PLEA INDIAN CONTRACT ACT

PART I

1. What are the essential elements of a valid contract? (Section 10) (Interview)- A
contract has six important elements so that it will be valid which is offer, acceptance,
consideration, intention to create legal relation, certainty and capacity.
https://www.lawteacher.net/free-law-essays/contract-law/main-elements-constituting-a-
valid-contract-contract-law-essay.php#:~:text=A%20contract%20has%20six
%20important,legal%20relation%2C%20certainty%20and%20capacity.
2. Is consideration necessary for a contract? (Interview) - Consideration’ means
“something in return”, i.e. quid pro quo that is an essential element to find out the
genuine intention of the parties of the promise to create legal relationship. Consideration
is an essential component of a valid contract. Consideration is the price for the contract.
An agreement without consideration is void and thus not enforceable by law except
under certain circumstances (natural affection, gifts, promise to pay a time barred debt).
An agreement without consideration is a bare promise and exnudo pacto non aritio actio,
i.e., cannot be held to binding on the parties. When, at the desire of the promisor, the
promisee or any other person has done or abstained from doing, or does or abstains from doing,
or promises to do or to abstain from doing, something, such act or abstinence or promise is
called a consideration for the promise;
3. What is the difference between an agreement and a contract? (Interview)- When an
agreement is enforceable by law, it becomes a contract. When an offer made by a
party is accepted, it becomes an agreement Consideration has to be given. Agreements
can be formed without consideration. Mentioned in Section 2(h) of the Indian Contract
Act 1872. Section 2(e) of the Indian Contract Act 1972 Preferred mode Written contracts
are generally preferred over oral contracts. Agreements can be verbal or written.
Legality. Every contract has a legal obligation. Agreements may or may not have a legal
obligation. Every promise and every set of promises, forming the consideration for each other,
is an agreement
4. What is the difference between a void and voidable contract?- (i) Fails to be
enforceable by law, when it lacks enforceability/ one party has the option to enforce or
avoid, and not at the option of other or others. (ii) change in law or circumstances/
consent of the parties is not free (iii) performance becomes impossible/ if the aggrieved
party does not exercise the right to rescind the contract within stipulated time he can be
sued by the other claiming the performance (iv) valid when it is formed but becomes void
due to unavoidable reasons/ valid until he party whose consent is not free choose to
revoke it. (v) no rights are conferred/ aggrieved party has the right to rescind it. (vi)
damages cannot be claimed / can be claimed.
5. Is a contract with a minor valid? (Interview) - A contract with a minor is void and,
hence, no obligations can ever arise on him thereunder. 2) The minor party cannot ratify
 the contract upon attaining majority unless a law specifically allows this. 3) No court
can allow specific performance of a contract with minors because it is void altogether.
6. Difference between rescind, repudiate and revocation? – rescinding a contract means
the abrogation of a contract, effective from its inception, thereby restoring the parties to
the positions they would have occupied if no contract had ever been formed. Repudiation
occurs when one party refuses to honor a contract with another party. Often the party
doing the repudiation cannot perform its obligations outlined in the contract due to
financial difficulties. Section 5 says that a Contract can be revoked any time before the
communication of acceptance is made to the proposer and not afterwards.
7. What is anticipatory breach of contract?- An anticipatory breach occurs when a party
demonstrates its intention to break a contract. However, vocal or written confirmation is
not required, and failure to perform any obligation in a timely matter can result in a
breach. By declaring an anticipatory breach, the counterparty may begin legal action
immediately rather than waiting until the terms of a contract are actually broken. The
intent to break the contract must be an absolute refusal to fulfill the terms for it to qualify
as an anticipatory breach. The expected breach cannot be based solely on the
assumption that the other party will not meet its obligations.
8. Modes of discharging a contract- https://www.vedantu.com/commerce/discharge-of-
contract
9. Difference between damage and damages (Interview)- The damage means legal loss or
violation of legal right, i.e. infringement of legal right. And on the other hand, damages
means it is a pecuniary, or monetary compensation in terms of money.
10. Difference between loss and losses (Interview)
11. Different forms of compensation- http://jec.unm.edu/education/online-training/contract-
law-tutorial/remedies-for-breach-of-contract
12. Difference between contract of service and contract for service- A contract for
service is required when one wants to engage the services of a third-party as an
independent contractor for a specific project or short-lived purpose. A contract of service
is that of employment and is entered with employees who engage and perform services
with the company on a day-to-day basis.
13. What is a promissory estoppel. - The doctrine of Promissory Estoppel means when an
individual with an intention of forming a relationship which is lawful makes a clear
promise to another individual and the latter individual acts on it, that promise becomes
an obligation for the individual who made the promise. Hence, then going back from its
words is not permissible. Going back from the words will be in contradiction of equity.
14. What constitutes Free Consent?
https://lawcirca.com/free-consent-under-the-indian-contract-act-1872/#:~:text=The
%20definition%20of%20free%20consent,the%20absence%20of%20such%20factors.
15. What is the consequence of mistake of fact (one/both parties) and mistake of law on
the contract? S. 21, 22, 20
 16. What are Quasi Contracts? Examples
There are cases where the law implies a promise and imposes obligations on one party
while conferring rights to the other even when the basic elements of a contract are not
present. These promises are not legal contracts, but the Court recognizes them as
relations resembling a contract and enforces them like a contract. These promises/
relations are Quasi contracts.
17. What considerations and objects are lawful, and what not.—The consideration or
object of an agreement is lawful, unless— it is forbidden by law4 ; or is of such a nature
that, if permitted, it would defeat the provisions of any law; or is fraudulent ; or involves
or implies, injury to the person or property of another; or the Court regards it as immoral,
or opposed to public policy.
18. Difference between fraud and misrepresentation
https://keydifferences.com/difference-between-fraud-and-
misrepresentation.html#:~:text=Fraud%20is%20a%20deliberate%20misstatement,to
%20deceive%20the%20other%20party.
19. Difference between frustration of contract and Force Majeure
https://www.lawsonlundell.com/china-blog/force-majeure-vs-frustration-of-contracts

