Mergers & Acquisitions

[By Abeer Sharma] The author is a student of Rajiv Gandhi National University of Law, Punjab. Introduction Recently, a penalty of Rs 40 Lakhs was imposed by the Competition Commission of India (CCI) on Goldman Sachs for the offence of Gun Jumping based on the acquisition of equity and information rights without informing the CCI. The offence of Gun Jumping is provided under Section 6(2A) of the Competition Act, 2002, which stipulates that no combination shall be given effect to until the expiry of 210 days from the date of notification to the CCI. Goldman Sachs, through its AIF scheme-1, acquired optionally convertible debentures (less than 10% equity) under Biocon Biologics, wherein it had access to the board and shareholder meeting minutes (information rights). Furthermore, under the ‘solely as an investment’ exemption in the Combination Regulations, 2011, acquisitions of less than 10% equity are exempt from notification to the CCI. However, CCI found these information rights not to be ‘ordinary’ for shareholders, and classified them as Commercially Sensitive Information (CSI). This interpretation amounted to  a significant shift, wherein certain acquisition or merger involving the sharing of CSI, regardless of the percentage of equity shares acquired, was required to be reported to the CCI. However, sharing of CSI, as prohibited under the new Combination Regulation of 2024, is defined through the CCI’s updated FAQs on combinations, part N of which provides a list, including information relating to prices, profit margins, sales, and terms with customers. Although this information criteria are uniformly applicable to all entities as recognised in the Beer Cartel Case, CSI differs from entity to entity depending on the functions performed by it and the industry in which it is involved. The ignorance of this distinction by the Combination Regulations and the updated FAQs creates a grey area, wherein acquirers are faced with ambiguity concerning the classification of information as CSI or not, based on their specific industry. Furthermore, this uncertainty results in a lowering of investments, as evidenced by a study, finding that firms perceiving uncertainty in regulatory policies as a major obstacle exhibit an approximately 2.5 percentage point lower investment rate compared to those not viewing uncertainty as an impediment. Considering the same, this article, by briefly discussing the concept of CSI, provides a sector-specific solution through changes under the Competition Act, 2002 and the Competition (Combinations) Regulations, 2024, for rectifying the uniform information criteria based on international precedent of the United Kingdom (U.K.) and European Union (EU) and further examines its application under the Indian antitrust regime. The Concept of CSI and its Blanket Sectorial Application CSI, as defined under Part N of CCI updated FAQs on Combinations of 2025, relates to information that is important for an undertaking to protect, maintain, or improve its competitive position in the market. Further, Part N also discusses what is excluded from CSI, which includes information that is readily ascertainable through appropriate means or information available to an ordinary shareholder of a company that is not considered by the management for commercial decision-making. However, these criteria can be ascribed as subjective due to their enforcement variability across industries. In light of this, the section contrasts industries selected to represent different market structures, such as: (a) oligopolistic digital/ automative markets, (b) hyperlocal/price-sensitive retail, (c) large national FMCG firms, and (d) pharmaceuticals depicting pricing/regulatory sensitivity. The reason behind choosing these industries was not their superficial similarity, but to test the robustness of CSI across market concentration, public observability, and strategic value. Building on this sectoral comparison, information concerning quality, sales, and market shares functions as CSI as per the FAQ’s and may be applicable in the automobile industry, where a company may consider its quality ratings and sales data as highly sensitive. This is due to the oligopolistic nature of the market, wherein even minor changes in sales numbers or quality indices can be used to realign pricing and financing by competitors. The same was observed in General Motors’ OnStar Smart Driver case from 2025, wherein driving behaviour and quality-related data were held to be highly sensitive competitive information. In contrast, within the bakery industry, quality ratings and sales data are often publicly available due to the entity’s reputational dependence on them. Moreover, they do not provide competitors with a significant strategic advantage because of hyperlocal and price-sensitive demand. A similar precedent can be observed with the Sweets Treats Bakery case study in Chicago, which experienced a 20% increase in sales after implementing a bakery management software that provided detailed tracking of customer reviews, depicting product quality and sales data. Additionally, the subjectivity of excluded information from CSI can be illustrated through the Fast-Moving Consumer Goods (FMCG) sector. For instance, Hindustan Unilever Limited (HUL) files annual reports, investor presentations and financial disclosures with the Securities and Exchange Board of India (SEBI), revealing details such as plant location and generic production capacity. However, this disclosure adds little strategic advantage because competitors focus instead on stock-keeping unit (SKU), level consumer insights (e.g., which wheat or pack size sells more), functioning as a CSI, rather than on how much wheat production is undertaken by HUL, which merely showcases its generic production capacity. By contrast, in the pharmaceutical industry, where pricing is highly sensitive and private medications compete with generic medications, information revealing production capacity can indeed provide rivals with an edge. It can help predict a company’s future strategy of undercutting prices, enabling counteractions such as pre-emptive price slashing or blocking contracts with distributors. A similar situation arose with the U.S. Pharma Company- Mylan, which conspired with Pfizer and Teva by entering into patent litigation settlements to deliberately delay the market entry of competitors’ epinephrine autoinjectors, strategically postponing its generic production. Therefore, the foregoing sectoral contrasts demonstrate that CSI is not a fixed or universal category, but one that turns on market concentration, the observability of information, and its strategic value within a particular industry. Information that is treated as competitively critical in an oligopolistic market may function as a routine in a fragmented

