These securities grant special rights to existing shareholders to purchase additional stock at a discounted price on that triggering event say 20% acquisition. In this strategy, the company issues the securities with special rights excisable only on the occurrence of a triggering event.

This is also known as shareholders’ rights plan. A Company may amend the AoA by adding provisions such as a supermajority approval mechanism which will trigger in case of takeovers or a fair price provision. Shareholders have absolute power under the Companies Act, 2013 to amend the AoA by passing a special resolution. Some provisions are added to the AoA of the company to prevent the takeover. Article of Association ( AoA) to make the takeover nearly impossible for the acquirer. In this strategy, the company amends its constitution i.e. It was later repealed and was replaced by SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (the “ Takeover Code”).Ĭommonly known as anti-takeover amendments. Much later SEBI enacted SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 to regulate the acquisitions in India. The hostile takeover was saved by the Government and it was later mediated where Swaraj Paul agreed to sell back the shares at a mutually agreed price. The Government of India capped the portfolio investment by NRI at 5%. Nanda, Bharat Ram, and a few others, businesses who were concerned about a hostile takeover. However, a request was made to the Government of India by a group of FICCI including J.R.D. Whereas, the Nanda family and Shri Ram family, the controlling shareholders, were left with less than 5% and 10% of the shareholding in their respective companies. He acquired 13% and 7.5% of shares in DCM and Escorts respectively. The first attempt dates back to the pre-liberalized era where an English businessman Swaraj Paul scared the businessmen in India.

India has seen only handfuls of hostile takeovers or even hostile takeover attempts. A hostile takeover can also be affected without intervening in the promoters’ shareholding. without the willingness of remaining promoters holding 20% in A ltd. now has 51% of the shareholding in A ltd. Say, Z ltd purchases 15% of the promoter group, 5% of the public shareholding, and buys out the rest 31% from others entering into a Share Purchase Agreement. Let us take an example to understand this better: “A ltd” has the following shareholding pattern: promoter group (35%) public (35%) financial institute 1 (5%) B ltd (5%) C ltd. In a hostile takeover, the target company is been acquired or attempted to be acquired. According to Black’s Law Dictionary, a hostile takeover is defined as “A takeover that is resisted by the target corporation’s board of directors.” In simple words, when a company wishes to buy the target company and without the willingness of the target company, it is called a hostile takeover.

What is a hostile takeover