NON COMPETE FEE

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Ayyswariya RG

Ayyswariya RG (Querist)
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27 October 2010 WHAT IS A NON COMPETE FEE??

Ayyswariya RG

Ayyswariya RG (Querist)
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27 October 2010 AND IS IT A PROFESSIONAL FEE? PLS SOLVE MY QUERIES SIR

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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27 October 2010 Non-compete fee is paid to selling promoters, so that they do not re-enter the business and pose competition to the acquired company.

https://www.thehindubusinessline.com/iw/2010/08/22/stories/2010082251021200.htm

Please read the article from above link.

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Ayyswariya RG

Ayyswariya RG (Querist)
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27 October 2010 thank u sir. so it is not a professional fees right?

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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27 October 2010 yes. It is not a professional fees.

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Ayyswariya RG

Ayyswariya RG (Querist)
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27 October 2010 Thanks a lot sir

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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27 October 2010 Most companies when they take over a business or buy out a company pay a non-compete fee to the seller so that the seller waives off the right to continue in similar business.

The issue is becoming contentious due to the high non-compete fees being paid to the seller, with the Vedanta group being a recent example.

The Vedanta group plans to acquire 51-60 per cent of Cairn India for $8.5-9.6 billion in an all-cash deal. As a part of the deal, the promoters will get a non-compete fee of about Rs 6,000 crore. The non-promoter shareholders will not receive non-compete fee.

The new takeover guidelines by the market regulator Sebi propose to abolish the non-compete fees. At present, Sebi allows the non-compete fees to go up to 25 per cent of the offer price.

Ayyswariya RG

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27 October 2010 again thanks a lot sir

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