The Insolvency & Bankruptcy Code, 2016 makes promising claims of boosting M&A activity by making sale of NPAs a more transparent and time-bound procedure.
“An Act to consolidate and amend the laws relating to reorganisation and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximisation of value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders including alteration in the order of priority of payment of Government dues and to establish an Insolvency and Bankruptcy Board of India, and for matters connected therewith or incidental thereto.” – Insolvency and Bankruptcy Code, 2016
Also, recently, SEBI made it mandatory for listed companies entering a merger or acquisition transaction to first take clearance from the market regulator before approaching any court or the National Company Law Tribunal (NCLT) with a so-called scheme of arrangement.
A scheme of arrangement is a court-approved agreement between a company and its shareholders or creditors. The regulator said that this would be applicable for amalgamation, reduction of capital, reconstruction and other similar matters, apart from M&As.
Read more about SEBI’s announcement at http://www.livemint.com/Money/toEV4eHvzF9IOzptzXSqiJ/Sebi-streamlines-MA-rules-for-listed-firms.html
With these developments at hand, Kartick Maheshwari, Partner, and Aashutosh Sampat, Principal Associate at Khaitan & Co.raised some concerns at Livemint.