GUARANTEE AND INDEMNITY

1. Difference between guarantee and indemnity (Interview) (Both interviews)

https://www.linkedin.com/feed/update/urn:li:activity:6929747963447508994 A ‘contract
of guarantee’ is a contract to perform the promise, or discharge the liability, of a third
person in case of his default. The person who gives the guarantee is called the ‘surety’;
the person in respect of whose default the guarantee is given is called the ‘principal
debtor’, and the person to whom the guarantee is given is called the ‘creditor’. A
guarantee may be either oral or written."
2. How do you enforce a guarantee or indemnity (Interview) the liability of the
indemnifier starts the moment the loss or damages in the form of liability to the
indemnified becomes absolute and without limit.
Section 128 of the act provides for co-extensive liability of the surety with that of the
debtor, unless otherwise provided in the contract. The liabilities of both the parties arising
out of the contract are joint and several and the lender may proceed against the surety
and/or debtor in any particular order he feels. This implies that there lies no compulsion
for the lender to first exhaust the remedies against the borrower before proceeding against
the guarantor, provided that there are no such express terms in the contract. It would
defeat the purpose of having a guarantee if a certain order of utilizing the legal remedies
with respect to the surety and the borrower is created in law. It would make the guarantee
redundant and the lender would be left with limited remedies when the whole purpose of
getting a surety was to have multiple recovery options. Therefore, this principle is
considered the very essence of a contract of guarantee.
3. What is a bank guarantee? A bank guarantee is a kind of guarantee from a lending
organization. The bank guarantee signifies that the lending institution ensures that the
liabilities of a debtor are going to be met. In other words, if the debtor fails to perform
the obligation, the bank will cover it.
4. Is the liability of a surety coextensive with the judgment debtor? (S128; yes. It means
that upon breach, both guarantee and surety will become co – judgment debtors)

BAILMENT

5. What is bailment? A "bailment" is the delivery of goods by one person to another for
some purpose, upon a contract that they shall, when the purpose is accomplished, be
returned or otherwise disposed of according to the directions of the person delivering
them.
6. Different forms of bailment (See wiki page of Coggs v Bernard)
https://aishwaryasandeep.com/2021/06/06/bailment/
7. Is a contract necessary for bailment? Yes, the contract may be express or implied.
8. Difference between bailment and sale http://www.differencebetween.info/difference-
between-sale-and-bailment
9. What is the duty of care imposed on a bailee According to section 151, it is the duty of
a bailee to take care of goods bailed to him. Bailee should take care of these goods as an
ordinary man will take care of his goods of the same value, quality, and quantity.
10. What is lien (general lien and particular lien)
Where the bailee has, in accordance with the purpose of the bailment, rendered any
service involving the exercise of labour or skill in respect of the goods bailed, he has,
in the absence of a contract to the contrary, a right to retain such goods until he
receives due remuneration for the services he has rendered in respect of them.
Bankers, factors, wharfingers, attorneys of a High Court and policy-brokers may, in
the absence of a contract to the contrary, retain as a security for a general balance
of account, any goods bailed to them; but no other persons have a right to retain, as
a security for such balance, goods bailed to them, unless there is an express contract
to that effect.
Lien is a right of possession of property or goods by a person who is due for payment of
any kind. Particular Lien: When the holder holds the property which is in connection
with the due payment and then releases the property once the due amount is received.
General Lien: When the holder holds a property that might not have a connection to the
payment due they can hold off to anything that is of similar value as to the amount due
even if the item is not connected to the payment due. A banker's lien, when it is not
excluded by special contract, express or implied, extends to all bills, cheques, and money
entrusted or paid to him, and all securities deposited with him, in his character as a
banker. Strictly, it is confined to securities and properties in the custody of the banker;
 and in respect of things that belong to the customer, and are held by the bank as security;
whether they are in the same or different branches.
11. What are the requirements to impose a particular lien it was stated by the court that
the lien can only be exercised on the goods on which the payment is due when the work
on the item is done for its improvement or to make it better.
12. What is a pledge, pledgee, pawnbroker, pledgor? The bailment of goods as security
for payment of a debt or performance of a promise is called 'pledge'. The bailor is in this
case called the 'pawnor'. The bailee is called 'pawnee'. Pawnbroker a person who lends
money at interest on the security of an article pawned.
13. Rights of a pledge –(special right- more than lien but less than mortgage. General rights
still vest with owner. Check this)
14. Difference between lien and pledge
https://aishwaryasandeep.com/2021/11/27/bailment-mortgage-lien-pledge-indian-
contract-act/
15. Difference between pledge and mortgage
https://aishwaryasandeep.com/2021/11/27/bailment-mortgage-lien-pledge-indian-
contract-act/

