Comparative study of the takeover regulations prevailing in different countries
Comparative Study of Takeover Regulations in Different Countries Research Assignment: Set IComparative Study of the TakeoverRegulations 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
Comparative Study of Takeover Regulations in Different Countries ABSTRACTThe author has tried to explain the core differences in the Indian and international takeoverregulations and thereby has attempted to point out certain crucial learning that can beincorporated in the Indian Code. The author has critically reviewed the partial open offertriggers and the process in comparison with those in U.K and Singapore. This work suggestsscrapping of some redundant regulations to make the law more competitive and businessfriendly. Electronic copy available at: http://ssrn.com/abstract=2139745
Comparative Study of Takeover Regulations in Different Countries
Comparative Study of Takeover Regulations in Different Countries THE CONCEPT OF TAKEOVER AND GENESIS OF THE LAW The term takeover has the potential, like many terms in law, to encompass a widevariety of events and transactions leaving enough room for speculation and ambiguity. Looselyspeaking, Mergers are often spoken of in the same breadth as takeovers and little effort ismade in common usage to distinguish between them. Strictly speaking, however, they are twodifferent worlds with similar characteristics.So, what is a Takeover?Takeover can be simply defined as purchase of one company by another for consideration- cashor non cash or a combination of both. Again, different regulations define it in different ways soas to cover a wide ambit of transactions as may be relevant to the country or with regards tothe history of such transactions in the country. However, it is important to note that no law canever provide an exhaustive definition to something as dynamic as takeovers. As mentioned inThe Singapore Code on Takeovers and Mergers, It is impracticable to devise rules in sufficientdetail to cover all circumstances which can arise in take-over or merger transactions.BackgroundA study on the business activities of US companies revealed that so far there have been fivemajor merger waves in US. First wave (1897-1904); during this period rapid economic growththrough concentration was achieved. Expansion of business operations, economies of scale anddrive for efficiency & technological changes were the motivating forces. It created monopolyand large companies absorbed smaller ones. For example, US Steel emerged on combination of785 companies. Similarly, American Tobacco and General Electric emerged after absorbing largenumber of companies. Second wave (1916-1929); if first wave was the era of horizontalmergers, 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 anddistribution networks were the driving forces. Third wave (1965-1969; during this period nopervasive motive could be identified. Merger activities were mainly influenced by the Anti-trustpolicies. Circumventing regulatory provisions, managerial reorganization, product diversity etc.were the governing forces. During this period a large number of firms disappeared from themarket. Fourth wave (1981-1989); during this period Companies responded to a common set ofenvironmental/macro factors and assumed an international dimension. Hostile takeovers andLBOS were the primarily acquisition strategy. Fifth wave (1990-2000); this is the era of crossborder acquisitions. A number of mega mergers emerged involving companies from different
Comparative Study of Takeover Regulations in Different Countriescountries. IT revolution, continued deregulation of the economies, reduction in trade barriers,globalization and privatization led to these mergers.Indian ScenarioThe concept of takeover for India is a borrowed one- one that originated in the west followingthe wave of mergers & acquisitions. Mergers and takeovers are prevalent in India right from thepost independence period. But Government policies of balanced economic development and tocurb the concentration of economic power through introduction of Industrial Development andRegulation Act-1951, MRTP Act, FERA Act etc. made hostile takeover almost impossible andonly a very few M&A and Takeovers took place in India prior to 90s. But policy of decontrol andliberalization coupled with globalization of the economy after 1980s, especially afterliberalization in 1991 had exposed the corporate sector to severe domestic and globalcompetition. This had been further accentuated by the recessionary trends, resulted in fallingdemand, which in turn resulted in overcapacity in several sectors of the economy. Companiesstarted to consolidate themselves in areas of their core competence and divest thosebusinesses where they do not have any competitive advantage. It led to an era of corporaterestructuring through Mergers and Acquisitions in India. While the possibility of takeover of acompany through share acquisition is desirable in new competitive business environment forachieving strategic corporate objectives, there has to be well defined regulation so that theinterest 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 stronglyfelt.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 aregoverned by the Companies Act,1956 (Sections 391 to 394) while takeovers are governed bySEBI (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. Sincethe nature of the transactions by themselves is so similar, a common law to govern the samewould be the logical step.I now move on to explore takeover code in its current form in India and juxtapose relevantimportant provisions from similar regulations around the world. The focus of my research is onhow effective are the regulations in really protecting investors’ interest as they claim to whilstcomparing the scenario around the world. I would also like to throw light on the relationbetween the takeover law and ease of doing business which is, among other things, dependenton the regulation governing mergers and takeovers in general.
