A Controversial Case of Ajay Singh – Spice Jet takeover

Abstract

India's Security Market regulator.i.e., Securities Exchange Board of India (SEBI) thinks that the most important regulation of the Indian Securities Market that is the Take Over Code has been through a tough time and has been tested quite a few times due to numerous corporate takeover clashes and struggles in India. Securities Exchange Board of India (SEBI) having the main aim and purpose of protecting the rights of shareholders being affected due to the corporate takeovers is very strict regarding the application of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011. However, the proper application of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 has been very ambiguous and the interpretation of the same depends upon case to case coming before the Board's ambit. Many loopholes have been found and are continuously under the scrutiny of SEBI. Reacting to the evolving times, Securities Exchange Board of India (SEBI) has actively taken part in making fundamental changes and amending Takeover Code from time to time to be at par with the changing society and international standards of takeover and merger regimes. SEBI has also provided us with many clarifications on the provisions of the Takeover Code. But one such instance where SEBI went easy on the party was during the takeover of the low-cost airline Spice jet. The takeover in 2015 was very unique because of two major reasons. They are: • It noticed the comeback of Mr. Ajay Singh, the co-founder of the carrier airline who had left the business a few years ago. • And it was also one of the first instances where the purchase price of the takeover was not mentioned and no mandatory open offer was made to the existing shareholders of the airline company. Besides all the controversy in place, SEBI decided that the entire takeover procedure was legitimate and the exemption for not making a mandatory open offer to the existing shareholders of the company was correct in place and was in accordance with the Regulations in the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011. This paper will be giving the necessary details about the background of the deal, will analyse dynamics of the transaction and will also discuss about the controversy involved with this deal and what the Authorities decided.