AGENCY
16. Who is a mercantile agent as per section 2(9) of the Sale of goods act, 1930, a
mercantile agent is a person who in the customary course of business has an agent's
authority either to sell or consign the goods for the purpose of sale or to buy goods or to
raise money on the security of goods.
17. As defined in Section 182 of the Indian Contract Act, 1872, an agent is a person
employed to do any act for another, or to represent others in dealings with third parties
and the person for whom such act was done or who was so represented was so-called
“the principal”. An agent is merely an extended hand of the principal and cannot claim
independent rights.
18. Will the principle be responsible for a sub agent The sub-agent is responsible for his
acts to the agent, but not to the principal, except in cases of fraud or wilful wrong.
19. What is agent’s lien The lien of an agent extends only to the retention of the property till
his dues are paid. At common law a legal lien merely confers on the holder of the articles
in respect of which it was claimed, a passive right to detain the articles until the debt is
paid.
20. Difference between agent and servant https://keydifferences.com/difference-between-
agent-and-servant.html

INDIAN PARTNERSHIP ACT

21. What is a partnership - Partnership is the relation between persons and who have
agreed to share the profits of. a business carried on by all or any of them acting for all.
22. What is the nature of liabilities of partners- All the partners are jointly liable for
paying the debts of the firm. The liability is unlimited which means that the partner's
private assets can be disposed of for the purpose of paying the debts of the firm.
23. Does a partnership have to be in writing? (I think yes) Partnership comes into
existence as a result of agreement among the partners. The agreement can be either oral
or written.
24. What is the nature of liabilities in an LLP (Trilegal Test)- The liabilities of the
partners in an LLP are limited and separate. Their personal assets are not liable to the
attachment if the LLP is suffering or winding up legal consequences of debt or
repayments.
25. What is holding out under the Partnership Act (S28) Also, can a retired partner be
liable (S32) - He represented himself or knowingly allowed himself to be represented as
a partner. Such representation may be by spoken or written words, by conduct or by
knowingly permitting others to make such representation by words or conduct. The other
party on the faith of such representation gave credit to the firm.
https://www.indiacode.nic.in/show-data?
actid=AC_CEN_22_0_00012_193209_1523350631460&sectionId=34658&sectionno=3
2&orderno=32#:~:text=(2)%20A%20retiring%20partner%20may,such%20third
%20party%20and%20the
26. Can a minor be a partner (S30) A person who is a minor according to the law to which
he is subject may not be a partner in a firm, but, with the consent of all the partners for
the time being, he may be admitted to the benefits of partnership.
27. What is partnership at will (S7 I think) (Interview) A Partnership at Will is a form of
business partnership where there is no fixed term agreed for the duration of the
partnership.
28. How does a partner in a partnership at will resign (Interview)
https://taxguru.in/corporate-law/resignation-partner-limited-liability-partnership-llp.html

SALE OF GOODS
29. What is difference between hire purchase agreements and sale-
https://keydifferences.com/difference-between-sale-and-hire-purchase.html
30. Difference between conditions and warranties (S12)-
https://keydifferences.com/difference-between-condition-and-warranty.html#:~:text=A
%20condition%20is%20an%20obligation,the%20state%20of%20the%20product.
31. Difference between sale and service-
http://www.differencebetween.net/business/difference-between-sales-and-service/
32. What is the principle of caveat emptor (Hasenbhoy Jetha, Bombay v New India
Corporation Ltd. – case brief or internet will do ) (There is a diff between Indian law and
 common law on this matter) (Trilegal test) in the law of commercial transactions,
principle that the buyer purchases at his own risk in the absence of an express warranty
in the contract.