Comparative Study of Takeover Regulations in Different Countries INTERPRETATION OF CONCEPTS IN DIFFERENT REGULATIONSThe Concept of Persons Acting in ConcertThe SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 defines PACmore broadly by using the words “persons who for a common objective or purpose ofsubstantial 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 orcontrol over the target company.” Thus it leaves the agreement implicit or explicit, commonintent etc open to interpretation. We have often seen cases that include contesting of thisdefinition hovering around whether there was a “common objective” and implicit agreementfor the persons to be referred to as PAC.The Singapore Code on Take-overs and Mergers defines PAC in a similar fashion too, butnotable is the fact that the terms common objective is unique to Indian Code. The same appliesmutandis mutatis to THE CITY CODE ON TAKEOVERS AND MERGERS of the UK- whereagreement being implicit is a part of the definition, but the terms common objective are notpresent. A case in point around this definition and its interpretation in the Indian context isModi Spg. & Wvg. Mills Co. Limited v SEBI.Concept of ControlThe concept of control as laid out in the Indian scenario is as follows: “control” shall include theright to appoint majority of the directors or to control the management or policy decisionsexercisable 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 orvoting agreements or in any other manner.
Comparative Study of Takeover Regulations in Different CountriesThis is a crucial definition and forms the basis for trigger points of the open offer. TheSingapore Code too defines control, but being more specific with regards to the percentagethreshold that gives control. It is heartening to see the Indian cod a step ahead, as control canbe established even when a person has less than 10% of shareholding. Noteworthy is the caseof now infamous Ramalinga Raju of erstwhile Satyam. The UK’s city code and EC directive ontakeover make no explicit definition of control.Threshold Limits & Open OfferThreshold 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, asthe trigger point for open offer. In the Indian context, if a person holds 5%, 10% or 14% then ateach level, he has to inform to concerned company and stock exchange about the level of hisholding. It shows the level of holdings beyond which acquirer have to make open offer forfurther acquisition of shares or voting right.The Singapore Code on Take-overs and Mergers has the same trigger specified at 30%, muchhigher than in India. Also important to reiterate that it is the percentage that defines control inSingapore listed entity. Continual disclosures have to be made from this percent onwards forevery percent increase in the holdings.The City Code on Takeovers in UK also has 30% threshold limit and requires continualdisclosures from the potential acquirer once 15% shareholding is crossed. While in the USA, anyholding 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 thatare relevant to my research. Regulation India U.K Singapore USA Who Regulates SEBI FSA Securities Securities and Industry Council Exchange Commission (SEC) Threshold limit (Initial 15% 30% 30% or 1% Offers are only Acquisition) creeping voluntary between 30% to 50%Creeping Acquisition limit 5% for No 1% in 6 months No(subsequent acquisitions shareholders for shareholders for consolidation of holding 15% to holding shares holdings) 75% between 30% and 50%
Comparative Study of Takeover Regulations in Different Countries 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 For balance shares Regulation Is As much as 5% the voting share silent called “Tender capital of the Offers” target company Less than 5% – ‘Mini tender offer’ Offer price parameters parameters specified parameters - specified specified Escrow Account 25% of Confirmation from a - consideration third party that there payable are resources.Competitive bids allowed Yes Yes Yes -Can offer be withdrawn Yes, under Yes. If a competitive Yes Regulation Is silent certain bid is made at a higher on this conditions:- price. - Refusal of statutory approvals. - Death of sole acquirer - As and when SEBI deems fit Can shareholders Yes, up to three Yes. Under certain Yes Yes, up to seven withdraw the days before circumstances. days of the copiesacceptances tendered? closure of offer of the offer are sent. Concept of Indirect Present Yes, chain rule is Yes, Chain - acquisitions existing subject to principle is there condition of significant shareholding Penalties Civil and Criminal Reprimand, public Private Civil penalties Liabilities censure, etc. reprimand or public censure or deprive the offender
Comparative Study of Takeover Regulations in Different Countries temporarily or permanently to enjoy facilities of securities market. Data Source: Takeovercode.com, www.mas.gov.sg, Takeover panel, UK CRITICAL EVALUATION & OPINION ON CORE REGULATIONS AND SUGGESTIONS FOR IMPROVEMENT IN THE CODENow that I have laid out some comparisons between the takeover regulations of the world, Iwould 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 introducedway back in 1992, it served to remove a major lacuna in the then regulatory structure- Clause40A and 40B of the listing agreement did not cover a wide variety of people who were broughtunder the ambit of this code that provided a transparent and orderly framework for substantialacquisition of shares of companies listed on the stock exchanges. However, that by itselfdoesn’t exempt SEBI’s SAST of its own lacunae. It is one of those regulations that has beenmaking news ever since its proposal and is keeping up the trend till date as fresh amendmentsare underway.On Trigger PointsIn the last 13-14 years of the existence of the new regulations, there have been almost 20amendments to the code. And as many experts would agree, as I have seen from the list ofamendments myself, many were in areas that did not even require a second look. One look atthe existing regulations will outline the level of complexity and consequent bottleneck to itsinterpretation.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 rightsalready held by the acquirer or by the persons acting in concert). Thus a person holding noshares can acquire up to 14.99% voting rights and a person holding 10 % could acquire up to4.99% voting rights. The holding should be such as would entitle the acquirer to exercise 15% ormore of the voting rights in a listed company according to Regulation 10.