[By Isha Khurana] The author is a corporate lawyer. Introduction Over the last decade, Private Equity (PE) has emerged as a primary financing mechanism for Indian corporations. Previous literature has examined how the typical leveraged buyout (“LBO”) model employed by private equity investors in other jurisdictions was not feasible in India due to regulatory restrictions.Thus, PE investors structured their investments as minority shareholdings, with a wide range of investor rights to protect their investments. While the investor rights typically granted to PE investors are beneficial for both the investor and the firm, the investor rights so granted have faced severe scrutiny by Indian authorities, such as the Competition Commission of India (CCI). Moreover, the 2025 Commercial Banks – Capital Market Exposure Draft Directions (2025 Directions) by the Reserve Bank of India (RBI) seek to open the door for banks to fund corporate acquisitions. The 2025 Directions allow banks to increase their capital market exposure (an area that has been heavily regulated so far) while also limiting the participation of PE funds in raising capital. This paper analyses the two developments collectively and argues that they may alter the mergers and acquisitions landscape in India while simultaneously limiting the growth of PE investments. CCI’s Concerns with PE investors CCI, as the anti-trust authority of India, is concerned with ensuring fair competition and equitable investor rights. The CCI had earlier taken a quantitative approach to assessing competition where “control” was seen only through the lens of shareholding percentages. Until this time, the CCI did not scrutinize PE investments due to their position as minority shareholders. Over time, however, the CCI integrated the substance over form approach  in its assessments and began delving into qualitative features such as the investor rights. As a part of these investor rights, PE investors typically negotiate for, inter alia, information rights, veto rights, right to board representations, reserved matters, and exit rights. From their standpoint, this helps them protect their investments in a largely family-business controlled business environment wherein promoter opportunism is a major obstacle. However, from the CCI’s perspective, these rights move the investment outside the ordinary course of business and make PE investors privy to sensitive information. While PE investors may not exercise control through shareholding, their veto rights and director appointment powers enable them to influence a firm’s business decisions. Thus, the CCI views such influence as a strategic investment, making it reportable under prevailing laws and regulations. This background led to the CCI’s scrutiny of Goldman Sachs’ investment this year, as the authority found that the investment goes beyond the scope of a minority investment. The CCI’s approach is a departure from its earlier quantitative approach, but still aligns with global practice. Interestingly, the EU’s competition commission has similarly found that governance rights amount to strategic investments and go beyond the scope of a minority investment due to the element of decisive influence. These events mark a shift in the regulatory approach, since anti-trust and competition authorities have typically focused on competition at the market level but now are venturing into competition concerns at the investor level as well. Authorities across jurisdictions seek to prevent any fund or group of funds from engaging in transactions that may accord it strategic control or market influence over any industry. What remains concerning, is the PE funds primary focus to build their portfolios and maximise returns. So, in theory, PE funds may share important business and market information of firms that they have invested in (belonging to the same industry) to maximize their returns. This may lead to serious competition concerns, thereby warranting concerns from competition authorities. Moreover, most PE investors negotiate for exit rights, as they leave an investee firm after maximizing returns ( through an IPO or otherwise). However, this raises concerns regarding market and industry stability that must be addressed. We have established that the CCI’s approach in the Goldman Sachs decision aligns with that of the competition authorities of other jurisdictions. However, it is worth noting that in the Indian landscape, PE investors have had to modify their investment model (moving away from an LBO). PE investors in India have no alternative but to rely solely on investments as minority shareholders, while this may not hold true in other jurisdictions. While PE Funds’ governance and exit rights may raise concerns, one cannot ignore their importance, since they are key to maintaining a favorable investment landscape for PE investors. Unfortunately, the CCI’s recent findings have distinct implications for the PE industry in India, as they severely increase the compliance and reporting burdens. Due to the CCI’s recent findings and scrutiny of most governance rights, PE investors may be forced to report perhaps all their investments, which is extremely cumbersome. These compliances may eventually deter  PE investments and work against the PE framework, which has grown in India. In the larger scope, it could substantially alter the investment landscape in India altogether when viewed with the RBI draft master directions discussed hereinafter. Consequently, a revised PE model addressing competition concerns whilst maintaining essential investor protections is essential for sustainable PE growth in India. RBI’s Move Towards Acquisition Financing The RBI on 24th October 2025 issued the 2025 Directions for capital market exposures by commercial banks, thereby allowing Indian banks to finance corporate acquisitions, which was previously off-limits. The 2025  Directions define acquisition financing as the lending funds to a company (acquiring company) for the purchase of all, or a controlling portion of the target company. Interestingly, acquisition financing seems to follow the same model of financing or investing as an LBO. An LBO is the acquisition of a target company by an acquirer, where the acquirer company uses debt for such acquisitions. Such debt is typically borrowed from one or multiple lenders (which are usually commercial banks). Since there is a high risk of non-payment here, the assets of the target company are often provided as security against the debt undertaken. It is interesting that the RBI now allows commercial banks’ entry in

[By Harsh Ahuja] The author is a student of Hidayatullah National Law University I. Introduction and Context India’s corporate landscape is in the middle of a restructuring wave. Some groups are consolidating, others are splitting. A pattern has become visible: listed companies are increasingly turning to demergers as a way to unlock value, simplify holding structures, or prepare for sector-specific growth. Quess Corp’s recent three-way split, ITC’s decision to hive off its hotel business, and Tata Motors’ separation of passenger and commercial vehicle divisions are only the latest in a string of high-profile examples. Yet, these transactions are constrained by a complex and sometimes contradictory legal framework. The Companies Act, 2013 creates two main pathways for corporate restructuring: the conventional scheme of arrangement before the National Company Law Tribunal (“NCLT”) under sections 230-232, and a fast-track route under section 233. The latter was designed to reduce cost and time, but while it works reasonably for small company mergers, its application to demergers has been fraught. The Income Tax Act has not recognised fast-track demergers. Approval thresholds are near impossible for listed firms. Ambiguities remain about  how liabilities, guarantees, and minority rights are handled. Regulators retain broad discretion to push cases back into the conventional route. This blog analyses why India’s framework remains under-prepared for demergers. It examines the statutory routes, tax foundations and the specific frictions in practice, as well as lessons from