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TMI BlogCORPORATE RESTRUCTURING – TAKEOVERSX X X X Extracts X X X X X X X X Extracts X X X X ..... Kinds of Takeover 1.Friendly takeovers Before a bidder makes an offer for another company, it usually first informs the company's board of directors. In an ideal world, if the board feels that accepting the offer serves shareholders better than rejecting it, it recommends the offer be accepted by the shareholders. In a private company, because the shareholders and the board are usually the same people or closely connected with one another, private acquisitions are usually friendly. If the shareholders agree to sell the company, then the board is usually of the same mind or sufficiently under the orders of the equity shareholders to cooperate with the bidder. 2.Hostile takeovers A hostile takeover allows a s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... costs. 9. To secure advantage of vertical combination 10. To secure substantial facilities 11. To increase market share. 12. To achieve market development by acquiring one or more companies in new geographical territories or segments. Takeover Bids A type of corporate action in which an acquiring company makes an offer to the target company's shareholders to buy the target company's shares in order to gain control of the business. Takeover bids can either be friendly or hostile. Consideration for Takeover 1. Consideration in the form of cash Cash could be paid in exchange for the shares acquired. Shares could be acquired through a bid made directly to the equity h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y within four months after the making of the offer in that behalf by the transferee company, been approved by the holders of not less than nine- tenths in value of the shares whose transfer is involved (other than shares already held at the date of the offer by, or by a nominee for, the transferee company or its subsidiary), the transferee company may, at any time within two months after the expiry of the said four months, give notice in the prescribed manner to any dissenting shareholder, that it desires to acquire his shares; and when such a notice is given, the transferee company shall, unless, on an application made by the dissenting shareholder within one month from the date on which the notice was given, the Tribunal thinks fit to ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deration received for the shares has been deposited in a separate bank account to be held in trust for the dissenting shareholders. Transferee Company: Offer made to the transferor company. Copy of notice for the general meeting along with a copy of E- form circulated by the transferor company to its members. Intimation received from the transferor company in respect of approval of the offer by the requisite majority of the shareholders of the company. Notice as prescribed in Section 395 of the Companies Act, 1956 given by the company to dissenting shareholders of the transferor company for the purpose of acquiring their shares. If there is any Tribunal order in favour of the dissenting shareholders of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the acquiring or the holding company shall also maintain a Register of Investment in accordance with the provisions of Section 372A(5) of the Companies Act. 2. Subsidiary company s books of account - There will be no accounting entry in the books of account of the subsidiary company or Target Company. However, in the register of members of the subsidiary company, the transfer of shares of the shareholders, whose shares have been acquired by the holding company, shall be registered as soon as the relevant instruments of transfer along with the relevant share certificates have been received and the registration of their transfer. The share certificates shall be sent to the holding company after making due endorsement of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... effective transfer and control in a takeover . 4. Authorization of Preferred Stock The Board of Directors is authorized to create a new class of securities with special voting rights. This security, typically preferred stock, may be issued to a friendly party in a control contest. Thus, this device is a defense against hostile takeover bids, although historically it was used to provide the Board of Directors with flexibility in financing under changing economic conditions. Refusal to Register Transfer of Shares Refusal by Board of Directors to register a transfer is an important strategy to avert a takeover. Poison Pill Defenses It is a popular defense mechanism against hostile takeover bids is the cr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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