Comparative Study of Takeover Regulations in Different Countries2.) Regulation 10 implies that a 12% holder of voting equity cannot buy 5% without triggeringthe tender offer, but a 20% or a 49% holder is exempt from the tender offer on acquiring upto5%. This convoluted system allows creeping acquisition above 15% but not between 10 and15% levels of existing shareholding. In addition 15% is the hard boundary, if by acquiring evenone 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 31stMarch when the acquirer holds 15% or more but less than 55% of the shares or voting rights ofthe company concerned would also trigger the compulsory tender offer according to Regulation11(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 listingagreement (except by one share).4.) Where such acquisition is for less than 5% in a year (as defined), then it is exempt in what isknown 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 acquireralready owns or controls between 55 to 75% votes, if the same is the result of buy back ofshares 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 allcompanies 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 beyondthe 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 tenderoffer 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 ofpublic shareholding of a minimum of 25%, the acquirer must bring down his holding within atime period permitted by the exchange to be again in compliance with its agreement. In thesame facts where the listing agreement only requires a minimum 10% public shareholding, theacquirer can continue to hold the 80% shareholding. In another fact scenario of a company witha listing agreement for a minimum of 10% public shareholding, where a person is already incontrol of 76% voting equity, acquires further voting rights, and the tender offer for 20% takeshis holding to 96%, he must again divest his voting rights to below 90% levels within a periodprescribed by the exchange.
Comparative Study of Takeover Regulations in Different Countries7.) 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 ofthe listing agreement except 8) below.8.) Regulation 11(2A) read with Reg. 21 (3) provides for a special route of acquisition whichdoes not mandate a 20% tender offer.9.) Acquisition of direct or indirect control with or without acquisition of shares or voting rightswould 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 triggerpoints for a compulsory tender offer to be triggered. Complexity devoid of any rationale orphilosophy ought to be avoided. There is a need to simplify this unnecessary complexity whilekeeping the philosophy of the regulations alive.SuggestionFirstly, as the Code is being reviewed by the Takeover Review Committee, I would like tosuggest that the percentage threshold for open offer be hiked from its current 15% to at least25%, a suggestion by the Economic Times Bureau (see Refine Takeover Code- Dated 30th Dec2009) and one that I concur with. The hike will give private equity players a good chance toinvest without triggering the code. Subject to compliance with other regulations, this willdefinitely 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 theremaining shares up to 75% as required by the listing agreement should be made. This isconsistent with the view of the Finance Ministry that gradually all companies should bemandated to have a minimum of 25% public shareholding. Also, whilst respecting the ListingAgreement, one would also streamline our regulations with those in UK and USA, where thereis no creeping limit at all and open offer is made for all the remaining shares. I have alsoimplicitly stated here that the partial open offer of 20% be done away with. I have my reasonsto 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 oftransactions. Currently, though the view of the Bhagwati Committee is not incorporated inblack and white that purchases should not be netted off for calculating the acquisition of sharesand votes, SEBI has often relied on this view to calculate positions on a gross basis. This meansthat a person acquiring 4% shares, then selling 3% shares and further buying 2% shares isrequired to make a disclosure. This is a violation of principle of the code as well as impractical in