COMPANIES ACT
33. What is the difference between a public company and private company (Interview)-
http://www.nou.ac.in/Online%20Resourses/18-5/Public%20Company%20and%20Private
%20Company%20by%20Prof.%20Reyazuddin-converted%20(1).pdf
34. Difference between company ad partnership- https://keydifferences.com/difference-
between-partnership-firm-and-company.html
35. When does it become an illegal associating of person- According to section 464 of the
Indian Companies Act, 2013, any association of persons or partnership in which the
number of members is more than 50 and it carries on business for profit, it is said to be
an illegal association unless it is registered as a company under the Act or is formed
under any other law for the
36. What is a prospectus and a statement in lieu of prospectus?-
https://keydifferences.com/difference-between-prospectus-and-statement-in-lieu-of-
prospectus.html#:~:text=A%20legal%20document%20published%20by,Statement%20in
%20lieu%20of%20prospectus.
37. Certificate of registration or certificate of commencement.- Certificate of
Commencement is document required under the company act 2013 before a business can
initiate its operations.
38. What are MOU and AOA (what do they contain)- https://cleartax.in/s/company-moa-
aoa-under-companies-act#:~:text=company%20incorporation%20form.-,The
%20Memorandum%20of%20Association%20(MOA)%20and%20Articles%20of
%20Association%20(,company's%20foundation%20stands%20upon%20them.
39. How do you alter the same (special or general resolution and who alters directors,
shareholder)? (Interview)- special resolution by shareholder
https://www.allindiaitr.com/alteration-in-MoA-and-AoA#:~:text=Process%20of
%20Changing%20the%20Articles,in%20the%20Articles%20of%20Association.
40. What type of resolution do you need to increase the capital in the capital clause in
the AOA (Interview)- special resolution
41. What are the different types of shares (Interview)-
https://www.angelone.in/knowledge-center/what-are-shares-and-types-of-shares
42. What are the different types of preference shares and what is the difference between
them (Interview)-
43. What is a statutory meeting, general meeting and EGM
https://www.toppr.com/ask/question/write-notes-onstatutory-meeting/
44. Different types of directors? Can a managing director be a director of more than
one company? (Not sure of this question. See taxxmann. It talks about managing
director, independent director, full time director etc etc) https://cleartax.in/s/types-of-
directors-in-a-company not more than 20 comapnies
45. What is the procedure for merger of company (Interview)
46. What is the procedure to be followed for hiving off (Interview)
47. What is demerger
48. What type of resolution do you need for merger (Interview) (I’m not sure if there is a
difference between 2/3rd majority and special resolution – find out. Also keep in mind if
the voting is b/w directors or shareholders) (Interview)
49. Difference between mergers and acquisition
https://www.wallstreetmojo.com/amalgamation-vs-merger/#:~:text=Amalgamation%20is
%20a%20type%20of,are%20involved%20in%20a%20merger.
50. Difference between special resolution and ordinary resolution (Interview)

51. THE PREFERENCE SHARES AND EQUITY SHARES AS DEFINED IN

DISTINCTION BETWEEN
THE COMPANIES ACT. HTTPS://WWW.TAXMANN.COM/POST/BLOG/DIFFERENCE-BETWEEN-
PREFERENCE-SHARE-CAPITAL-AND-EQUITY-SHARE-CAPITAL/

52. PROCESS OF ISSUE OF DEBENTURES? HTTPS://TAXGURU.IN/COMPANY-LAW/DEBENTURES-

ISSUE-PROCESS.HTML

53. WHETHER A DIRECTOR CAN BE A NON-RESIDENT OF INDIA? YES

54. HOW MANY MANAGING DIRECTORS A COMPANY CAN HAVE? 1

55. WHAT ARE THE CONDITIONS FOR BECOMING A MANAGING DIRECTOR?

HTTPS://CLEARTAX.IN/S/COMPANY-MANAGING-DIRECTOR#:~:TEXT=THE%20MINIMUM
%20AGE%20LIMIT%20FOR,AFTER%20OBTAINING%20THE
%20SHAREHOLDERS'%20APPROVAL.

56. WHETHER A MANAGING DIRECTOR CAN BE A NON-RESIDENT OF INDIA?

57. UNDER WHAT CIRCUMSTANCES A SPECIAL RESOLUTION IS REQUIRED?

HTTPS://CLEARTAX.IN/S/UNDERSTANDING-ORDINARY-SPECIAL-RESOLUTIONS

58. WHETHER EQUITY SHARES CAN BE REDEEMED? NO

59. WHAT IS UNDERWRITING OF SHARES? IN THE SECURITIES MARKET, UNDERWRITING

INVOLVES DETERMINING THE RISK AND PRICE OF A PARTICULAR SECURITY. IT IS A
PROCESS SEEN MOST COMMONLY DURING INITIAL PUBLIC OFFERINGS, WHEREIN
INVESTMENT BANKS FIRST BUY OR UNDERWRITE THE SECURITIES OF THE ISSUING ENTITY
AND THEN SELL THEM IN THE MARKET. THIS ENSURES THAT THE ISSUERS OF THE
 SECURITY CAN RAISE THE FULL AMOUNT OF CAPITAL WHILE EARNING THE
UNDERWRITERS A PREMIUM IN RETURN FOR THE SERVICE

