{"id":2823,"date":"2021-03-01T05:45:43","date_gmt":"2021-03-01T05:45:43","guid":{"rendered":"https:\/\/swaritadvisors.com\/blog\/?p=2823"},"modified":"2021-03-01T05:45:46","modified_gmt":"2021-03-01T05:45:46","slug":"procedure-for-company-takeover","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/blog\/procedure-for-company-takeover\/","title":{"rendered":"What is the Procedure for Company Takeover in India?"},"content":{"rendered":"\n<p class=\"has-drop-cap\">In\nthis modern world, where company growth is at topmost with increasing\ncompetitive and financially unnatural environment, companies are recognizing\nvarious growth and strategies to build up their position in the market and\nfinancial performance. The different strategies used by any companies to enter\nnew markets and spread their market base include Company Take Over, Amalgamation\nand <strong><a href=\"https:\/\/swaritadvisors.com\/mergers-and-acquisitions\" class=\"text-primary\">Merger and Acquisition<\/a><\/strong>.\nCompany Takeover is one of the most chosen methods for expansion and\ndiversification of businesses in India. But before choosing this method, you\nmust know about the procedure for <strong><a href=\"https:\/\/swaritadvisors.com\/company-takeover\" class=\"text-primary\">Company Takeover in India<\/a><\/strong>.\nIn this process, a company gets control over another by purchasing the popular\nstake in that company. The company purchasing the majority stake is known as\nthe <strong>Acquirer\/Bidder<\/strong>, and the company\nwhose control is acquired is called the <strong>Target\nCompany<\/strong>. In this blog, we discuss the benefits, types, and the procedure\nfor Company Takeover in India.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a5596f163264\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a5596f163264\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/swaritadvisors.com\/blog\/procedure-for-company-takeover\/#Different_Types_of_Company_Takeover_in_India\" title=\"Different Types of Company Takeover in India\">Different Types of Company Takeover in India<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/swaritadvisors.com\/blog\/procedure-for-company-takeover\/#What_are_the_Benefits_of_Company_Takeover_in_India\" title=\"What are the Benefits of Company Takeover in India?\">What are the Benefits of Company Takeover in India?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/swaritadvisors.com\/blog\/procedure-for-company-takeover\/#Complete_Checklist_%E2%80%93_Procedure_for_Company_Takeover\" title=\"Complete Checklist \u2013 Procedure for Company Takeover\">Complete Checklist \u2013 Procedure for Company Takeover<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/swaritadvisors.com\/blog\/procedure-for-company-takeover\/#Complete_Procedure_for_Company_Takeover_in_India\" title=\"Complete Procedure for Company Takeover in India\">Complete Procedure for Company Takeover in India<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/swaritadvisors.com\/blog\/procedure-for-company-takeover\/#Consideration_of_Takeover\" title=\"Consideration of Takeover\">Consideration of Takeover<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/swaritadvisors.com\/blog\/procedure-for-company-takeover\/#Legal_Provision_for_the_Takeover_Regulation\" title=\"Legal Provision for the Takeover Regulation\">Legal Provision for the Takeover Regulation<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/swaritadvisors.com\/blog\/procedure-for-company-takeover\/#Companies_Act_2013\" title=\"Companies Act, 2013\">Companies Act, 2013<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/swaritadvisors.com\/blog\/procedure-for-company-takeover\/#SEBI_Regulation_2011\" title=\"SEBI Regulation, 2011\">SEBI Regulation, 2011<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/swaritadvisors.com\/blog\/procedure-for-company-takeover\/#Conclusion\" title=\"Conclusion\">Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Different_Types_of_Company_Takeover_in_India\"><\/span>Different Types of Company Takeover in India<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Following is the list of all the different types of\nCompany Takeover in India:<\/p>\n\n\n\n<ul><li><strong><em>Friendly Takeover:\u00a0<\/em><\/strong>Before undergoing the procedure for Company Takeover, the acquirer company takes control of the targeted company known as the Friendly Takeover. That\u2019s why it is a process where both the companies equally agree to the terms &amp; conditions of a Company Takeover.<\/li><li><strong><em>Reverse Takeover:<\/em><\/strong>\u00a0In this type of takeover, a Private Limited Company decides to purchase a public listed company to become entitled to list its share at a known stock exchange without going through the process of Initial Public Offer.