Comparative Study of Takeover Regulations in Different Countriesthat the person never actually acquires “substantial” percentage of shares to trigger thedisclosure. 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 OfferAs I already above have mentioned, the open offer which currently is triggered at differentlevels in the Indian code should be simplified. There are also certain loopholes that need to beplugged so that the code moves toward the uniform and simplified yet comprehensive versionas in regulations around the world. Let us first have a look at the regulations around the worldand try to converge our Indian regulations towards the same.The Singapore Code doesn’t specify any open offer limit and the trigger points are relativelysimple. An open offer has to be made when the 30% threshold is crossed or creepingacquisition limit is exceeded (see Rule 14.1). It also has provisions of partial offer but not ascomplicated as one in SEBI’s SAST Regulations ’97. My objective of quoting these differenceswill 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 theCode is reached, or when the offeror approaches the offeree and the resultant speculationcauses undue share price movement in the latter’s stocks, an open offer for the balance sharesneeds to be made.The Indian Takeover Code has multiple limits with multiple rules. Regulation 10 is the firsttrigger at 15%, much lower than international standards and a barrier according to the mediaand industry sources for more Private Equity investment. Then comes the terrible Regulation11(2) and 11(2A). The two provisions create an unnecessary legal arbitrage between acquiringno shares and acquiring one share, where the choice would determine whether an expensive20% 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 bemade is a person can make an offer of 20%, stating that the acquirer will refuse to accept theoffer 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 SEBIdoes not permit such an interpretation. What the regulation is trying to say is that only whereacquisition of shares is by way of a memorandum of understanding which can be revoked, can aperson make such a conditional offer; because there would not be any acquisition of votingright as the whole tender offer and the primary acquisition could be reversed altogether.
Comparative Study of Takeover Regulations in Different CountriesThe Code also claims to provide investors with an exit option in case of a takeover andsubsequent mandatory open offer. The step is a significant one as it will prevent theclandestine acquisition of shares at high prices from selected shareholders leaving the bulk ofthe shareholders high and dry. But again, 11(2A) has left me disappointed as it allows openmarket purchase as an option to creep up 5% shares for holders of more than 55% shareswithout making an announcement. The typical shareholder has no way of knowing how wellthe open market operations are succeeding. He is thus faced with a dilemma – should he holdon to his shares in the hope that the acquirer will be forced to offer a better price or should hesell immediately before the acquirer winds up his open market operations?In this situation, I believe thata) The small shareholders will be stampeded into tendering shares at low pricesb) 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 reportmentioned that the offer size is low (20%) because they believed Indians will not have thefinancial clout to take advantage of any provision requiring offer size greater than 20%. TheBhagwati 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 famousTata- JLR deal. The question to be asked is, will the review panel change its view in this regardand accordingly make the open offer a full offer as suggested by me later in this work?SuggestionsReg. 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 privateagreements which can be reversed if the conditional offer is not satisfied and not in everyacquisition of shares from the market which are incapable of being reversed. This is the waySEBI implements the regulation, but the position is different on a literal reading of theregulation. 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 iscalled for. In one form of this takeover, the acquirer consolidates his position in the first step byacquiring a significant proportion of control, and then makes the next move for a greater
Comparative Study of Takeover Regulations in Different Countriescontrol. In the second form, what is also known as “boot strap” takeover, the takeover is madeself 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 withthis problem:a) The UK takeover code frowns upon partial takeovers. Attempts to acquire less than majoritycontrol are permitted only under special conditions. Attempts to acquire majority but less thantotal control are allowed only if they are approved by the acquiree’s board and the holders of atleast 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 thefirst step is completed, any subsequent merger, asset sale or other similar step requiresapproval 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 theacquirer has bought shares in the partial takeover. Under Indian conditions, a total ban onpartial takeovers may not be appropriate at this stage. Option (b) above is however moreacceptable in the Indian context. We already have some similar provisions in Sections 293 and314 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, thesestringent provisions could be limited to the first five years after the first step takeover iscompleted.
