In case of acquisitions involving listed companies, parties
often choose to complete the transaction
'on-market', that is, on the floor of the stock
exchanges, on account of tax benefits.
This note analyses certain key legal considerations in
completing such on-market acquisitions.
Considerations for Foreign Acquirers
Under the Foreign Exchange Management (Non-debt Instruments)
Rules, 2019, only certain categories of foreign investors can
acquire shares on-market. These include (i) registered foreign
portfolio investors (FPIs); and (ii) foreign investors that already
have (and continue to hold) 'control' over the target
company in accordance with the SEBI (Substantial Acquisition of
Shares and Takeovers) Regulations, 2011 ("Takeover
Regulations"). A non-FPI foreign investor seeking to
acquire shares in a listed company, but that does not
'control' such company as of the closing of the proposed
acquisition, can only complete such transaction
'off-market'.
