Exit Without Voice: Evaluating Whether SEBI's Takeover Regulations Genuinely Protect Minority Shareholders
Dhriti Agarwal, Symbiosis Law School, Pune
ABSTRACT
The SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 ("SAST Regulations") are designed as a protection mechanism for the minority shareholders. However, the primary pillar of the SAST Regulations is exit, not a voice for the minority shareholders. This paper elucidates how this is instead a design decision, which is taken from the mandatory bid model that was adopted in the UK but not the fiduciary-duty approach adopted in the US. It contends that the Indian takeover law is deficient because of doctrinal and comparative analysis of the SAST Regulations, judicial decisions, and UK/US takeovers law in that regard and even a purposive interpretation of the SAST Regulations cannot overcome the gaps. It finds that the SAST Regulations afford true protection to minority shareholders, but that this protection is not adequate, and that increased shareholder voice would carry important regulatory considerations.
