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THE GAZETTE OF SECURITIES AND
EXCHANGE BOARD OF S. O. No 124(E) - In the
exercise of the powers conferred by section30 of the Securities and Exchange
Board of India Act, 1992 (15 of 1992), the Board hereby makes the following
Regulations namely: - 1 (1) These Regulations shall be called the
Securities and Exchange Board of India (Substantial Acquisition of Shares and
Takeovers) Regulations, 1997. (2) These Regulations shall come into force on the
date of their publication in the Official Gazette. 2 (1) In these Regulations, unless the context
otherwise requires:- (a) "Act" means the
Securities and Exchange Board of India Act, 1992 (15 of 1992); (b) "acquirer" means any
person who, directly or indirectly, acquires or agrees to acquire shares or
voting rights in the target company, or acquires or agrees to acquire control
over the target company, either by himself or with any person acting in concert
with the acquirer; (c) "control" shall include the right to
appoint majority of the directors or to control the management or policy
decisions exercisable by a person or persons acting individually or in concert,
directly or indirectly, including by virtue of their shareholding or management
rights or shareholders agreements or voting agreements or in any other manner; 1["Explanation:(i) Where there are two or more persons in
control over the target company, the cesser of any one of such persons from
such control shall not be deemed to be a change in control of management nor
shall any change in the natureand quantum of control amongst them constitute
change in control of management. Provided that the transfer from joint control to
sole control iseffected in accordance with clause (e) of sub - regulation (1)
of regulation3. (ii). If consequent upon change in control of
the target companyin accordance with regulation 3, the control acquired is
equal to or lessthan the control exercised by person (s) prior to such
acquisition of control,such control shall not be deemed to be a change in
control".] 2*[(cc)
"disinvestment" means the sale by the Central Government 3[orby the State Government as the case may be] of its
shares or voting rights and / or control in a listed Public Sector
Undertaking;] (d) "investigating officer" means any
person appointed by the Board under Regulation 38;
(e) "person acting in concert" comprises,
- (1) persons who, for a common
objective or purpose of substantial acquisition of shares or voting rights or
gaining control over the target company, pursuant to an agreement or
understanding (formal or informal),directly or indirectly co-operate by
acquiring or agreeing to acquire shares or voting rights in the target company
or control over the target company. (2) Without prejudice to the generality of this
definition, the following persons will be deemed to be persons acting in
concert with other persons in the same category, unless the contrary is
established : (i) a company, its holding company, or
subsidiary of such company or company under the same management either individually
or together with each other; (ii) a company with any of its
directors, or any person entrusted with the management of the funds of the
company; (iii) directors of companies
referred to in sub-clause(i)
of clause (2) and their associates; (iv) mutual fund with sponsor or
trustee or asset management company; (v) foreign institutional
investors with sub account(s); (vi) merchant bankers with their
client(s) as acquirer; (vii) portfolio managers with
their client(s) as acquirer; (viii) venture capital funds with
sponsors; (ix)
banks with financial advisers, stock brokers of the acquirer, or any company
which is a holding company, subsidiary or relative of the acquirer. Provided that sub-clause
(ix)shall not apply to a bank whose sole relationship with the acquirer or with
any company, which is a holding company or a subsidiary of the acquirer or with
a relative of the acquirer, is by way of providing normal commercial banking
services or such activities in connection with the offer such as confirming
availability of funds, handling acceptances and other registration work. (x) any investment company with
any person who has an interest as director, fund manager, trustee, or as a
shareholder having not less than 2% of the paid-up capital of that company or
with any other investment company in which such person or his associate holds
not less than 2% of the paid up capital of the latter company. Note: For the purposes of this
clause `associate' means: (a) any relative of that person
within the meaning of section 6 of the Companies Act, 1956 (1 of 1956); and (b) family trusts and Hindu
Undivided Families. (f) "4[offer period’ means the period between the date of
entering into Memorandum of Understanding or the public announcement, as the
case may be and the date of completion of offer formalities relating to the
offer made under these regulations.]; (g) "panel" means a panel constituted by
the Board for the purpose of Regulation4;
(b) any person named as promoter in any offer
document of the target company or any shareholding pattern filed by the target
company with the stock exchanges pursuant to the Listing Agreement, whichever
is later; and includes any person belonging to the promoter group as
mentioned in Explanation I: Provided that a director or officer of the target company
or any other person shall not be a promoter, if he is acting as such merely in
his professional capacity. Explanation I: For the purpose of this clause, 'promoter
group' shall include: (a) in case promoter is a body corporate - (i)
a subsidiary or holding company of that body corporate; (ii)
any company in which the promoter holds 10% or more of the equity capital or
which holds 10% or more of the equity capital of the promoter; (iii)
any company in which a group of individuals or companies or combinations
thereof who holds 20% or more of the equity capital in that company also holds
20% or more of the equity capital of the target company; and (b) in case the promoter is an individual - (i)
the spouse of that person, or any parent, brother, sister or child of that
person or of his spouse; (ii)
any company in which 10% or more of the share capital is held by the promoter
or an immediate relative of the promoter or a firm or HUF in which the promoter
or any one or more of his immediate relative is a member; (iii)
any company in which a company specified in (i) above, holds 10% or more, of
the share capital; and (iv)
any HUF or firm in which the aggregate share of the promoter and his immediate
relatives is equal to or more than 10% of the total. Explanation II: Financial Institutions, Scheduled Banks,
Foreign Institutional Investors (FIIs) and Mutual Funds shall not be deemed to
be a promoter or promoter group merely by virtue of their shareholding.
