Press Releases
Majmudar & Partners is the winner of the Economic Times Legal Awards 2023 in the categories “Excellence in Deal Advisory,” “Excellence in Mergers & Acquisitions,” and “Boutique Law Firm of the Year.”
22 July 2024
Overview In the Ayodhya Rami Reddy Alla (the “Taxpayer”) case, the Telangana High Court (the “THC”) held that,
24 June 2024
Health
The Department of Pharmaceuticals (the “DoP”) recently notified the Uniform Code for Pharmaceutical Marketing Practices 2024 (“UCPMP 2024”), in supersession of the UCPMP issued in 2014 (“UCPMP 2014”).
07 June 2024
Press Releases
With a career spanning over 18 years, Mustafa is a highly accomplished and reputed lawyer having extensive expertise in the field of dispute resolution, arbitration and real property law. Mustafa brings to the table a comprehensive understanding of real property law, a knack for resolving disputes, and a deep proficiency in navigating arbitration matter.
21 March 2024
Competition
The Indian parliament approved the Competition Amendment Act, 2023, (the “Amendment Act”) on April 11, 2023. The Amendment Act has also been published in the Official Gazette, although it is yet to come in force.
27 April 2023
Banking and finance
Last month, the Reserve Bank of India (the “RBI”) introduced master directions (the “Directions”) and guidelines (the “Guidelines”) for the acquisition and ownership of shares and voting rights in banking companies. The main aim of the Directions and Guidelines is to ensure that the ultimate ownership and control of banking companies remains well diversified.
17 February 2023
Education
Recently, the University Grants Commission (the “UGC”) has published the Draft University Grants Commission (Setting up and Operation of Campuses of Foreign Higher Educational Institutions in India) Regulations, 2023 (the “Draft Regulations”) proposing the establishment and operation of international branch campuses (“IBCs”) of foreign higher educational institutions (“FHEIs“) offering undergraduate and higher level programmes in India. The Draft Regulations prescribe the procedure for setting up IBCs, as well as the conditions of their operation.
17 February 2023
Employment
In November 2022, Amazon initiated a voluntary separation program (“VSP”) which allowed eligible employees to resign voluntarily from employment in exchange for specific severance benefits, including twenty-two (22) weeks’ base pay, one (1) week’s base salary for every six (6) months of services, up to a maximum of twenty (20) weeks, medical insurance for six (6) months and notice period or pay in lieu of it.
19 January 2023
Alternative Investment Funds
The Securities and Exchange Board of India (the “SEBI”) has issued two (2) circulars, dated November 17, 2022 (the “SEBI November 17 Circular”) and November 23, 2022, (the “SEBI November 23 Circular”), respectively, in furtherance of the SEBI (Alternative Investment Funds) Regulations, 2012 (the “AIF Regulations”) to protect investor interests and to better regulate the securities market. The amendments made by the SEBI are discussed below.
12 December 2022
Corporate and M&A
Mergers and Acquisitions (“M&A”) are strategic business collaborations that form an indispensable part of the corporate world. Parties have to mutually consent upon key terms and considerations regarding the target’s business before closing the deal. Legally speaking, the ongoing dispute between Twitter and Elon Musk (“Musk”) in the Delaware Chancery Court has given prominence to the contractual nuances prevalent in M&A deals with special attention on the Material Adverse Effect (“MAE”) clause. Typically, acquisition agreements include clauses which safeguard the interests of the contracting parties. One such clause is MAE, which is a ground for the acquirer to terminate a transaction on the occurrence of a materially adverse event that puts the acquirer’s commercial interest in jeopardy. Generally, a MAE clause envisages broad circumstances or events, whose adverse consequences make the transaction untenable. These may include events that have a materially adverse impact on the target business itself, or the ability of the parties to perform their obligations and consummate the transaction, or the ability of the acquirer to carry on the target’s business post-acquisition. MAE clauses are heavily negotiated and differ depending on the facts and industry requirements of each deal. While acquirers seek to retain broad definitions, sellers seek to include qualitative and quantitative constraints to protect their own interests. In the ongoing Twitter v. Musk feud, the following developments have taken place: Musk has terminated the merger agreement to acquire Twitter by claiming that Twitter has made materially inaccurate representations (especially in relation to fake Twitter accounts), which allegedly result in a materially adverse event triggering the MAE clause. Twitter, on its part, has denied Musk’s claims of misrepresentation and challenged the termination. Twitter has alleged that Musk is seeking to walk away from the transaction due to a market downturn and subsequent fall in the stock price. Twitter has relied on the qualitative thresholds in the MAE clause to argue that a market downturn does not trigger the MAE clause. In India, there is a scarcity of judicial decisions on the enforceability of MAE clauses, especially as many such disputes end up in arbitrations which are confidential in nature and not in public courts of law. However, the provisions of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (“Takeover Code”) provide some guidance in the form of Regulation 23 which provides statutory grounds for withdrawal of a takeover offer. Accordingly, an offer for takeover can be withdrawn if a condition mentioned in the acquisition agreement attracting the obligation to make the open offer is not met for reasons outside the