Since a hostile takeover takes place by the acquirer directly approaching the shareholders, quite often the affected party is usually the management of the target company and the majority shareholders. For instance, in the case of NDTV, prior to the acquisition, Radhika Roy and Prannoy Roy, two of the Directors of NDTV individually and through their parent company RRPR held majority shareholding. Post-acquisition, AEL replaced them to become the largest individual shareholder in NDTV. Similarly, the management of the target company is also at risk and gets affected because in terms of Section 169(1) of the Companies Act, 2013 (“Companies Act“), the directors are vulnerable to being removed by a mere ordinary resolution. The goodwill that the management has established in the process of advancing the company gets affected because of the takeover. Their position plunges to being controlled in the hands of the acquirer.
Source: Barandbench