TOPA AND GENERAL QUESTIONS FROM MY INTERVIEW

60. What is the difference between simple mortgage and English mortgage (S 57)
(Interview) https://blog.ipleaders.in/understanding-different-types-mortgage-transfer-
property-act-1882/#English_Mortgage_Section_58e
61. You are given a MOA and AOA. The name of the company is blacked out. Is it a pvt
co or public co – If there is a restriction on transferability of shares under the Articles
then and prohibits any invitation to the public to subscribe for any securities of the
company
62. There is a company with 30 members and 5 crores as share capital. Is it a pvt co or public
co
63. When a foreign entity wants to invest in India does it buy shares or bonds or what (not
sure of this question)

64. What is the difference between a representation and a warranty?

https://www.mondaq.com/india/contracts-and-commercial-law/955660/revisiting-
representation-and-warranty-clauses#:~:text=A%20representation%20is%20basically
%20an,future%20promise%20of%20a%20fact.

65. What is the meaning of slump sale? 'slump sale' means the transfer of one or more
undertakings as a result of the sale for a lump sum consideration without values being
assigned to the individual assets and liabilities in such sales.

66. What is the difference between a rebuttable presumption and a conclusive

presumption? A rebuttable presumption is assumed true until a person proves
otherwise (for example the presumption of innocence). In contrast, a conclusive (or
irrebuttable) presumption cannot be refuted in any case (such as defense of infancy in
some legal systems).

67. DOES REDUCTION OF CAPITAL OR A BUY BACK OF SHARES NEED A COURT ORDER? NO
FOR BUYBACK BUT FOR REDUCTION IT REQUIRES

68. WHAT ARE DRAG ALONG, TAG ALONG RIGHTS AND ROFR AND ROFA?
HTTPS://TAXGURU.IN/COMPANY-LAW/DRAG-ALONG-TAG-ALONG-PROVISIONS-
SHAREHOLDERS-AGREEMENT-ENFORCEABILITY.HTML

69. WHAT IS THE POSITION W.R.T FREE TRANSFERABILITY OF SHARES FOR PUBLIC COMPANIES
? HTTPS://WWW.MONDAQ.COM/INDIA/SHAREHOLDERS/603222/IS-RESTRICTION-ON-
TRANSFER-OF-SHARES-VALID-UNDER-COMPANIES-ACT-2013
 70. WHAT IS STRICT LIABILITY AND WHAT DO YOU THINK OF IT AS A CONCEPT PER SE?
HTTPS://BLOG.IPLEADERS.IN/CONCEPT-STRICT-LIABILITY-ABSOLUTE-LIABILITY/

71. WHAT ARE THE REQUIREMENTS FOR THE NOMINATION AND THE REMUNERATION
COMMITTEE UNDER CA, 2013 AND SEBI LODR REGULATIONS
THE ?
HTTPS://TAXGURU.IN/COMPANY-LAW/NOMINATION-REMUNERATION-COMMITTEE-
COMPANIES-ACT-2013-VIS-A-VIS-SEBI-LODR-REGULATIONS-2015.HTML

72. WHAT IS THE SIGNIFICANCE OF TAKEOVER CODE?

The Code is designed principally to ensure that shareholders in an offeree company are treated fairly
and are not denied an opportunity to decide on the merits of a takeover and that shareholders in the
offeree company of the same class are afforded equivalent treatment by an offeror. The Code also
provides an orderly framework within which takeovers are conducted. In addition, it is designed to
promote, in conjunction with other regulatory regimes, the integrity of the financial markets.

the extant Indian takeover regulations also regulate the acquisition of stake in Indian listed companies
and ensure transparency in the affairs of the company. Further, the interests of the public shareholders
are protected by the Takeover Code by obligating the acquirers to mandatorily provide an exit
opportunity to the public shareholders in case of a takeover or substantial acquisition. Also, the
Takeover Code seeks to ensure that the securities market in India operates in a fair, equitable and
transparent manner. https://www.nishithdesai.com/fileadmin/user_upload/pdfs/Ma%20Lab/Takeover
%20Code%20Dissected.pdf

73. ARE YOU FAMILIAR WITH FOLLOWING TERMS

HTTPS://WWW.SEBI.GOV.IN/SEBI_DATA/FAQFILES/MAR-2022/1648620806406.PDF

ACQUIRER

THE DEFINITION OF “ACQUISITION” AS “DIRECTLY OR INDIRECTLY, ACQUIRING OR AGREEING TO

ACQUIRE SHARES OR VOTING RIGHTS IN, OR CONTROL OVER, A TARGET COMPANY”3 . FURTHER,
THE TAKEOVER CODE IDENTIFIES AN “ACQUIRER” AS ANY PERSON WHO, DIRECTLY OR
INDIRECTLY, ACQUIRES OR AGREES TO ACQUIRE WHETHER BY HIMSELF, OR THROUGH, OR WITH
PERSONS ACTING IN CONCERT WITH HIM, SHARES OR VOTING RIGHTS IN, OR CONTROL OVER A
TARGET COMPANY