<\/li><li><strong><em>Backflip Takeover:<\/em><\/strong>\u00a0In this, an acquirer company chooses to become the subsidiary of the Target Company.<\/li><li><strong><em>Bail-out Takeover:<\/em><\/strong> In Bail-out Takeover, a well-recognized company purchases a poor or not a well-recognized company to bail it out from the liquidation process.<\/li><li><strong><em>Hostile Takeover:<\/em><\/strong> Hostile Takeover is just opposite of Friendly Takeover. In this takeover, the acquirer company does not attain any prior approval of the target company and forcefully pursues the procedure for Company Takeover.<\/li><\/ul>\n\n\n\n<p><strong>Also, Read:<\/strong> <mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/swaritadvisors.com\/learning\/7-steps-to-takeover-a-company-in-india\/\">7 Steps to Takeover a Company In India<\/a><\/mark><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_are_the_Benefits_of_Company_Takeover_in_India\"><\/span>What are the Benefits of Company Takeover in India?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Following\nare some benefits that you can only avail after completing the procedure for\nCompany takeover:<\/p>\n\n\n\n<ul><li><strong><em>Decrease the Competition: <\/em><\/strong>When\nan acquirer company purchases the controlling stake in a target company, it\nautomatically decreases the market&#8217;s competition level.<\/li><li><strong><em>Increase in Business Size: <\/em><\/strong>In\na short period, Company Takeover is the best method to spread a company&#8217;s\nbusiness operation.<\/li><li><strong><em>Tax Benefits: <\/em><\/strong>In\na takeover, the losses experienced by a bidder company are set-off against the target\ncompany\u2019s profits, in this manner decreasing the net taxable income.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Complete_Checklist_%E2%80%93_Procedure_for_Company_Takeover\"><\/span>Complete Checklist \u2013 Procedure for Company Takeover<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Below are the steps involved in the process of estimating a\ndecision for Company Takeover:<\/p>\n\n\n\n<ul><li><strong><em>Planning:<\/em><\/strong>\nAn acquirer company required first to examine the industry by going through the\noverall objective of takeover in terms of the opportunities, threats, strength,\nand weakness. It also includes other factors such as the size of the market,\nquality of management, and capital structure before starting the procedure for\nCompany takeover in India.<\/li><li><strong><em>Selection of Candidates: <\/em><\/strong>The\nCompany requires to search and select the appropriate candidates who are\nsuitable or fit for takeover by taking into consideration.<\/li><li><strong><em>Financial Calculation:<\/em><\/strong>\n&nbsp;While calculation the company&#8217;s\nfinancial health, the following are some essential points that must be\nconsidered:<\/li><\/ul>\n\n\n\n<ol><li>Cash Flows.<\/li><li>Way to finance the takeover.<\/li><li>Maximum price payable for\ntakeover.<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Complete_Procedure_for_Company_Takeover_in_India\"><\/span>Complete Procedure for Company Takeover in India<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Once\ncompleting the steps involved in the checklist of a company takeover, as we\nmentioned above, a bidder company can go further with the procedure of company\ntakeover in India. The procedure for Company Takeover can be summarized as:<\/p>\n\n\n\n<ul><li><strong><em>Step 1: Board Resolution:<\/em><\/strong>\nAn acquirer company\u2019s director require to pass a board resolution to approve\nbidding for the target company\u2019s shares.<\/li><li><strong><em>Step 2: Submit an Application:<\/em><\/strong>\nAfter that, the company requires to apply with the commission by filing an\napplication for the approval of the takeover bid. The companies file the\napplication along with the following attachments:<\/li><\/ul>\n\n\n\n<ol><li>NOC or No Objection Certificate\nfrom the related Government Authority.<\/li><li>Takeover Bid.<\/li><li>Information Memorandum.<\/li><\/ol>\n\n\n\n<ul><li><strong><em>Step 3: Registration of the\nSuggested Bid:<\/em><\/strong> Once the company received the\napproval, the bidder company needs to apply to register the proposed bid with\nthe commission.<\/li><li><strong><em>Step 4: Takeover Bid:<\/em><\/strong>\nAfter attaining the proposed bid registration, the bidder company can go\nfurther with the takeover bid by sending the same to the target company.<\/li><li><strong><em>Step 5: Hold a Board Meeting:<\/em><\/strong>\nOnce the company receive the takeover bid, the target company holds a board\nmeeting and accepts 90% of its shares are subject to acquisition.