Project – 30 marks – only case analysis

Class Presentation (Same topic) – 10 marks

Project Viva – 10 marks
Ens sem (Closed Books) – 50 marks

Holding v Acquiring Company

Holding company has control both financially and operationally over the subsidiary
company. Operation is the management. Total control
In acquisition there is step by step approach in acquiring the shares. It is the process which
can lead to you becoming the holding company.
Once when you have the majority shares then you become a majority shareholder.
Merger is in which two or more companies come together. Here there can be a new identity
or existing identity may remain.
Amalgamation is when two or more companies come tother. Here a new entity will always
come up.
Scheme can be a merger, demerger, amalgamation, acquisition or restructuring. Once scheme
has been approved then the step is taken forward. The draft scheme is approved by the board
first.
Arrangement comprises reorganizing share capital of the company, by division of shares in
different classes or other methods. It is rearranging your shares. It does not go beyond this.
Takeover can be friendly or hostile. Taking over shareholding over the other company which
is 25%. Acquisition is the process of how you takeover. When a person acquires over 25%
then he has to make on open offer that he has over 25% and then there is bid rigging.

Types of Merger
Horizontal Merger - Companies which are similar and competitors of each other. They offer
similar products. Vodafone-Idea
Vertical Merger – Different stages of production. Operate in the same industry. Google-
Motorola
Conglomerate Merger – Totally unrelated companies merging together. ITC-ITC Hotels
Merger.
Congeneric Merger – Companies in the same industry. They are related some way. Either
they substitute or complement each other. Thomas Cook and Sterling Hotels.
Reverse Merger – Usually does not happen in India. A short cut for private company to go
public. Skip the process of IPO. You just combine with a public company.

Section 230 Companies Act

When there is any kind of restructuring between any company, creditor, class of creditors,
members, then you have to make an application before the NCLT.
When application is made then need to go to NCLT and it will tell to conduct or hold a
meeting.
Section 231
Powers of NCLT. It has power to supervise the implementation. Power to pass any such order
to ensure implementation.
Section 232
Talks about the purpose of doing this.
Section 233
Talks about fast track merger – in instances when it is between two or more small companies
or between a holding and wholly owned subsidiary. In such cases no approval of the NCLT is
needed.
Section 234 – Cross Border Merger
One has to be Indian and one has to be a foreign company. Most important body here is the
RBI. There is also central government which has the power to make rules, but this in
consultation with the RBI.
1st req is RBI approval because foreign currency is involved.
2nd Central government has power to make rules, but if RBI does not approve it, then these
rulels cannot be applied.
Jurisdiction is also derived from Rule 25A of Companies Compromise Arrangement and
Amalgamation Rules. Annexure B provide for the jurisdiction
After all of this, NCLT approval is needed.

Inbound and Outbound Merger

Inbound – Resultant company is Indian.
Outbound – Resultant is foreign.

Read CAA Rules

Competition Act
The reason why we need competition act is because:
Anti-competitive, dominant position, survival of other players, monopoly, adverse effects,
consumer welfare.
All the aims are overlapping with each other.
Section 2(a) – Defines Acquisition
Meaning of Enterprise is very wide. Everything falls under this definition.
Section 3 and 4 are important.
Section 5 defines Control.