PERSONS ACTING IN CONCERT

PERSONS ACTING IN CONCERT (“PAC”) AS PERSONS WHO, WITH A COMMON OBJECTIVE OR

PURPOSE OF ACQUISITION OF SHARES OR VOTING RIGHTS IN, OR EXERCISING CONTROL OVER A
TARGET COMPANY, PURSUANT TO AN AGREEMENT OR UNDERSTANDING, FORMAL OR INFORMAL,
DIRECTLY OR INDIRECTLY CO-OPERATE FOR ACQUISITION OF SHARES OR VOTING RIGHTS IN, OR
EXERCISE OF CONTROL OVER THE TARGET COMPANY
CONTROL

The Takeover Code defines “control” to include the right to appoint majority of the directors or to
control the management or policy decisions exercisable by a person or persons acting individually or in
concert, directly or indirectly, including by virtue of their shareholding or management rights or
shareholders agreements or voting agreements or in any other manner: Provided that a director or
officer of a target company shall not be considered to be in control over such target company, merely by
virtue of holding such position

OPEN OFFER

An open offer is an offer made by the acquirer to the shareholders of the target company inviting them
to tender their shares in the target company at a particular price. The primary purpose of an open offer
is to provide an exit option to the shareholders of the target company on account of the change in
control or substantial acquisition of shares, occurring in the target company.

VOLUNTARY OPEN OFFER

A voluntary open offer under Regulation 6, is an offer made by a person who himself or through Persons
acting in concert ,if any, holds 25% or more shares or voting rights in the target company but less than
the maximum permissible non-public shareholding limit.

COMPETING OFFER

Competitive offer is an offer made by a person, other than the acquirer who has made the first public
announcement. A competitive offer shall be made within 15 working days of the date of the Detailed
Public Statement (DPS) made by the acquirer who has made the first PA.

CONDITIONAL OFFER

An offer in which the acquirer has stipulated a minimum level of acceptance is known as a ‘conditional
offer’.

MINIMUM LEVEL OF ACCEPTANCE

‘Minimum level of acceptance’ implies minimum number of shares which the acquirer desires under the
said conditional offer. If the number of shares validly tendered in the conditional offer, are less than the
minimum level of acceptance stipulated by the acquirer, then the acquirer is not bound to accept any
shares under the offer.

OFFER PRICE

Offer price is the price at which the acquirer announces to acquire shares from the public shareholders
under the open offer. The offer price shall not be less than the price as calculated under regulation 8 of
the SAST Regulations, 2011 for frequently or infrequently traded shares
OFFER SIZE

PUBLIC ANNOUNCEMENT

Public Announcement contains minimum details about the offer, the transaction that triggered the open
offer obligations, acquirer, selling shareholders (if any), offer price and mode of payment.

LETTER OF OFFER

Letter of offer contains details about the offer, background of Acquirers/PACS, financial statements of
Acquirer/ PACs, escrow arrangement, background of the target company, financial statements of the
target company, justification for offer price, financial arrangements, terms and conditions of the offer,
procedure for acceptance and settlement of the offer. SEBI has prescribed the format for Letter of offer,
which enumerates minimum disclosure requirements. The Manager to the offer/ acquirer is free to add
any other disclosures which in his opinion are material for the shareholders.

DETAILED PUBLIC STATEMENT

Detailed Public Statement contains disclosure in more detail about the acquirer/PACs, target company,
financials of the acquirers/PACs/target company, the offer, terms & conditions of the offer, procedure
for acceptance and settlement of the offer, escrow account etc

74. IN WHICH SITUATIONS IS AN OPEN OFFER TRIGGERED UNDER THE TAKEOVER CODE?
75. WHO ALL CAN PARTICIPATE IN AN OPEN OFFER?

Shareholders who acquire shares after the identified date are eligible to participate in the open offer
provided they submit their valid tenders before the end of the tendering period.

76. WHEN DOES AN OPEN OFFER HAVE TO BE MADE?

77. WHAT IS THE MAXIMUM PERMISSIBLE NON-PUBLIC SHAREHOLDING IN A LISTED
COMPANY? 75%
78. ARE THERE ANY EXEMPTIONS FROM MAKING AN OPEN OFFER UNDER THE TAKEOVER
CODE?