comparative jurisdictions. Demergers may be strategically valuable, but until the law synchronises company procedure with tax certainty and investor protection, the fast-track will remain more of a mirage than a mechanism. II. Routes for Demergers in India: Conventional vs Fast-Track Every demerger in India that utilizes the conventional route begins the same way: with a plan on paper and a nod from the boardroom. Once the board approves the scheme, the company must turn outward- to its creditors,  shareholders, and finally, to the National Company Law Tribunal. The process advances at a slow pace through a framework of mandatory formal steps. Notices go out, meetings are called, votes are counted. If three-fourths in value agree, the scheme moves ahead. Then comes the tribunal’s turn. The NCLT examines whether the valuation stands up, whether minority shareholders were heard, and whether the deal respects both the letter and the spirit of the law. Only after that scrutiny does the gavel fall, giving the scheme its legal life. Appeals lie with the NCLAT, which ensures another layer of review. Every actor knows the next step, every order builds on the last. The route is long and heavy with paperwork, but it offers certainty in corporate restructuring. The fast-track route under section 233 was introduced to ease this burden. Originally limited to mergers of small companies or between a holding and wholly owned subsidiary, it allows approval through Regional Directors rather than the NCLT. The Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2025 (“Companies (CAA) Amendment Rules, 2025”) expanded this idea to allow demergers to follow a similar path. In theory, this offers a cheaper, quicker option, especially attractive for start-ups and smaller entities. However, a significant challenge emerges here: the Income Tax Act still defines a “demerger” narrowly in section 2(19AA), requiring transfer of all assets and liabilities and mirroring of shareholding. It recognises only schemes sanctioned by tribunal. Fast-track demergers risk falling outside this tax definition, with severe consequences. That uncertainty makes the fast-track route a legal gamble. III. Gaps, Ambiguities, and Friction in the Framework India’s fast-track demerger framework promises efficiency but is weighed down by legal uncertainty. The 90% approval requirement for shareholders and creditors may work for private companies, but it effectively excludes large listed firms with widely dispersed ownership. In practice, such companies rely on the conventional tribunal route, which is slower but predictable. The law is also silent on how liabilities transfer between entities. There is no clarity on whether contingent liabilities, guarantees, or third-party obligations automatically move to the new company. Vedanta’s proposed split into six listed entities exposed this flaw. Credit rating agencies, including Fitch and Moody’s, flagged uncertainty about how group-level debt and guarantees would be divided, warning that such ambiguity could trigger covenant breaches or weaken credit profiles. Without express statutory guidance, creditors face uncertainty each time a restructuring is attempted. Disclosure gaps further weaken the framework. When Vedanta sought shareholder approval, it omitted a ₹1,200-crore claim from SEPCO, a major contractor. The omission distorted the financial picture and misled investors about the company’s liabilities. The NCLT noted that shareholders cannot provide informed consent if material facts are missing. Regulators pointed out that the scheme had changed after initial clearances, raising questions about procedural transparency. Regulatory discretion adds another layer of unpredictability. Regional Directors can refer any fast-track scheme back to the NCLT on broad “public interest” grounds. This power, though well-intentioned, blurs the line between oversight and obstruction. In Vedanta’s case, the Ministry of Petroleum and Natural Gas alleged misrepresentation of hydrocarbon assets and non-disclosure of loans worth ₹3,200 crore. The objections led to adjournments, highlighting how regulatory intervention, often justified, can still prolong the process. Other listed demergers show similar systemic strain. Quess Corp’s three-way split in 2024 triggered concerns about whether all entities would qualify for tax neutrality under section 2(19AA) of the Income Tax Act. Tata Motors’ separation of its passenger and commercial vehicle businesses proceeded smoothly, but only because the company pre-emptively ensured full valuation transparency, an extra step that India’s law does not mandate. Taken together, these cases reveal a pattern. Approval thresholds remain impractical, liability allocation uncertain, disclosure incomplete, and oversight inconsistent. The framework, built to facilitate quick restructuring, often turns into a procedural maze. Until company law and tax law move in sync, India’s demerger process will stay slow, unpredictable, and risk-prone. COMPARATIVE INSIGHTS AND THE ROAD AHEAD The United Kingdom: Clarity through Restraint The United Kingdom’s demerger regime values clarity over control. Demergers are regulated by Parts 26 and 27 of the Companies Act 2006, which govern schemes of arrangement.

[By Anushree Srivastava & Shravasti Yadav] The authors are students of Gujarat National Law University. Introduction In 2020, LVMH sought to withdraw its $16.2 billion acquisition of Tiffany & Co., citing a Material Adverse Change (“MAC”) and breaches of conditions due to the COVID-19 pandemic’s effect on retail. The dispute ended with a $425 million price reduction, highlighting the influence of such provisions on deal outcomes. MAC clauses are provisions in a contract that allow a buyer in a merger and acquisition (“M&A”) deal to walk away from the transaction if a material adverse event happens to the target company between when the agreement is signed and the transaction is completed. MAC clauses protect a buyer against unexpected detrimental alterations to the business of a target company. However, these provisions in the M&A contract must be read in conjunction with other contractual provisions therein, as they collectively provide for the buyer’s possible grounds for withdrawal. Specifically, those clauses which are similar to MAC clauses, for instance the clauses addressing conditions for execution, backing out and damages in the event of backing out from the contract.  