Comparative Study of Takeover Regulations in Different Countries DEFENSE MECHANISMS AVAILABLE UNDER ALL REGULATIONSThe term defense mechanism comes into picture in the takeover world only when we talk about ahostile takeover. In friendly takeovers, which occur by mutual understanding and an almost win-winsituation of the management of both the companies, and hopefully also for the shareholders. Hostiletakeovers were primarily prevalent in the US when the SEC regulation was not adequate to counter suchhostile 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 themanagement it is termed as a hostile takeover. In short, when an acquirer silently tries to gain control ofa company against the wishes of the existing management, the acquirer has triggered what comes to becalled as a hostile takeover bid. Hostile takeover is an attempt by outsider to wrest control away froman incumbent management.Defenses against Hostile Takeovers-Shark RepellentsThere are several ways to defend against a hostile takeover. The most effective methods are thosewhere there are built-in defensive measures that make a company difficult to take over. These methodsare collectively referred to as "shark repellents".The classic ‘poison pill strategy’ (the shareholders’ rights plan) is the most popular and effective defenseto combat the hostile takeovers. Under this method the target company gives existing shareholders theright to buy stock at a price lower than the prevailing market price if a hostile acquirer purchases morethan 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 percentageof the target company equity owned by the hostile acquirer to an extent that makes any furtheracquisition prohibitively expensive for him. ‘White Knight’ is another type of defense mechanism. In thiscase, a third company makes a friendly takeover offer to the company facing a hostile takeover. This is a
Comparative Study of Takeover Regulations in Different Countriescommon tactics in which the target company finds another company to enter the scene and purchasethem out and away from the company making the hostile bid. The several reasons why the companiesprefer to be bought out by the third company could be -- better purchase terms, a better relationship orbetter prospects for long-term success. At times these ‘white knight’ companies only help the targetcompany improve the deal terms with the hostile bidder. A very good example is of Severstal whichacted 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 astrategy 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 consideredmost effective. This method drags out the takeover process by preventing the entire board from beingreplaced at the same time. The directors are grouped into classes; each group stands for the election ateach 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 expensiveand less attractive. It is provision in a CEOs contract, which is worded such that the CEO gets a largebonus 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 targetcompany. It forewarns the company about the advances of an acquirer by mandating that the acquirermake 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 targetcompany during the offer period, such as transferring of assets or entering into material contracts andeven 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 sharescarrying voting rights upon conversion of debentures already issued or upon exercise of option againstwarrants, according to pre-determined terms of conversion or exercise of option. It also allows thetarget company to issue shares pursuant to public or rights issue in respect of which the offer documenthas already been filed with the Registrar of Companies or stock exchanges, as the case may be.
Comparative Study of Takeover Regulations in Different CountriesHowever this may be of little respite as the debentures or warrants, contemplated earlier must beissued prior to the offer period. Further the law does not permit the Board of Director, of the targetcompany to make such issues without the shareholders approval either prior to the offer period orduring 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 wardof the hostile acquirer or bring him to a negotiated position. In such a situation, it may be timeconsuming and difficult to obtain the shareholders’ approvals especially where the management and theownership of the company are independent of each other.The Takeover Code is required to be read with the SEBI ICDR (formerly DIP Guidelines). They imposeseveral restrictions on the preferential allotment of shares and/or the issuance of share warrants by alisted company. Under the ICDR, issuing shares at a discount and warrants which convert to shares at adiscount is not possible as the minimum issue price is determined with reference to the market price ofthe shares on the date of issue or upon the date of exercise of the option against the warrants. Thiscreates an impediment in the effectiveness of the shareholders’ rights plan which involves thepreferential 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 eighteenmonths, after which they would automatically lapse. Thus, the target company would then have torevert 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 theshareholders’ rights plan futile as a takeover deterrent.Also, the FDI policy and the FEMA Regulations have provisions which restrict non-residents fromacquiring listed shares of a company directly from the open market in any sector, including sectorsfalling under automatic route. There also exist certain restrictions with respect to private acquisition ofshares by non-residents, under automatic route, is permitted only if Press Note 1 of 2005 read withPress Note 18 of 1998 is not applicable to the non-resident acquirer. This has practically sealed anyhostile takeover of any Indian company by any non-resident.However, for the poison pill strategy to work best in the Indian corporate scenario certain amendmentsand changes to the prevalent legal and regulatory framework are required. Importantly, a mechanismmust be permitted under the Takeover Code and the ICDR which permit the issue of shares/warrants ata discount to the prevailing market price. These amendments would need to balance the interests of theshareholders 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 considerstructuring a poison pill in place whereby backend rights which permit the shareholders to exchange therights/shares held for senior securities with a backend value as fixed by the Board, are issued to existingshareholders when the hostile acquirer’s shareholding crosses a predetermined threshold.