reasonable control of the acquirer. A similar provision in the predecessor to the Takeover Code i.e., SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, has been interpreted by the Indian judiciary to be restricted only to instances of legal and natural impossibility. Poor financial performance of the target entity is, typically, not permitted as a legitimate ground for invoking this provision. The Takeover Code, however, applies only to listed companies. For private or unlisted public companies in India, there are no guiding statutory provisions. Hence, everything boils down to negotiations and the contractual understanding between the parties. American jurisprudence, however, provides some legal literature on this subject. In Re IBP, Inc. Shareholders Litigation v. Tyson Foods, Inc., the broadly worded MAE clause included events affecting the financial condition, business, assets, liabilities and results of operations of the target and its subsidiaries taken as a whole. The Delaware court interpreted this clause to mean a substantial threat to the overall long-term earning potential of the acquirer and not just applicable to mere short-term setbacks. The court also relied on past negotiations and conduct of the acquirer in its interpretation of the clause. In Akorn, Inc. v. Fresenius Kabi, the Delaware court permitted the termination as the acquirer had complied with all its obligations and its conduct showed an intent to close the deal. In this case, the court also introduced a test of quantitative and qualitative materiality to invoke the MAE clause to safeguard the seller. M&A deals in India are at an all-time high, especially in the startup space which is attracting the interest of well-established conglomerates too. While regulatory, legislative and even judicial guidance is scare domestically, there are some lessons to be learned from this foreign dispute. Even as proceedings are sub judice, certain key aspects should be kept in mind by parties to a M&A deal: MAE clauses should be drafted with care to accurately capture the commercial intent of the parties. Boilerplate MAE clauses should be avoided. Termination may only be permitted if the MAE has a substantial impact on the transaction. General stock market downturns may not save the day. Further, the conduct of the parties between signing and closing can play a key role in determining if a MAE clause is being invoked unreasonably. It is also suggested that parties should be proactive and get their existing arrangements legally reviewed for risk mitigation. In conclusion, this dispute has highlighted the importance of efficient contracting, especially to resolve future conflicts when the parties may no longer be on the same page. Lastly, we can expect the Delaware court to give a precedent-setting judgement, which will have the potential to change the course of future M&A deals in India and the world over. Author: Rukshad Davar, Partner and Head of M&A
03 August 2022
White-collar crime
Background Since the advent of globalization, enterprises have started engaging in increasingly complex cross-border transactions. In many cases, such mandates involve dealing, interfacing and obtaining approvals from government entities in foreign countries. So as to ensure transparency and fair play, governments the world over have enacted anti-bribery and anti-corruption legislations, many of which are extraterritorial in nature. Prime examples are the Foreign Corrupt Practices Act, 1988 (FCPA) and the United Kingdom Bribery Act, 2010. As a result, it has become very important for businesses to ensure that they are in compliance with the anti-corruption laws of not only their own country but also of countries where they do business.
11 July 2022
Private Equity & Investment Funds
Typically, private equity and venture capital investors seek various contractual rights to protect their investments and secure their returns. In relation to private investments in public enterprises or PIPE deals, it becomes important for minority shareholders (including financial investors) to understand their statutory rights as listed below and ascertain whether their rights are well and truly enforceable.
17 May 2022
Mergers & Acquisitions
By: Akil Hirani, Head of the Transactions Practice & Managing Partner, and Rukshad Davar, Head of the M&A Practice, Majmudar & Partners, India
28 March 2022
Press Releases
Centre takes the first step towards legalising crypto by taxing gains at 30%. Here's what it means for investors.
15 February 2022
TMT (Technology, Media & Telecoms)
By: Akil Hirani, Managing Partner, Majmudar & Partners, India
07 December 2021
Corporate and Commercial
Background Micro, Small, and Medium Scale Enterprises (“MSMEs”) have faced a lot of hardships and financial stress during the Covid19 pandemic. The Indian government has taken several measures to mitigate their distress, including increasing the limit of the minimum amount that constitutes a default for the initiation of the Corporate Insolvency Resolution Process (“CIRP”) and suspending the filing of fresh insolvency applications under the Insolvency and Bankruptcy Code, 2016 (the “Code”) for a year post March 25, 2020.
07 December 2021
Government
Indian securities law has focussed on regulating, holding accountable and penalizing “promoters” as a result of concentrated family owned businesses which are largely prevalent in India. In this regard, the Securities and Exchange Board of India (the “SEBI”) defines a “promoter” to include any person: (a) who has been identified as a promoter by the company in its offer documents or annual returns; (b) who has direct or indirect control over the affairs of the company whether as a shareholder, director or otherwise; or (c) in accordance with whose advice, directions or instructions, the board of directors of the company is accustomed to act.
16 September 2021