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VCCircle

Mergers, Acquisitions, Private Equity, Venture Capital, Investment Banking

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If the acquirer of a company pays a non compete fees to the promoters for the acquisition of their shares, which is built up into the price paid for one share, does he have to pay the same price to other shareholders in the open offer or will it be a reduced price, net of the non compete fees paid. If it is a reduced price, then how would the non compete fee portion of the price has to be computed?

, January 01, 1970

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Asked on:	January 01, 1970
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Sanjeev Nippanikar
November 03, 2010

Whether Non-Compete fee is taxable under Service Tax Act under the category Intellectual Property Services or Business Support Services?

Avinash Agrawal
November 01, 2008

>> "The Tribunal further held that payment of the NC Fees to the promoters must be justified as a method of averting possible competition to the company through any future endeavours by the promoters and not as a route to reduce the cost of acquisition of a company through a public offer." <<

Please elaborate how this can be justified.

If there are an example case where it was successfully justified and a case where it was not, these will help.

If there are no known examples, could we take up hypothetical examples to explain this.

Thank you.