Provided that the Financial Institutions, Scheduled Banks and Foreign
Institutional Investors (FIIs) shall be treated as promoters or promoter group
for the subsidiaries or companies promoted by them or mutual funds sponsored by
them.” (i) "public
financial institution" means a public financial institution as defined in
Section 4A of the Companies Act, 1956. 7a(j)“public shareholding”
means shareholding held by persons other than promoters as defined under clause
(h) (k) "shares" means shares in the share capital of
a company carrying voting rights and includes any security which would entitle
the holder to receive shares with voting rights 8[but
shall not include preference shares]. (l) "sick industrial company" shall
have the same meaning assigned to it in clause (o) of sub-section (1) of
Section 3 of the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of
1986) or any statutory re-enactment thereof. (m) "state level
financial institution" means a state financial corporation established
under Section 3 of the State Financial Institutions Act, 1951and includes
development corporation established as a company by a State Government with the
object of development of industries or agricultural activities in the state; (n) "stock
exchange" means a stock exchange which has been granted recognition under
Section 4 of the Securities Contracts (Regulation) Act, 1956 (42of 1956); (o) "target
company" means a listed company whose shares or voting rights or control
is directly or indirectly acquired or is being acquired; 9[(p)
"working days" shall mean the working days of the Board."] (2)
All other expressions unless defined herein shall have the same meaning as have
been assigned to them under the Act or the Securities Contracts (Regulation)
Act, 1956, or the Companies Act, 1956, or any statutory modification or
reenactment thereto, as the case may be. Applicability
of the Regulation 3 (1) Nothing
contained in Regulations 10, Regulation11 and Regulation 12 of these regulations shall apply to : (a) allotment in pursuance of an application made to a
public issue. Provided
that if such an allotment is made pursuant to a firm allotment in the public
issues, such allotment shall be exempt only if full disclosures are made in the
prospectus about the identity of the acquirer who has agreed to acquire the
shares, the purpose of acquisition, consequential changes in voting rights,
shareholding pattern of the company and in the Board of Directors of the
Company, if any, and whether such allotment would result in change in control
over the company. (b) allotment pursuant to an application made by the
shareholder for rights issue, (i)
to the extent of his entitlement; and (ii) upto the percentage specified in Regulation 11: Provided
that the limit mentioned in sub-clause(ii) will not apply to the acquisition by any person
presently in control of the company and who has in the rights letter of offer
made disclosures that they intend to acquire additional shares beyond their
entitlement if the issue is undersubscribed. Provided
further that this exemption shall not be available in case the acquisition of
securities results in the change of control of management; 10*[(c)] (d) allotment to the underwriters pursuant to any
underwriting agreement; (e) interse transfer of shares amongst :- 11[(i)group
coming within the definition of group as defined in the Monopolies and
Restrictive Trade Practices Act, 1969 (54 of 1969) where persons constituting such
group have been shown as group in the last published Annual Report of the
target company. ]; (ii)
relatives within the meaning of Section 6 of the Companies Act, 1956 (1 of
1956) ; (iii)
(a) 11a[Qualifying] Indian promoters and
foreign collaborators who are shareholders; (b)11aa[qualifying] promoters: 12[ Provided
that the transferor(s) as well as the transferee(s) have been holding shares in
the target company for a period of at least three years prior to the proposed
acquisition.]; 12a“Explanation: For the purpose of the exemption under sub-clause (iii) the term
“ 12b [qualifying] promoter" means -
(a) where the 12c[qualifying] promoter is an
individual, - Provided that, in case of a partnership firm, the share of
the 12g[qualifying]
promoter or his relative, as the case may be, in such firm should not be less
than fifty per cent.(50%)"; (b) where the 12h [qualifying] promoter is a
body corporate,- Provided that, in case of a partnership firm, the share of
such 12k [qualifying] promoter or his
relative, as the case may be, in such firm should not be less than fifty per
cent.(50%).” 13[(iv)the
acquirer and persons acting in concert with him, where such transfer of shares
takes place three years after the date of closure of the public offer made by