Comparative Study of Takeover Regulations in Different CountriesAs most takeovers are carried out through borrowed funds, the use of backend rights reduces theprofitability of the takeover because of the mounting interest rates on borrowings; thus deterring thehostile acquirer and more importantly sets the minimum takeover price, which is the price at which theshares have been exchanged for senior securities.Another method is where a company puts a provision in its Articles of Associations to the effect that ahostile acquirer who succeeds in taking control of that company and/or its subsidiaries is prohibitedfrom using the company’s established brand name. A live example is of the Tata companies who haveput 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 beentitled to a significant bite of its valuation — the valued brand name!! 1Hostility is usually perceived when an offer is made public that is aggressively rejected by the targetfirm. Consequently, perceptions of hostility are closely linked with takeover negotiations that are farfrom completion. Often firms engage in confidential negotiations before there is a public announcementof a bid or an intention to bid. In some cases, the first public announcement is of a successfullycompleted negotiation, which would be perceived to be friendly, even if the early stage privatenegotiations would have seemed hostile if they had been revealed to the public. In other cases, privatenegotiations break down and one of the parties decides that public information about the potential bidwould enhance its bargaining position.Other countriesThe 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 atbay. In The US, The managers of a company that has both a poison pill and a staggered board ofdirectors have almost complete discretion to resist an unwanted takeover bid. In contrast, UK takeoverregulation has a strikingly shareholder- oriented cast. The most startling difference comes in the contextof takeover defenses. UK managers are not permitted to take any “frustrating action” withoutshareholder 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 provisionwith a favored bidder that would have the effect of impeding target shareholders’ ability to decide onthe merits of a takeover offer. To be sure, the “no frustrating action” principle of the UK’s TakeoverCode only becomes relevant when a bid is on the horizon. Thus, managers seeking to entrenchthemselves theoretically could take advantage of less stringent ex ante regulation to “embed” takeoverdefenses well before any bid comes to light. Such “embedded defenses” range from the fairlytransparent, such as the issuance of dual-class voting stock, adopting a staggered board appointmentprocedure, or the use of “golden shares” or generous golden parachute provisions for managers, to themore deeply embedded, such as provisions in bond issues or licensing agreements that provide foracceleration or termination if there is a change of control. Yet, other aspects of UK law and practice —
Comparative Study of Takeover Regulations in Different Countriesincluding rules that prevent effective staggered boards — mean that embedded defenses are notobserved 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 followingthe public announcement of the bid (but not before, so for example not any action since the board hasbecome aware of the bid) must be approved by the AGM. Any decisions out of the ordinary course ofbusiness are to be approved by the AGM anyway. (Article 9) The application of this rule is optional forcompanies, 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 steelcutlery and the site Oktatabyebye.com. This was a part of drive against misuse of TATA brand nameChilean tender offer provisions generally prohibit a target company from taking frustrating action duringthe tender offer period. However, some mechanisms which can potentially be used to fend off atakeover 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 fromacquiring 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 controlchange are not used. They are not forbidden by law, but would require a general shareholder meetingapproval, and may face a review by the securities regulator, on the legal concern of being “detrimentalto the interests of the corporation and its shareholders”. Golden parachutes would be objectionable onthe same count.The most common defensive tool of Canadian companies is the shareholder rights plan. Several hundredCanadian companies have adopted rights plans. Shareholder agreement is only required if the pill will bein 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 (often20%) of the securities of the issuer, causing substantial dilution to the acquirer unless a permitted bid ismade. However, Canadian regulators will not permit a target company to use a rights plan to shield itselfindefinitely, and will often have it removed at the request of the hostile bidder. Institutional investorsalso favor poison pills of the less potent variety. As a result, poison pills tend to be benign, providing thetarget board with some extra time to respond to an unsolicited offer. The more exotic pills common inthe 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 followingthe news of the takeover threat, or up to 18 months in advance (# 33 German Takeover Code). Tofurther protect minority shareholders who disagree with the shareholder meeting decision regarding theantitakeover measures, a court procedure may be available. In Italy, the anti-takeover regulationssubject only certain anti-takeover tactics to the approval of a shareholder meeting ((# 104 Italy CFA). Inmany countries, a blanket prohibition exists against any actions that would frustrate the hostile tenderoffer (e.g. Czech Republic and Chile). Such provisions may again prove difficult for a weak court toenforce.