It is in light of this that, this blog examines three critical intersections that shape modern MAC clause drafting: its interplay with break fee provisions, bring-down conditions, and the debate between quantifiable versus subjective materiality thresholds. Indian jurisprudence on the MAC clauses is limited, given that they are rarely litigated and often lead to price renegotiations rather than a termination, which can lead to litigation. However, Delaware courts have continuously refined their interpretation of MAC clauses, making it crucial for M&A practitioners to understand these relationships. Risk Allocation Mechanism in M&A: Break Fees and MAC Clauses A Break Fee, or a termination fee, is a penalty paid in M&A transactions if the seller withdraws from the deal, compensating the buyer for the time and resources invested in negotiating the deal. The existence of a break fee and MAC clause in a contract provides the parties with opportunities to develop timing strategies. For instance, buyers may deliberately delay closing of the contract to see if market conditions trigger a MAC (additionally, a MAC claim requires the proof of adverse change over a period of time) while knowing the break fee provides a financial safeguard if their MAC claim is unsuccessful. Conversely, sellers might rush to close the transaction before potential adverse circumstances may materialize, to avoid MAC disputes altogether. It has been observed that MAC clauses are more frequently enforced during periods of high market volatility, as was evidenced during the 2008 financial crisis and the COVID-19 outbreak. Conversely, break fee clauses are typically invoked in stable market conditions. This is so because, in case of market volatility, the buyers face higher uncertainty about the target’s future performance, making MAC clauses more valuable as an “insurance policy” against deterioration. In case the market is stable, break-fee clauses are enforced because there are fewer opportunities to invoke MAC. This reflects the optimal relationship between break fee size and MAC clause scope. Further, does a more restrictive MAC clause (harder to invoke) correspond with a larger break fee? Usually, a higher break fee is paired with a broader MAC clause, as issues are expected to be addressed under the MAC clause without triggering the fee payment. This higher fee protects against third-party offers and incentivizes sellers to enforce the contract, enabling the buyers to exit without significant penalties during extraordinary events like COVID-19. For instance, in some highly volatile market periods, we’ve seen larger break fees tied to MAC clauses to discourage opportunistic deal abandonment. On the other hand, a reverse break fee is a penalty that a buyer pays if they cannot complete the transaction due to reasons within their control. The inclusion of a reverse break fee with a MAC clause provides buyers a clear monetary framework for evaluating the risk of invoking the MAC clause. This fee acts as a cost of exercising the MAC “option” if market conditions deteriorate, serving as a de facto limit on their deal risk. Moreover, courts also tend to construe these provisions cumulatively rather than in isolation. For example, some jurisdictions such as the Delaware Courts consider a higher break fee combined with a wide MAC clause as an unconscionable penalty rather than a legitimate liquidated damages provision. In such cases, the MAC clause is viewed merely as an attempt to avoid paying the break fee. This was the case in Sallie Mae Litigation where the purchaser sought to trigger the MAC clause to escape paying higher reverse break fee. Conversely, a broad MAC clause with a low break fee provides buyers more flexibility to exit under adverse conditions. Risk Management through Intersection of MACs and Bring-Down Conditions A bring-down condition requires parties to confirm that the representations and warranties in an agreement remain accurate on the closing date. MAC clauses allow buyers to escape unforeseen crises, while bring-down conditions ensure a seller’s representations remain accurate until closing. Their interplay influences negotiations and transaction risks. The standards of evidence to prove a breach of representation differ significantly from those required to establish a MAC, creating a strategic option for buyers: pursue the more specific representation breach or establish the more general but higher-threshold MAC. Courts in different jurisdictions interpret the interaction of these provisions differently. Delaware courts tend to interpret them as complementary but distinct provisions, while some international jurisdictions, such as the England Courts view them as more integrated concepts. M&A agreements often include a MAC provision to adjust the bring-down conditions regarding its business operations by specifying that nothing material enough to cause a MAC has occurred, thereby establishing a materiality threshold. This is usually done through negative modification or affirmative modification. The MAC clause qualifies a negative statement as “The holding’s records contain no inaccuracies except for those not expected to result in a MAC.” On the other hand, an example of affirmative modification is that “The Holding is not a party to any litigation

[By Chaitanya Vohra] The author is a student of Rajiv Gandhi National University of Law, Punjab.   Introduction In the corporate realm, one of the pertinent factors that affect the Ease of Doing Business is an investor-friendly environment. Hostile takeovers are successful acquisitions of a target without the green signal from the management of the target, thereby being viewed as pro-investor and anti-management of the target. Investors have a potential to benefit from hostile takeovers by virtue of receiving premium for their shares in cases of sell-out or a natural boost to their dividends in cases of threats of hostile takeover, thereby positively contributing to that investor-friendly environment, which will causally improve the Ease of Doing Business. Nevertheless, the route of hostile takeover is very rarely taken and is considered uncommon in India.  Although hostile takeovers are not expressly recognized and classified in SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (‘Takeover Code’), there are no statutory hurdles to the same under the Takeover Code. Upon scrutiny, the answer to the obvious question of the non-prevalence of hostile takeovers can be accredited to the combination of strong promoter influence, mandatory disclosure requirements, and strict regulatory controls over takeover offers. It is important to note that hostile takeover attempts will rise in future with increasing corporate restructuring and foreign investment, and such a change is considered inherently beneficial as it would facilitate corporate competence and foster capital market development.  The advent of hostile takeovers in India means the emergence of defence strategies adopted by the management of the target to deter the potential acquirer from a successful acquisition. This article highlights the prevalence of promoter-driven companies, which immensely help in the effectuation of the defence strategies.  However, the promoter-driven companies appear to have been reduced in numbers as per the latest trends. This calls for the need for a robust and effective regulatory framework and, subsequently, the much-needed changes are effectively proposed. Thereupon, a reasonable argument is built which supports the need to expressly accommodate the proposed amendments in its existing regulatory framework. Moreover, these proposed changes will better equip the corporate entities for a shift towards a liberal environment with the surge of global interest in the M&A landscape in India.  