In respect of certain acquisitions, SAST Regulations, 2011 provide exemption from the requirements of
making an open offer, subject to certain conditions being fulfilled. For example, acquisition pursuant to
inter- se transfer of shares between certain categories of shareholders; acquisition in the ordinary
course of business by entities like Underwriter registered with SEBI, stock brokers, merchant bankers
acting as stabilizing agent, Scheduled Commercial Bank (SCB), acting as an escrow agent; etc. For more
details, please refer to regulation 10 of SAST Regulations, 2011

79. WHAT ARE THE DISCLOSURES REQUIRED TO BE MADE IN TERMS OF THE TAKEOVER CODE,
BY WHOM, WHEN AND TO WHOM?
HTTPS://BLOG.IPLEADERS.IN/TYPES-DISCLOSURE-OBLIGATIONS-TAKEOVER-CODE/

IS INSIDER TRADING PROHIBITED IN INDIA? WHY? PROVISIONS/LEGISLATIONS/REGULATIONS

DEALING WITH INSIDER TRADING IN INDIA. AMENDMENTS BROUGHT ABOUT BY THE SEBI
(PROHIBITION OF INSIDER TRADING) REGULATIONS, 2015? DO THE SEBI (PROHIBITION OF
INSIDER TRADING) REGULATIONS, 1992 STILL APPLY? WHICH TYPE OF SECURITIES IS COVERED
UNDER THE INSIDER TRADING FRAMEWORK IN INDIA? ARE YOU FAMILIAR WITH THE FOLLOWING
TERMS: ‘INSIDER’ ‘CONNECTED PERSON’ ‘UNPUBLISHED PRICE SENSITIVE INFORMATION’
(UPSI) ‘TRADING PLANS’ IS COMMUNICATION OF UNPUBLISHED PRICE SENSITIVE INFORMATION
PROHIBITED? ‘CODE OF CONDUCT AND FAIR DISCLOSURES’ ‘CHINESE WALLS’ IS
COMMUNICATION OF UNPUBLISHED PRICE SENSITIVE INFORMATION PROHIBITED? WHAT ARE THE
VALID DEFENSES/EXCEPTIONS TO INSIDER TRADING IN INDIA? WHAT ARE THE CONSEQUENCES
OF INSIDER TRADING IN INDIA? DO ‘LAWYERS’ QUALIFY AS ‘INSIDERS’ FOR THE PURPOSES OF
THE SEBI (PROHIBITION OF INSIDER TRADING) REGULATIONS? WHAT ARE THE DISCLOSURES
REQUIRED TO BE MA+B482:C491DE IN TERMS OF THE SEBI (PROHIBITION OF INSIDER TRADING)
REGULATIONS, BY WHOM, WHEN AND TO WHOM?

WHAT IS COMPETITION LAW? WHY IS IT CALLED ANTI-TRUST LAW? THE DIFFERENCE BETWEEN
HORIZONTAL AND VERTICAL AGREEMENTS IN TERMS OF THE COMPETITION ACT? WHAT IS
'APPRECIABLE ADVERSE EFFECT ON COMPETITION? IS DOMINANCE PER-SE ILLEGAL? HOW IS
DOMINANCE DETERMINED UNDER THE ACT? HOW IS “RELEVANT MARKET” DEFINED UNDER THE
ACT? WHAT ARE THE THRESHOLDS IN RELATION TO TURNOVER AND ASSETS FOR TRIGGERING
COMBINATION REGULATIONS? WHAT IS THE MAXIMUM AMOUNT OF PENALTY IMPOSED BY CCI?
ARE COMPETITION LAW CLAIMS ARBITRABLE IN INDIA AS ALLOWED IN US AND EUROPEAN
UNION VARIOUS ENFORCEMENT FRAMEWORKS UNDER INDIA, US AND EU LAWS. KINDS OF
LENIENCY PROGRAMS IN VARIOUS JURISDICTIONS- INDIA, US AND EU LAWS; HAVE YOU BEEN
INVOLVED IN ANY PROCEEDINGS BEFORE CCI/COMPAT IN RELATION TO SECTION 3 AND 4 OF
THE ACT? HAVE YOU BEEN INVOLVED IN ANY COMBINATION FILING BEFORE CCI (SECTION 5-6
OF THE ACT)?

