Section 230(11) of the Companies Act, 2013

provides that takeover offer in case of unlisted companies can be made through Scheme of compromise or arrangement, while in case of listed companies, takeover offers must be made as per regulation prescribed by Securities and Exchange Board of India. 

An application of arrangement for takeover offer shall be accompanied by valuation report issued by Registered Valuer disclosing the details of valuation of shares proposed to be acquired by the shareholder after considering the following factors: 

  • The highest price paid by any person or group of persons for acquisition of shares during last 12 months; and
  • The fair price of shares of the company considering valuation parameters viz. return on net worth, book value of shares, earning per share, price earning multiple vis-a-vis the industry average and any other necessary parameter

The majority shareholders (holding 75% or more shares) buying out the minority shareholders (holding remaining shares) will have to open a separate bank account and deposit at least 50% of the total consideration to be paid pursuant to such takeover offer

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