The Shift from Promoter-Driven Shareholdings: Implications for Hostile Takeover Defences The shareholders are ultimate arbiters in scenarios which require the adoption of defence strategies to hostile takeover, given the shareholder-centric nature of Indian law. In this regard, one of the effective ways to defend against a hostile takeover can be having a shareholding structure such that substantial control is in the hands of promoters. It is pertinent to note that such was the case in the recent past, as concentrated promoter shareholdings were a norm in this sense. However, these promoter-driven companies are no longer seen to be in trend due to the advent of investments by virtue of private equity funds and institutional investors. Acknowledging these changes, SEBI released a consultation paper seeking comments with respect to shifting from the concept of ‘promoter’ to ‘person in control’. In support of such changes, it has been prudently observed by SEBI that there has been a substantial reduction of companies having major promoter shareholding in the top-500 listed companies, from 58% in 2009 to 50% in 2018. These statistics heavily indicate the shift, which is the elephant in the room as the regulatory framework does not allow the nascent companies without the traditional shareholding structure to fully avail the defences in cases of a hostile takeover. It is pertinent to note that these defences to hostile takeover are numerous, ranging from poison pill to golden parachutes. However, these defences are toothless in the present regulatory structure. For instance, Regulation 26(c) of Takeover Code prohibits the practical application of poison pill defence mechanism and Regulation 26(d) of Takeover Code prohibits the employment of leveraged recapitalization defence. Thus, it can be implied in the present circumstances that the companies are encouraged to vest a major shareholding with promoters to ensure stability in the company. This is not ideal due to the fact that it emboldens the ongoing norm of promoter-driven companies, thereby punishing those who choose not to follow such a norm with the persistent threat of a hostile takeover. This threat persists due to the lack of a robust regulatory framework that provides for the feasibility of availing defences against hostile takeovers.  Therefore, based on the latest trends, the upcoming companies going away from the concept of promoter-driven shareholdings are put at a significant disadvantage as they cannot avail the appropriate defence strategies of hostile takeovers.  Pinpointing Hiccups in Effective Adoption of Hostile Takeover Defences Upon a deeper dive, the Indian law appears to rely heavily on the concept of shareholder democracy, which was introduced in the Indian framework by the J.J Irani Committee. While the introduction of such a governance model can be attributed to past events such as the Satyam scandal case, and it presently acts as a safeguard for protecting the interests of shareholders, its application in certain circumstances can be deemed skeptical. One such specific circumstance can be taking the crucial decision of employing a certain defence strategy to avert a hostile takeover.   The shareholders acting as sole arbiters in this regard can amount to gross injustice to the future of the company due to the indifferent attitude of Indian shareholders towards understanding the policies and future objectives of the company. Hence, Indian shareholders appear to be gullible when their interests lie in reaping monetary benefits, as opposed to corporate successand preservation, thereby implying the slow death of the practicality of availing defences. It can be said that the shareholders who are not personally invested and associated with the company, as opposed to promoters, tend not to represent the class of long-term investors, which means that they are much more likely to bend to the will of potential acquirers in a hostile takeover by virtue of selling their shares at a premium, as opposed to

[By Shaurya Jha] The author is a student of Hidayatullah National Law University, Raipur.   Introduction With the Indian Space Industry’s expected target to reach $40 billion by 2040, funding roadblocks stand as the major hurdle. Conventional financial mechanisms are misaligned with the commercial requirements of space ventures. Bank loans require collateral and predictable income, constraining early-stage space startups. Venture capital, on the other hand, demands short-term to medium-term exit (5–7 years). This has necessitated the industry to react with the accelerated usage of Special Purpose Acquisition Companies, or SPACs – a mechanism that facilitates the company to go for a public listing and fundraising even before the acquisition target is recognized. The end goal of a SPAC is to capitalize on shareholders and PIPE funding to purchase an operating company, which has marked a watershed phase in modern corporate capital acquisition, breaking outside conventional methods like IPOs.   SPACs, informally known as “blank-check companies,” are publicly listed entities created entirely to converge with or take over a pre-existing corporation, thereby aiding its swift transition to public trade venues. Space technology has surfaced as an alluring industry for cooperatives focusing on developing satellite constellations, reusable rockets, and space travel industry services that conventional funding avenues falter to provide. Notable space technology SPAC transactions include Virgin Galactic, the first publicly traded commercial spaceflight company, which went public via a $1.5 billion SPAC merger in 2019. Similarly, Rocket Lab’s SPAC merger underscored the sector’s promise, enabling the company to expand its small satellite launch capabilities. However, India lacks regulations dedicated to SPACs, resulting in uncertainties for the investors of space-tech markets, and the current legislation makes the process of capitalizing on the financing model difficult due to the imposition of compliance barriers.  Through the means of this article, the author analyses the convergence of SPACs and Space technology. Subsequently, the author deliberates on the legal regulatory dimensions of space technology SPACs in the Indian context and the challenges and risks of space technology SPACs in India, and the author concludes the article by discussing the future of SPACs in India’s space industry.  The Intersection of SPACs and Space Technology The concept remains to be evolving in India, despite gaining global traction, India is yet to develop a definitive legislation for SPACs within concrete guidelines. The vacuum further limits the Indian startups, specifically the capitally intensive ones, from exploring this alternative route to markets.   Unlike traditional IPOs, SPACs enable privately listed companies—particularly those in fledging industries—to circumvent lengthy supervisory scrutiny and facilitate significant funding within months. In 2020 and 2021, SPACs collectively raised over $160 billion globally, with several transactions targeting innovative industries such as the space sector. The SPACs are now venturing into innovative sectors, with space technology being a key area of focus. For instance, Lynk Global, a company specializing in satellite communications, announced its merger with Slam Corp, a SPAC. The convergence, valuing Lynk at $800 million, aims to finance the low earth orbit satellite constellation. The space sector has its unique impediments, like substantial capital requirements coupled with long development deadlines, thus making SPACs an ideal financial mechanism to close the divide between pioneering cooperatives and funding ecosystems in India. These deals reflect the rising investor confidence in private space companies and highlight SPACs’ role in democratizing access to the space economy. The promising convergence of SPAC and the Space technology of India provides a humongous opportunity for technological advancement and growth. SPACs, which provide an efficient process for private cooperatives to be open to the public or civic and access capital, have been and will be pivotal in developing the global space industry. Companies such as SpaceX have demonstrated the commercial viability of reusable rockets, while satellite ventures promise to bridge the global digital divide. SPACs enable these firms to secure the necessary capital to scale operations and innovate rapidly. As projected, the space economy is estimated to reach $ 1 trillion by 2040, facilitated by space-based internet systems, satellite technology, and even lunar exploration.   