WHAT DO YOU KNOW ABOUT THE FVCI ROUTE? WHAT ARE THE BENEFITS OF INVESTING UNDER
FVCI ROUTE? ARE YOU FAMILIAR WITH STANDARD INVESTOR PROTECTION RIGHTS IN
SHAREHOLDER AGREEMENTS? PLEASE LIST THEM. DO YOU KNOW WHAT PRE-MONEY VALUATION
AND POST- MONEY VALUATION MEAN? WHAT IS CAP TABLE? DO YOU KNOW THE MEANING OF
CALCULATION OF SHAREHOLDING ON A FULLY DILUTED BASIS? ARE YOU FAMILIAR WITH A
SLIDING CONVERSION RATIO IN AN CONVERTIBLE INSTRUMENT AND HOW IT TYPICALLY WORKS?
IS IT POSSIBLE TO PROVIDE FOR A SLIDING CONVERSION RATIO IN CASE OF ANY FOREIGN
INVESTMENT? WHAT ARE THE LIMITATIONS? ARE YOU AWARE OF THE DIFFERENCES BETWEEN
REPRESENTATIONS, WARRANTIES AND COVENANTS? WHAT IS A DISCLOSURE SCHEDULE OR
SCHEDULE OF EXCEPTIONS? ARE YOU FAMILIAR WITH THE INDEMNIFICATION RIGHTS OF AN
INVESTOR IN ANY INVESTMENT DOCUMENT AND THE TYPICAL LIMITATIONS THAT ARE
NEGOTIATED? WHAT IS (I) JOINT LIABILITY, (II) SEVERAL LIABILITY AND (III) JOINT AND SEVERAL
LIABILITY? WHAT DO THE FOLLOWING MEAN: DEMINIMUS, DEDUCTIBLE, BASKET, INDEMNITY
CAP DO YOU KNOW THE DIFFERENCE BETWEEN RIGHT OF FIRST OFFER (ROFO) AND RIGHT OF
FIRST REFUSAL (ROFR)? DO YOU KNOW WHAT IS A TAG ALONG RIGHT AND A DRAG ALONG
RIGHT? ARE YOU AWARE OF THE TYPICAL EXIT RIGHTS FOR THE INVESTOR? ARE THERE ANY
ISSUES CONCERNING ENFORCEABILITY OF PUT OPTIONS? DO YOU KNOW WHAT IS AN ANTI-
DILUTION RIGHT AND THE DIFFERENT TYPES OF ANTI-DILUTION PRICE PROTECTION? ARE YOU
AWARE OF THE ISSUES CONCERNING ENFORCEABILITY OF ANTI-DILUTION PRICE PROTECTION
RIGHTS? ARE YOU AWARE OF VETO RIGHTS? IS THERE ANY REASON WHY SUCH VETO RIGHTS
MAY NOT BE ENFORCEABLE AT THE BOARD LEVEL? DO YOU KNOW WHAT “REGISTRATION
RIGHTS” ARE? DO YOU KNOW WHAT IS MEANT BY LIQUIDATION PREFERENCE AND WHAT ARE
THE ENFORCEABILITY ISSUES WITH RESPECT TO THE SAME?

THE CONSTITUTIONAL LAW WHICH GOVERNS FOREIGN EXCHANGE TRANSACTIONS, AND ITS
OBJECT?

ART 323(B) THE OBJECTIVE IS TO CONSOLIDATE AND AMEND THE LAW RELATING TO FOREIGN
EXCHANGE WITH VIEW TO: FACILITATE EXTERNAL TRADE AND PAYMENTS. FOR PROMOTING
DEVELOPMENT & MAINTENANCE OF FOREIGN EXCHANGE MARKET IN INDIA.

“CAPITAL ACCOUNT TRANSACTION” MEANS A TRANSACTION WHICH ALTERS THE ASSETS OR

LIABILITIES, INCLUDING CONTINGENT LIABILITIES, OUTSIDE INDIA OF PERSONS RESIDENT IN
INDIA OR ASSETS OR LIABILITIES IN INDIA OF PERSONS RESIDENT OUTSIDE INDIA, AND INCLUDES
TRANSACTIONS REFERRED TO IN SUB-SECTION (3) OF SECTION 6;

“current account transaction” means a transaction other than a capital account transaction and without
prejudice to the generality of the foregoing such transaction includes,— (i) payments due in connection
with foreign trade, other current business, services, and short-term banking and credit facilities in the
ordinary course of business, (ii) payments due as interest on loans and as net income from investments,
(iii) remittances for living expenses of parents, spouse and children residing abroad, and (iv) expenses in
connection with foreign travel, education and medical care of parents, spouse and children;

ANY OTHER LEGAL FRAMEWORK UNDER THE CONSTITUTIONAL LAW, WHICH COVERS THE
FOREIGN EXCHANGE TRANSACTIONS? THE CURRENT ACCOUNT TRANSACTIONS? THE CAPITAL
ACCOUNT TRANSACTIONS? DIFFERENT REGIMES OF FOREIGN INVESTMENT INTO INDIA? THE
SECTORAL CAPS AND THE MINIMUM CAPITALIZATION NORMS UNDER FOREIGN INVESTMENT
REGULATIONS? ANY ADVANTAGES FOR NRIS TO INVEST ON ‘NON-REPATRIATION’ BASIS? THE
REGULATORY PROCESS FOR INVESTING IN A COMPANY IN WHICH AUTOMATIC ROUTE IS NOT
AVAILABLE. THE REGULATORY PROCESS FOR INVESTING IN A COMPANY IN WHICH AUTOMATIC
ROUTE IS AVAILABLE? REGULATIONS GOVERNING OVERSEAS INVESTMENT BY AN INDIAN
COMPANY, ESPECIALLY IN A FINANCIAL SERVICES SECTOR? THE PROVISIONS FOR RESIDENT
INDIAN INDIVIDUALS TO MAKE OVERSEAS INVESTMENT? THE PROVISIONS TO MONITOR ALL THE
FOREIGN EXCHANGE TRANSACTIONS? THE CONSEQUENCES FOR BREACH OF ANY OF THE
PROVISIONS OF THE ACT OR THE RULES/REGULATIONS? ANY OTHER IMPORTANT LAWS THAT
GOVERN FOREIGN EXCHANGE TRANSACTIONS?