Comparative Study of Takeover Regulations in Different CountriesBelow is a table of data from Thomson SDC showing that hostile bids are easier and consequently morecommon in the U.K.Location Announced M&A (total No.) Hostile Bids Hostile Bids completed number percent number percentU.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 CLIMATEMy Research is primarily on how proper regulatory framework can help better development of thecountry. The thought crossed my mind when an article in Economic Times mentioned India’s position onease of doing business (a World bank report) was 134 while that of Pakistan and other lesser developednations was at 83. Takeover laws, while not being the only law, definitely play a very important role indeveloping 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 pricesthat were 70% higher on average. Minority shareholders did not participate in this upside. Shareholderdissatisfaction peaked during the takeover of Enersis S.A, Chile’s largest private energy conglomerate, byEndesa España (Spain) in 1997. The deal became a landmark case in minority shareholder rights andequitable treatment and prompted the overhaul of Chilean takeover legislation. The case also allows asimple illustration of the rules which would prevent minority rights abuse, as well as a practical view onthe exact functioning of different protection mechanisms. Enersis was controlled by a group of fiveinvestment companies, known as the Chispas, via 29.04%. All Chispas companies had the same politicalstructure: class A shares had 99.94% of the ownership and elected 4 out of 9 directors (held by pensionfunds); and Class B shares that represented 0.06% of the ownership but elected 5 out of 9 members ofthe 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 retiredbeneficiaries) 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. EndesaEspaña offered USD 253.34 for each B share and only USD 0.30 for the A shares. A takeover legislationwith an equal-pricing rule would have made the deal impossible. The Spanish company also offered
Comparative Study of Takeover Regulations in Different CountriesClass B shareholders the option of purchasing up to 5% of Endesa shares at discounted prices, andguaranteed the Enersis managers their positions for at least five years. Strict adherence to gooddisclosure 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 beconsidered as acting in concert with Endesa España, and therefore the notice would require that theystate their intentions to collaborate in a change in control, as well as the sweeteners used by EndesaEspaña 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 EndesaEspaña, 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 theEnersis 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 pensionfunds would have been left with non-voting shares and no control over Enersis, which would have goneunder the complete control of Endesa España. Had the latter considered taking Enersis private, thepension funds would have lost virtually all value of their shares, an expropriation which will be fullyavoided with the new Chilean takeover law, which does not allow squeeze-outs and gives dissentingshareholders appraisal rights in this case.The new law established that share transactions that result in a person’s or group’s acquisition ofcontrol of a corporation must be conducted through a tender offer. Additionally, when the targetcompany has several classes of shares with different voting rights, the tender must be extended to allclasses in proportion. Partial offers must be pro-rated. The law also contains a mandatory offerprovision, so that a shareholder who reaches the ownership level of 2/3rds of a corporation must tenderfor all outstanding shares and classes. An optional transitory rule shielded companies for a further threeyears from the new law, to allow learning, and most firms took advantage of that rule. The details of thelaw are presented in Appendix C. The securities regulator (Conasev) can enforce takeover law by issuingadditional rules, imposing fines for noncompliance, demanding complete information about thetransaction, and suspending tender offers procedures, even before they have started, in response toincomplete disclosure or a legal obligation default.Following the implementation and enforcement of the new law, in 2000 and thereafter, one can note anew 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 premiumpaid over market prices, 23%, is now shared more equally between controlling shareholders andminorities.A graph showing improvement in capital markets activity post the launch of the Takeover Code in Chile
Comparative Study of Takeover Regulations in Different CountriesThe World Bank report commends U.K takeover code as being one of the finest as it doesn’t have anypercentage based open offer; i.e. partial open offer. To support my findings that mandatory offerdoesn’t always provide a feasible exit option and that it may not be the best of the options, I include thebelow observation by WB verbatim:“Mandatory offer rules serve to protect minority shareholders from inefficient control transfers, asrepeatedly shown in the academic literature, but also decrease the chance that efficient control transfersoccur.17 Beyond the positive effect of the mandatory offer rule on minority rights, there have been nostudies on the optimal ownership threshold at which an offer becomes mandatory. To the extent that alower mandatory offer threshold increases the incidence of sharing the control premium with minorityshareholders, we expect a negative relationship between the mandatory offer threshold and betterminority shareholders rights.” Below are some more data and graphs that would help in making the regulations better and on par withthe best in the world.