The Indian space economy targets a fivefold expansion in the next two decades; harnessing the prowess of SPACs could accelerate the transition to a full-scale commercial enterprise, strengthening global competitiveness. SPACs allow the private Indian space-tech corporations to step into the humongous market, making sure that the Indian space-based industry is suitably financed so that India remains at the place of prominence in space exploration. As the aspirations mature, the regulation of SPACs should not be assessed economically but legally as the determinant of their success.    Legal and Regulatory Dimensions of Space Technology SPACs in India In defiance of the global acceptance, the regulatory environment of India persists to be limited. In contrast to major countries like the United States of America, where SPACs have been accepted as a major tool of financial transactions.   Despite the readiness around investments driven by SPAC in the space sector, the Indian  Investor continues to face intimidating difficulties due to the lack of a formalized and dedicated framework which engender legal roadblocks for the space-tech corporations willing to go public via SPAC.   Assessing Section 26 of SEBI ICDR Regulations, 2018, which places a requisite of exhaustive financial disclosures as well as past earnings, presents an overwhelming challenge for space-based startups as unlike the conventional commercial corporation, these startup make take years to make the transition from prototype to product due to the long term R&D investment with limited immediate funds, making the adherence to the IPO eligibility, counterproductive. \  While Regulation 2(s) of the International Financial Services Centres Authority (Issuance and Listing of Securities) Regulations, 2021 defines a SPAC and allows SPACs to be listed on IFSCs, it lacks the sectoral guidance for the capital-intensive sectors. In defiance of a consultation paper issued by SEBI, no formal rules have yet been notified. Absence of such provisions prevents the alignment with the upfront R&D investment and extensive development cycles of commercial space in India. By contrast, in major jurisdictions such as the United States of America, the Securities

[By Devina Somani & Manikya Manaswini] The former is a student at Jindal Global Law School and the latter is a practising lawyer.   The Merger Motive: What was Behind the Strategic Union of Zee and Sony? On 22nd December 2021, a Merger Corporation Agreement was entered into between, Zee Entertainment Enterprises Limited (“ZEEL”), Bangla Enterprises Private Limited (“BEPL”) and Sony Pictures Entertainment Networks (“SPNI”). The merger between Zee and Sony aimed to establish the second-largest media entity in India, trailing only Disney India & Star in market share.   The merger was anticipated to grant the combined entity improved access to cash flows and bolstered capital. The merger provided a redemption opportunity for Subhash Chandra & family (the promoter shareholders of Zee), whose ownership stake had diminished to just 4% owing to compelled share sales aimed at settling debts. For Zee’s creditors, the merger offered a potential avenue to recover some of their investments, especially given Zee’s precarious financial standing due to high debt levels within its holding company, Essel Group.   On the other hand, Sony’s loss of broadcasting rights to the Indian Premier League (“IPL”) had a considerable impact on its revenue stream. The merger with Zee offered Sony a chance to bounce back from these setbacks and regain momentum in the Indian market.   This Article highlights the multiple factors contributing to the merger fallout, elucidating the enforcement actions taken by the Securities Exchange Board of India (“SEBI”) against Subhash Chandra and Puneet Goenka (the promoters of Zee). Additionally, it underscores the breach of multiple conditions by Zee which were within the Merger Corporation Agreement signed by both the entities, which led to the erosion of Sony’s confidence in Zee and its subsequent withdrawal from the merger. Furthermore, the piece explores the broader implications of this debacle on mergers in the Indian Media Industry, providing a comprehensive analysis of its potential repercussions.  What led to the Merger Falling through? The collapse of the proposed $10 billion merger between Sony and Zee has exposed a labyrinth of intricate issues, from regulatory investigations to shareholder activism, shedding light on the complexities of corporate governance, financial transparency, and strategic decision-making in Cross-Border Mergers and Acquisitions in the Media and Entertainment Industry. Sony cited Zee’s failure to meet specified financial thresholds and a perceived lack of commercial prudence, deeming the breaches substantive rather than procedural. Moreover, Sony highlighted Zee’s inability to realistically assess the timeline to resolve outstanding issues, leading to the termination of their merger plans after two years of negotiations.  The heart of the issue lies with investigations by the Securities and Exchange Board of India (SEBI) into Zee which has led to allegations of fund diversion and non-disclosure of financial information. The discovery of a significant discrepancy of $241 million missing from Zee’s accounts without any traceable history raised serious concerns about the company’s financial transparency and management integrity, casting doubt on its ability to uphold regulatory compliance.   SEBI’s enforcement order dated 25th April, 2023, against Shirupur Gold Refinery, where it was alleged that Mr. Subhash Chandra’s company further engaged in the diversion of funds from lenders to companies controlled by the family. Following a complaint received by SEBI in February 2021, an independent examination by the National Stock Exchange (NSE) revealed planned transactions with connected entities, nearly 100% of the company’s debtors being linked to the promoter family, and initiation of insolvency proceedings by connected entities against major debtors. In June 2023, SEBI issued an interim order barring Mr. Chandra and Mr. Goenka from holding directorship or key managerial positions in listed entities, citing allegations of fund diversion from the listed entity.   In M&A, decisions regarding leadership appointments are critical junctures that can significantly shape the future trajectory of the combined entity. Typically, these decisions are guided by various factors such as, strategic vision of the acquiring or merging entity, the distribution of majority shareholding, compatibility of leadership styles, track record and expertise of key individuals, as well as considerations of maintaining balance and harmony within the combined organization. The initial selection of Punit Goenka as CEO, despite allegations of financial impropriety and subsequent regulatory actions, suggests potential oversights in evaluating leadership suitability.   