Takeover norms for unlisted firms may change playing field for shareholders

The provision should benefit minority shareholders as long as there is no compulsory acquisition of shares of the minority, say legal experts

The ministry of corporate affairs (MCA) is in the process of coming out with takeover norms for unlisted companies. Legal experts explain how the new rules may change the playing field between majority and minority shareholders.

Why is there a need for takeover norms for unlisted companies?

These provisions existed in Section 395 of the Companies Act, 1956, and also under Section 236 of the Companies Act, 2013. However, these were never notified in the absence of rules or guidelines. 

These norms were for the benefit of minority shareholders (less than 10 per cent) in cases where an acquirer gets 90 per cent