Comparative Study of Takeover Regulations in Different Countries
Comparative Study of Takeover Regulations in Different Countries
Comparative Study of Takeover Regulations in Different CountriesBasic Economic indicators and the takeover index Market cap of Income per NO. of listed listed Stocks traded, capita 2004 companies, companies (% of total value (% of Takeover Country (USD$) 2004 GDP) 2004 GDP) 2004 index ARGENTINA 12,723 129 30.65 5.04 0.33 ARMENIA 4,222 213 0.51 0.05 0.16 AZERBAIJAN 4,175 234 . 0.02 0.06 AUSTRALIA 30,116 1,649 122.99 81.46 0.95 AUSTRIA 32,176 129 29.58 8.21 0.51 BELGIUM 31,009 106 219.64 20.09 0.6 BRAZIL 8,297 367 54.62 15.47 0.51 BULGARIA 8,007 342 11.62 2.12 0.31 CANADA 31,129 3,756 120.18 66.74 0.97 CHILE 11,487 240 124.4 12.32 0.57 CHINA 5,495 1,296 38.79 45.37 0.53 COLOMBIA 7,121 120 25.9 1.5 0.04 CZECH Rep 19,381 63 28.83 16.5 0.71 ECUADOR 3,885 30 8.52 0.33 0.06 EGYPT 4,103 824 51.25 7.46 0.07 FINLAND 29,816 147 98.48 117.93 0.72 FRANCE 29,077 772 92.74 65.5 0.65 GERMANY 28,147 715 44.01 51.8 0.45 GHANA 2,316 25 30.67 0.76 0.29 GREECE 21,954 341 61.57 21.38 0.44 HONG KONG 30,779 968 528.49 269.3 0.92 INDIA 3,115 5,644 56.06 54.79 0.51 INDONESIA 3,583 333 28.43 10.7 0.32 ISRAEL 24,082 576 81.25 39.33 0.5 ITALY 28,162 295 47.21 48.1 0.47 JAPAN 29,539 3,058 79.56 74.2 0.72 JORDAN 4,571 191 164.2 47.59 0.05 KENYA 1,063 51 24.94 2.07 0.36 KOREA 20,371 1,563 63.07 94 0.59 LITHUANIA 13,021 48 29.03 2.08 0.55 MALAYSIA 9,760 897 161.33 50.84 0.66 MEXICO 9,774 159 25.42 6.33 0.39NETHERLANDS 32,056 180 107.8 104.67 0.47 NIGERIA 1,113 200 20.06 2.31 0.36 PAKISTAN 2,210 663 30.17 76.86 0.31
Comparative Study of Takeover Regulations in Different Countries PERU 5,641 197 29.41 1.65 0.16 PHILIPPINES 4,558 234 33.49 4.24 0.39 POLAND 12,881 203 29.4 6.85 0.58 ROMANIA 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 0.6 SRI LANKA 4,173 244 18.23 2.9 0.37 SWEDEN 29,499 278 108.77 119.06 0.62SWITZERLAND 33,541 258 229.74 202.28 0.59 THAILAND 8,179 405 70.58 66.74 0.55 TURKEY 7,710 294 32.55 48.82 0.25 UK 30,843 1,701 131.53 173.16 0.94 URUGUAY 9,465 11 2.51 0 0.04 USA 39,618 5,685 139.91 165.89 0.76Components of the takeover law index Ran Ru Ran ge les ge whe ap whe re pl App re inte y Fai raisa inte ntio to r Fair l ntio n to no Fair pri Offe price right n to take n- pric ce r for s cont priv Offexc lis e for discl nonte afte rol ate hange te for all osur nderin r Sell- Antita Mandatpr is is price d min cla e g a out keoveCountr y Offer kno kno disclo fir orit sse inde invest mer provi ry Range wn wn sed m y s x ors ger sions tactics
Comparative Study of Takeover Regulations in Different Countries 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 -73.15ConclusionI do not attempt to suggest what numbers are better for the Indian takeover code as far as trigger pointsor thresholds are concerned. My endeavour throughout this work has been to bring to light someimportant learning from other regulations, which if implemented might, in my opinion, go a long way inimproving the regulation as it I in its current form. I have tried to present how takeover laws around theworld have an impact, among other laws of course, on the improvement of capital markets in generaland takeover activity in particular. Thus, whatever amendments would be proposed and implemented inthe forthcoming regulations, will hopefully consider some important lacunae and learning fromregulations in other countries.
Comparative Study of Takeover Regulations in Different 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,A LBERTA 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 (E XCHANGE 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 S HARES 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 (C ONSIGLIO DI BORSA, UNDER CONSOB - COMMISSIONE NACIONALE PER LE SOCIETA E LA BORSA). SINGAPORE COMPANIES A CT (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
Comparative Study of Takeover Regulations in Different Countries 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: T ENDER OFFER RULES, REGULATION M-A: M ERGERS 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- D ISCUSSION PAPER NO. 454 OF THE HARVARD LAW S CHOOL THE DIVERGENCE OF US AND U.K TAKEOVER REGULATION- BY JOHN ARMOUR, UNIVERSITY OF OXFORD AND DAVID A. SKEEL, JR., UNIVERSITY OF PENNSYLVANIA LAW S CHOOL 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.