Further, Zee’s ownership of two subsidiaries in Russia prior to the merger announcement posed a challenge for Sony, as an American entity legally restricted from engaging with businesses tied to Moscow. The failure of Zee to dispose its Russian assets, despite explicit provisions in the merger agreement prohibiting dealings with entities from countries under US sanctions, throws light on challenges of strategic misalignment during cross-border mergers stemming from divergent political considerations.   The Zee-Sony merger negotiations faced another significant hurdle with Zee’s decision in 2022 to ink a substantial $1.4 billion deal with Disney, securing specific TV cricket rights for India. Sony raised objections, citing emails that detailed Zee’s plan to provide a bank guarantee and a deposit amounting to $406 million for the acquisition of these cricket rights. This move by Zee to finance the deal through debt, undertaken without prior written consent from Sony, elevated their company’s total debt to over $451 million, surpassing the threshold specified in the merger agreement. Sony’s objection to Zee’s unilateral decision to enter into the agreement and take on additional debt exceeding the limit as mentioned in the merger agreement without prior consent highlights the lack of adherence to the conditions as outlined in the Merger Agreement.   Implications of the Merger Fallout on Cross-Border Mergers & The Media Industry in India The fallout from the collapsed Sony-Zee merger has sent shockwaves through the Indian media industry, reverberating across the financial landscape and raising significant concerns for investors. The episode underscores the need for foreign investors to exercise caution when engaging in deals within the Indian market, as regulatory complexities and governance issues has resulted in substantial risks.   One of the most glaring examples cited in the aftermath of the failed merger is the cautionary tale of Daiichi Sankyo Co.’s experience with Ranbaxy Laboratories Ltd. Despite a substantial investment

[By Aditi Kundu & Prithviraj Chatterjee] The authors are students of Hidayatullah National Law University, Raipur.   Introduction Passed on 11th August 2023, the Digital Personal Data Protection Act of 2023 (‘the Act’) envisages to regulate the intricacies of digital personal data processing. Once enforced, through this act the government aims to recognise the rights of individuals regarding their personal data and at the same time ensures personal data processing entities lawfully carry out their operations. Such entities apart from adhering to their obligations under the Act will also have to oversee its compliance during Mergers and Acquisitions (‘M&A’) transactions. While navigating the contours of the Act, the Authors will also analyse multi-fold implications on M&A transactions concerning Buyer Company, Seller Company and Legal Advisors. Finally, a clear picture would be visible by a sectoral study of M&A transactions occurring in the Financial Sector.    Overview of the DPDP Act, 2023 The main focus revolves around the protection of Digital Personal Data which is any piece of information in a digital medium that identifies/relates to an individual. The data stored by an entity is susceptible to mishandling and breach of privacy during various formalities and processes involved in M&A transactions which calls for greater liability on such entities in order to hold them accountable. The enforcement of the DPDP Act would subsume the governance regarding digital personal data while non-digital personal data would still fall under the Information Technology Act, 2000 (‘IT Act’) and Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules, 2011 (‘SPDI Rules’).    Breakdown of the Act The Act has recognised three central stakeholders, i.e. Data Fiduciary, Data Principal and Data Processor. Firstly, the Data Fiduciary determines the purpose for which the personal data will be processed. Secondly, the Data Principal is the individual whose data is in question. Lastly, Data Processors are those who process the data on behalf of the Data Fiduciary.   Obligations of Data Fiduciary The obligations of Data Fiduciary can be categorised into (i) Consent specific obligations; (ii) General obligations.  The data fiduciaries can process personal data only for lawful purposes. And this processing can be justified on two grounds, firstly, informed consent of the data principals and secondly, certain legitimate uses recognised under Section 7 of the Act. Such consent has to be explicit and can be attained via notice which has certain parameters such as it should convey what personal data will be collected and the purpose for the same.   A major respite for the Data fiduciary comes in the form of exemptions of its obligations for certain cases such as scheme of arrangement, merger, amalgamation, demerger and any reconstruction or transfer of undertaking. However such exemption is granted once a court, tribunal or other competent authority gives its approval to the transaction. By providing this the Act naturally creates a distinction in Section 17(1)(e) between those transactions that get approval such as scheme of arrangement or mergers and those that do not need any approval like acquisitions or share purchase transactions. The former transactions therefore are exempted while the latter will still need to comply with the provisions of the Act.   Implications for Various Parties in an M&A Transaction In a M&A transaction, both the seller and buyer companies are obligated as data fiduciary to comply with the Act, since they determine how data will be processed throughout the transaction. While entities like legal advisors are data processors acting on behalf of aforementioned data fiduciaries.  Seller Company The present scenario with most privacy policies follow the trend of using crafty, broad and vague consent requirements such as allowing the sharing of data with an intermediary, vendors or service providers but the Act will require all sellers to overhaul their current privacy policy with specified consent to accommodate any future potential merger or restructuring process. This is a viable precautionary measure for sellers to avoid any messy litigation while they are engaged in a major transaction. Additionally, compliances are enhanced against the selling company regarding serving consent notice which must instil an affirmative and clear action from the data principals which will require the seller company to incorporate an effective consent mechanism. Further Section 8 (6) of the Act compels the data fiduciary to inform the Board and each Data Principal in the event of a personal data breach which would lead to a negative market perception thereby affecting the seller’s valuation during an ongoing transaction. Now in the absence of a minimum threshold, even a minor breach can have huge implications due to the spread of misinformation in the market.   Buyer Company The major obligation for the Buyer Company would be the diversification of its Due Diligence drill. The expanded horizon of due diligence would entail checking the status of the seller company’s compliance with the data privacy laws which would include any sector-specific guidelines as well; ensuring that the seller company’s privacy policies are as per the law; the buyer will also have to run through the contractual obligations of the seller company. For example, where the seller company is a service provider its privacy obligations under the third-party contracts will have to be checked. In an M&A transaction, buyer companies have a level of protection against the seller companies by way of Representation & Warranties (‘R&W’) given by the latter for its legal compliances. Considering the wide ambit of privacy laws, it would be beneficial for the buyer companies to negotiate for a privacy-specific R&W, this would maximise the protection against hefty fines and penalties under the Act in case of any unanticipated breaches.   Legal Advisors Having seen that the sole responsibility for any breach would lie on the data fiduciary, it is very likely that the data fiduciaries would intend to be indemnified by the law firms, who process each transaction, for a breach caused by the latter. Therefore it is pertinent for law firms to negotiate such indemnity clauses while dealing with buyer or seller companies. Moreover, the law firms will