<\/li><li><strong><em>Step 6: Filing the Takeover\nReport:<\/em><\/strong> Once the procedure for Company Takeover\nhas complied, the acquirer company needs to file a takeover report within seven\ndays of the takeover conclusion to the commission.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Consideration_of_Takeover\"><\/span>Consideration of Takeover<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Consideration\nof takeover means the amount paid for the procurement of the target company.\nFollowing are some different forms of paying consideration:<\/p>\n\n\n\n<ul><li><strong><em>In the form of Shares:<\/em><\/strong> When the bidder company decide to assign its shares to shareholders of the target company.<\/li><li><strong><em>In the form of Cash:<\/em><\/strong> When the bidder company pays the consideration for the company&#8217;s share in cash to the target company and shares can be attained through an open market or a bid.<\/li><li><strong><em>By Attaining Minority Shares:<\/em><\/strong> If the acquirer or bidder company holds minimum 50% shares of the target company, acquirer company can decide to attain the balance equity.<\/li><li><strong><em>By Establishing a New Company:<\/em><\/strong> A bidder company can <strong><a href=\"https:\/\/swaritadvisors.com\/private-limited-company-registration\" class=\"text-primary\">establish a new company<\/a><\/strong> by attaining the target company&#8217;s shares. The shareholders of both the companies are selected shares of the newly established company.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Legal_Provision_for_the_Takeover_Regulation\"><\/span>Legal Provision for the Takeover Regulation<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Following\nare some legal provision for the takeover regulations:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Companies_Act_2013\"><\/span>Companies Act, 2013<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul><li><strong><em>Section 230(11) of the\nCompanies Act<\/em><\/strong> directs all forms of takes\nover, arrangements, and concession.<\/li><li><strong><em>Section 250(3)<\/em><\/strong>\ncontrols the takeover of the company\u2019s management and assets by the\nadministration of the company on the Tribunal\u2019s order.<\/li><li><strong><em>Section 261<\/em><\/strong>\ncertifies the company&#8217;s administrator to prepare the scheme of reintegration\n&amp; revival, and it controls the sick company&#8217;s take over by a solvent\ncompany.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"SEBI_Regulation_2011\"><\/span>SEBI Regulation, 2011<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The takeover of all the listed companies is governed by the <a href=\"https:\/\/www.sebi.gov.in\/\">SEBI<\/a> provisions and regulations along with Companies Act.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>From above it is cleared that the main objective of choosing a company takeover is to achieve growth by latest &amp; advanced technologies, market development, and product enhancement of the target company to increase the market size and productivity of the bidder company. But to achieve these objectives, it is compulsory to complete the procedure for company takeover in India. To know more regarding Company Takeover, contact <strong><a href=\"https:\/\/swaritadvisors.com\/\" class=\"text-primary\">Swarit Advisors<\/a><\/strong>.<\/p>\n\n\n\n<p><strong>Also, Read:<\/strong> <mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/swaritadvisors.com\/blog\/types-of-company-takeover\/\">Types of Company Takeover: A Guide on Different Takeovers<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In this modern world, where company growth is at topmost with increasing competitive and financially unnatural environment, companies are recognizing various growth and strategies to build up their position in the market and financial performance. The different strategies used by any companies to enter new markets and spread their market base include Company Take Over, [&hellip;]<\/p>\n","protected":false},"author":6,"featured_media":2824,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[426,64],"tags":[439],"acf":[],"_links":{"self":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/2823"}],"collection":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/comments?post=2823"}],"version-history":[{"count":3,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/2823\/revisions"}],"predecessor-version":[{"id":2827,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/2823\/revisions\/2827"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media\/2824"}],"wp:attachment":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media?parent=2823"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/categories?post=2823"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/tags?post=2823"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}