Goolam Vahanvati, the Attorney General of India has written to the Department of Telecommunications (DoT), providing a legal opinion on the issue of lock-in period regarding the merger and acquisition (M&A) norms being finalised by the department.
According to the Attorney General of India, if a licensee participates in an auction (and is consequently subject to a lock-in condition) and proposes to merge into another licensee, the lock-in period would apply to the new shares issued in respect of the resultant company (merged entity). This would mean that if operators winning in the auctions decide to merge, the lock-in period clause will be applicable on the new shares issued to the resultant or transferee company.
Further, the Attorney General of India is of the view that the move would help optimise operators? participation in the auctions and will help ?maintain the purpose underlying the lock-in period.?
Earlier, DoT had approached the Attorney General of India for his opinion on whether operators should be allowed to merge within a three-year lock-in period under the new M&A norms. DoT had sought clarity on whether resultant shares issued by the acquiring company to promoters of the company being acquired would amount to sale of equity of the acquired company. Also, whether this would be held as violation of the lock-in conditions in the Notice Inviting Application issued for upcoming auctions.
