HDFC BANK LIMITED AND ITS SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)
(Unaudited)
20. Risk and uncertainties
a) The
COVID-19 pandemic affected the world economy over the previous more than two years. The extent to which any new wave of COVID-19 or another contagious disease or pandemic will impact the Banks results will depend on ongoing as well as future
developments, including, among other things, any new information concerning the severity of the COVID-19 pandemic or another contagious disease or pandemic, and any action to contain its spread or mitigate its impact whether government-mandated or
elected by us.
b) On September 3, 2020, a securities class action lawsuit was filed against the Bank and certain of its current and
former directors in the United States District Court for the Eastern District of New York (the Court). As amended, the complaint alleged that the Bank, its former managing director, Mr. Aditya Puri, and the present managing director
and CEO, Mr. Sashidhar Jagdishan, made materially false and misleading statements regarding certain aspects of the Banks business and compliance policies, which the complaint alleged resulted in the Banks ADS price declining on
July 13, 2020, thereby allegedly causing damage to the Banks investors. On June 7, 2023, the Court dismissed the lawsuit with prejudice, whereby the plaintiffs cannot refile the same claim before the Court. Accordingly, no liability
has been recorded in the Banks consolidated financial statements.
c) The Bank continues to monitor the developments in the
ongoing war between Russia and Ukraine which complicates the geopolitical landscape. The United States, the United Kingdom and the European Union have expanded sanctions significantly against Russia which could impact global markets
and thus the Bank and its customers. The Bank seeks to manage the associated impacts on its customers and business.
21. Subsequent
events
a) In its meeting held on April 4, 2022, the Board of Directors of the Bank approved a composite scheme of amalgamation
(the Scheme) for the amalgamation of: (i) HDFC Investments Limited and HDFC Holdings Limited, each a subsidiary of HDFC Limited, with and into HDFC Limited, and (ii) HDFC Limited with and into HDFC Bank (the Proposed
Transaction). The share exchange ratio shall be 42 equity shares of HDFC Bank (each having a face value of Rs. 1.0) for every 25 equity shares of HDFC Limited (each having a face value of Rs. 2.0).
Following the Board meeting held on April 4, 2022, the parties to the Scheme filed a company scheme application with the National Company
Law Tribunal, Mumbai Bench (NCLT). Pursuant to the order dated October 14, 2022 by the NCLT, a shareholders meetings of HDFC Bank and HDFC Limited were convened. The Scheme was approved by the requisite majority of
shareholders on November 25, 2022. On receipt of such shareholders approval, the parties to the Scheme filed a joint company scheme petition before the NCLT seeking sanction of the Scheme. The NCLT, after hearing the parties to the
Scheme, sanctioned the Scheme on March 17, 2023.
In accordance with Clause 42 of the Scheme, the effectiveness of the Scheme is
inter alia subject to receipt of certain approvals and meeting various compliances under the applicable law and regulations. While the requisite approvals have been received by the parties, certain compliances are currently pending. The
Scheme will be made effective shortly after completion of such compliances, including filing the NCLT Order with the Registrar of Companies, which is expected to occur on or about July 1, 2023.
Upon the Scheme becoming effective, the Bank will issue equity shares to the shareholders of HDFC Limited as on the record date, which is to
be determined by the Boards of Directors of HDFC Limited and HDFC Bank, and the equity shares held by HDFC Limited in the Bank will be extinguished. The shares proposed to be issued pursuant to the Proposed Transaction will not be registered with
the SEC under the Securities Act of 1933 or the securities law of any state or other jurisdiction of the United States, and are being offered and sold in reliance on certain exemptions from registration under the Securities Act of 1933.
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