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Earlier this month, the Ministry of Corporate Affairs (​MCA​) notified certain provisions under the Indian Companies Act dealing with “takeover offers” in respect of unlisted public and private companies. Briefly, the new rules enable a shareholder holding 75% or more of the share capital of an unlisted company, to make an offer to acquire the remaining shares of the company (presumably all, and not only a portion, of the balance shareholding) as part of an application to be filed with the National Company Law Tribunal (​NCLT​) for a compromise or arrangement. Much like SEBI’s takeover rules applicable to listed companies, the MCA rules also set out certain minimum pricing requirements for the offer (i.e., to be based on a valuation by a registered valuer taking into account the highest price at which any shares in the company were traded in the last 12 months as well as other parameters such as return on net worth, book value, earnings per share and PE multiple taking into account the industry average) as well as a certain minimum amount (i.e., 50% of the total consideration) to be placed by the acquirer in a separate bank account.

Click to read more – Unlisted Company Takeovers – Touchstone