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The Tax Publishers Meaning of Control Under various Laws and Regulations: An Analytical Study Pragya Lalwani The term control is defined under various laws in different ways. In corporate laws it is, inter alia, used under the Companies Act, 2013 and Regulations framed under Securities and Exchange Board of India Act, 1992, Foreign Direct Investment Policy and Competition Act, 2002. While interpreting the said word, different authorities have given meanings thereof, which is not exactly same or similar. The learned author has analysed the interpretation of the expression control given by such authorities, the context in which such term has been used and its impact. 1. Introduction In common parlance, the term control means the power or authority of one person to determine or manage, partially or fully, actions of other person(s). Dictionary meaning of word control is to regulate or check, including power to give order or restrain or regulate something. Control in relation to companies in India is defined by various regulatory Authorities such as the Ministry of Corporate Affairs, Securities and Exchange Board of India, Department of Industrial Policy and Promotion and Competition Commission of India in their respective regulations. It may be in the context of management rights, right to appoint director(s) on the Board, voting rights, rights provided under any agreement or Articles of Association, shareholding rights as per the agreement, etc. The main objective of framing such laws is to ensure that such corporates run their affairs in a fair and proper manner, as specified in respective laws and all those, who are attached therewith, also work accordingly. 2. Control as per SEBI Regulations (i) Definition under Securities and Exchange Board of India (Substantial acquisition of shares and takeovers) Regulations, 2011 Regulation 2(1)(e) of SEBI (SAST) Regulations, 2011 defines the term control as: control includes 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. However, a director or officer of a target company would not beconsidered to be in control over such target company, merely by virtue of holding such position. Further, Regulation 4 states that, irrespective of acquisition or holding of shares or voting rights in a target company, no acquirer shall acquire, directly or indirectly, control over such target company unless the acquirer makes a public announcement of an open offer for acquiring shares of such target company in accordance with these Regulations. Thus, acquisition in the context of Regulation 4 includes direct or indirect acquisition of control over companies whether in India or abroad. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

Meaning of Control Under various Laws and Regulations: An Analytical Study

Pragya Lalwani

The term control is defined under various laws in different ways. In corporate laws it is, inter alia, used under the Companies Act, 2013 and Regulations framed under Securities and Exchange Board of India Act, 1992, Foreign Direct Investment Policy and Competition Act, 2002. While interpreting the said word, different authorities have given meanings thereof, which is not exactly same or similar. The learned author has analysed the interpretation of the expression control given by such authorities, the context in which such term has been used and its impact.

1. Introduction

In common parlance, the term control means the power or authority of one person to determine or manage, partially or fully, actions of other person(s). Dictionary meaning of word control is to regulate or check, including power to give order or restrain or regulate something. Control in relation to companies in India is defined by various regulatory Authorities such as the Ministry of Corporate Affairs, Securities and Exchange Board of India, Department of Industrial Policy and Promotion and Competition Commission of India in their respective regulations. It may be in the context of management rights, right to appoint director(s) on the Board, voting rights, rights provided under any agreement or Articles of Association, shareholding rights as per the agreement, etc. The main objective of framing such laws is to ensure that such corporates run their affairs in a fair and proper manner, as specified in respective laws and all those, who are attached therewith, also work accordingly.

2. Control as per SEBI Regulations

(i) Definition under Securities and Exchange Board of India (Substantial acquisition of shares and takeovers) Regulations, 2011

Regulation 2(1)(e) of SEBI (SAST) Regulations, 2011 defines the term control as: control includes 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. However, a director or officer of a target company would not beconsidered to be in control over such target company, merely by virtue of holding such position.

Further, Regulation 4 states that, irrespective of acquisition or holding of shares or voting rights in a target company, no acquirer shall acquire, directly or indirectly, control over such target company unless the acquirer makes a public announcement of an open offer for acquiring shares of such target company in accordance with these Regulations. Thus, acquisition in the context of Regulation 4 includes direct or indirect acquisition of control over companies whether in India or abroad.