The Securities Appellate Tribunal (SAT) has recently ruled, in the matter of Subhkam Ventures Pvt Ltd v SEBI, that control as defined under the takeover regulations does not include negative control.
The ruling, which is perceived by many as a landmark one, is contrary to a previous ruling by the SAT in the case of Rhodia SA v SEBI.
The takeover regulations essentially define control as an ability to appoint the majority of the directors on a board or an ability to control the management or policies of a company. Acquisition of 50% voting rights gives a person a clear ability to appoint the majority of the directors on a board and so there is not much ambiguity in this test of control.
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Akila Agrawal is a partner at Amarchand & Mangaldas & Suresh A Shroff & Co.
Amarchand Towers
216 Okhla Industrial Estate – Phase III
New Delhi – 110 020
Tel: +91 11 2692 0500
Fax: +91 11 2692 4900
Email: shardul.shroff@amarchand.com