[By Lakshita Bhatt] The author is a student of Kes Shri Jayantilal H. Patel Law College.   Introduction  The much-anticipated merger between Sony Entertainment, herein referred to as “Sony,” and Zee Entertainment, herein referred to as “Zee,” faced numerous challenges that ultimately led to its unravelling fate. Although the merger had the potential to transform the Indian media and entertainment sector, internal conflicts and regulatory challenges stalled its progress. In this article, the author delves into the intricacies surrounding the unsuccessful merger between Sony and Zee Entertainment. Following that, the author clarifies how this merger, aimed at establishing dominance in the Indian market, encountered obstacles due to internal disputes, regulatory probes, and legal entanglements. In the end, the author elucidates the aftermath of this merger, highlighting broader concerns regarding corporate governance and financial resilience within the Indian Media sector.   Overview of Sony-Zee Merger  Initially valued at $10 billion in 2021, the merger aimed to create the dominant force in the Indian market by combining a wide range of channels and streaming platforms, with Sony holding the majority of the stake, adding up to 52.93%, and Zee holding 47.07% of the stake. However, tensions arose between Punit Goenka, the Managing Director (MD) and Chief Executive Officer (CEO) of Zee, and Sony Executives over the directorial position of the future merged entity. These internal disputes became a significant obstacle to the merger’s success. Investigations into alleged financial improprieties cast a shadow over the merger, adding to the challenges faced by both companies and eventually leading to the cancellation of the merger. As negotiations faltered, legal disputes emerged, with Sony demanding a $90 million termination fee for what they perceived as breaches of merger agreements. What could have been a billion-dollar revenue-generating merger has now become a legal dispute. Furthermore, it has broader implications for the media and entertainment industry in India. As Zee faced ongoing scrutiny and financial challenges, this left the company vulnerable in India’s booming streaming market, which is highly competitive and offers significant profit potential.  Legal Disputes and Regulatory Scrutiny   The merger between Zee Entertainment and Sony Entertainment India in September 2021 marked a pivotal moment, combining the strengths of Sony, a prominent Japanese media company, with Zee Entertainment to create a formidable entity in the media landscape. However, the trajectory of events took a tragic turn with the National Company Law Tribunal (NCLT) accepting the insolvency proceedings against Zee on 22 February 2023, followed by a petition by IndusInd Bank citing a substantial default of Rs. 83.08 crore attributed to Subhash Chandra, Zee’s founder. This decision came after a series of prior events, including the approval of the merger with Bangla Entertainment by Zee’s Board of Directors in December 2021 and the subsequent filing for insolvency proceedings in February 2022, which was contested with an application for dismissal. Despite gaining approval from the Bombay Stock Exchange (BSE), the National Stock Exchange (NSE), and the Competition Commission of India (CCI) in 2022, challenges persisted, notably with the IDBI bank initiating insolvency proceedings against Zee in December 2022, seeking to recover dues of Rs. 149.60 crores. The NCLT’s directive in May 2023, led to a re-evaluation of initial merger approval by the Stock Exchanges. Despite objections from creditors, the NCLT eventually approved the merger in August 2023, dismissing objections from entities like Axis Finance and JC Flower Asset Reconstruction Co.   However, the Securities and Exchange Board of India (SEBI) confirmatory order in August 2023 barred Punit Goenka, and Subash Chandra, founders of Zee, from holding any key positions within Zee. Amidst ongoing legal battles, a one-time settlement with JC Flower allowed Chandra to regain ownership of family assets in October 2023, while the Securities Appellate Tribunal (SAT) overturned SEBI’s order restraining Goenka from holding a directorial position in the company. Legal disputes continued with appeals lodged against NCLT’s approval by IDBI Trusteeship and others, culminating in notices issued by the NCALT in December 2023, though no staying on the merger process was granted during the proceeding. Additionally, a SEBI probe unveiled allegations of Rs. 1000 crore being signed from the Sony-Zee deal post-merger cancellation.  The aftermath of the merger’s incompletion   Transitioning from the legal disputes to the aftermath of the merger’s incompletion, the leadership struggles between Sony and Zee came to the forefront. Sony expressed a clear intention to bolster its reputation and leadership role within the amalgamated entity. Concurrently, Sony conveyed dissatisfaction with the alternative proposals preferred by Zee. Sony’s resolve for a stronger presence and leadership position in the merger enterprise was unmistakable, as evidenced by its proposal to designate NP Singh, Sony’s India head, as the CEO of the amalgamated entity. However, discord arose when Zee expressed disapproval of this arrangement. Subsequently, Sony announced the cessation of negotiations through an official statement, citing unmet merger conditions and a failure to meet the stipulated deadline. Legal action ensued, with Sony initiating litigation against Zee, seeking damages, amounting to approximately $ 90 million. Sony contends that Zee violated the merger agreement terms as the period for completion of the merger ended in January 2024 and still the merger was not completed, whereas Zee maintains its adherence to the agreement in good faith. Simultaneously, Zee has initiated legal action in both India’s and Singapore’s jurisdictions to enforce the merger terms and prompt Sony to fulfill its obligations. The matter now rests with the court to decide the fate of the proposed merger. Additionally, Zee is facing regulatory scrutiny, particularly from the Enforcement Directorate (ED), a government agency combating economic crime, concerning allegations of financial impropriety involving its founders. Sony’s departure precipitated a decline in Zee’s shares, following the merger’s dissolution, resulting in a significant sell-off. Zee’s shares depreciated by 30%, reportedly marking the largest decline in Sony stock values within the market over five years. Institutional investors, entities managing substantial capital on the client’s behalf, seek clarifications. Reports indicate ongoing deliberation, contemplating avenues such as an extraordinary general meeting, potentially determining Punit Goenka’s tenure. The Zee founders are under