are listed/proposed to be listed

10. SEBI’s Perspective 10  DSE can seek clarification from company/opinion from independent CA  DSE to forward the draft scheme to SEBI within 3 days  DSE to forward its objection/no-objection to SEBI within 30 days  SEBI can seek clarification from any person/company/opinion from independent CA/grant of in-principle approval for listing  All complaints received by SEBI be sent to DSE for resolution by listed company

11. SEBI’s Perspective 11  “Complaints Report” within 7 days of expiry of 21 days from the filing of draft scheme with SE  SEBI to give its comments to DSE within 30 days of receipt of Objection/No-Objection/opinion from independent CA/satisfactory reply on clarification sought by SEBI  Within 7 days SE to issue observation letter to listed company after incorporating comments of SEBI (6 months validity)  Within 24 hrs observation letter be disclosed on website of listed company and on the website of SEs

12. 12  Listed company to ensure that final scheme presented before HC provides for shareholders approval through sp. Resolution, in cases of – (i) allotment of additional shares to promoter group, RPT etc. (ii) where one of the party to scheme is promoter group, RPT, etc. and (iii) where subsidiary is being merged in parent and the parent had in the past acquired shares of such subsidiary by paying cash to those shareholders of such subsidiary who happens to be promoter/promoter group of such parent company  Notice to shareholders to include observation letter of SE

13. SEBI’s Perspective 13  Observation letter to be brought to the notice of the Hon’ble HC by Listed company  Final sanctioned scheme along with certain documents to be submitted to SE  SE to send the scheme to SEBI with its recommendation  SEBI to offer its comments/approval within 30 days.

14. SEBI’s Perspective Co. submits Draft Scheme with SEs Draft Scheme along with various documents submitted with SEBI by Designated SE SEs submit NOC & Complaints Report with SEBI SEBI furnishes its comments to SEs SEs furnish Observation Letter Co. submits the Scheme with the Hon’ble High Court 14

15. SEBI’s Perspective Co. submits Draft Scheme with SEs T day Draft Scheme along with various documents submitted with SEBI by Designated SE T + 3 SEs submit NOC & Complaints Report with SEBI T + 30 / T +21 SEBI furnishes its comments to SEs T + 30 / T +21 15

16. Advantages in revised process  Improved quality of disclosures  Disclosure of information on websites  SEBI can seek clarifications and suggest further disclosure / modification  Disclosure of Related Party Transactions  Shareholders can take well-informed decisions  Timely clearance after Scheme is approved by the Hon’ble High Court.  Saving time and resources on litigation. 16

17. Disclaimer 17 Views expressed in this presentation are of the speaker and for academic purposes only. The views expressed herein do not necessarily represent the views/stand of SEBI on the issues dealt.

18. 18 Thanks