them under these Regulations.] 14[Explanation.-
(1) The exemption under sub-clauses (iii) and (iv) shall not be available if
inter se transfer of shares is at a price exceeding 25% of the price as
determined in terms of sub-regulations (4) and (5) of regulation20."; 2. The benefit of
availing exemption under this clause, from applicability of the Regulations for
increasing shareholding or inter se transfer of shareholding (f)
acquisition of shares in the ordinary course of business by,- (i) a
registered stock-broker of a stock exchange on behalf of clients; (ii) a registered
market maker of a stock exchange in respect of shares for which he is the
market maker, during the course of market making; (iii) by Public
Financial Institutions on their own account; (iv) by banks and
public financial institutions as pledgees; 15[(v) the
International Finance Corporation, Asian Development Bank, International Bank
for Reconstruction and Development, Commonwealth Development Corporation and
such other international financial institutions, (vi) a merchant
banker or a promoter of the target company pursuant to a scheme of safety net
under the provisions of the Securities and Exchange Board of India (Disclosure
and Investor Protection) Guidelines, 2000 in excess of limit specified in
sub-regulation (1) of Regulation 11.] 16[(ff)acquisition
of shares by a person in exchange of shares received under a public offer made
under these Regulations.] (g)
acquisition of shares by way of transmission on succession or inheritance; (h) acquisition of shares by government companies
within the meaning of Section 617 of the Companies Act, 1956(1 of 1956) and
statutory corporations; 17[Provided that this exemption shall not be applicable
if a Government company acquires shares or voting rights or control of a listed
Public Sector Undertaking through the competitive bidding process of the
Central Government 18[or the State Government as
the case may be] for the purpose of disinvestment."] (i) transfer of shares from state level financial
institutions, including their subsidiaries, to co-promoter(s)of the company 19[or their successors or
assignee(s) or an acquirer who has substituted an erstwhile promoter]
pursuant to an agreement between such financial institution and such
co-promoter(s); 20[(ia) transfer of shares from venture capital funds or
foreign venture capital investors registered with the Board to promoters of a
venture capital undertaking or venture capital undertaking pursuant to an
agreement between such venture capital fund or foreign venture capital
investors with such promoters or venture capital undertaking;] (j)
pursuant to a scheme – (i)
framed under Section 18 of the Sick Industrial Companies(Special Provisions)
Act,1985; (ii) of arrangement
or reconstruction including amalgamation or merger or demerger under any law or
regulation, Indian or foreign. 20a(ja) change in control by takeover of management of
the borrower target company by the secured creditor or by restoration of
management to the said target company bythe said secured creditor in terms of
the Securitization and Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002 (54of 2002). (k) acquisition of
shares in companies whose shares are not listed on any stock exchange; Explanation:
The exemption under clause(k) above shall not be applicable if by virtue of
acquisition or change of control of any unlisted company, whether in India or
abroad, the acquirer acquires shares or voting rights or control over a listed
company. 8a(ka)" acquisition of
shares in terms of guidelines or regulations regarding delisting of securities
specified or framed by the Board”. (l) 21[*]other cases as may be
exempted from the applicability of Chapter III by the Board under Regulation 4. 21a (1A) 21aaFor
the removal of doubt, it is clarified that nothing contained in sub-regulation
(1) shall affect the applicability of the listing requirements. (2) Nothing contained
in Chapter III of the Regulations shall apply to the acquisition of
Global Depository Receipts or American Depository Receipts so long as they are
not converted into shares carrying voting rights. (3) In respect of
acquisitions under clauses22[*](e),(h)and (i) of sub-regulation (1), the stock exchanges where the
shares of the company are listed shall, for information of the public, be notified of the details of the proposed transactions at least 4 working
days in advance of the date of the proposed acquisition, in case of acquisition
exceeding 23[5%]of
the voting share capital of the company. (4) In respect of
acquisitions under clauses(a),(b),24[*],(e)and
(i)
of sub-regulation (1), the acquirer shall, within 21 days of the date of
acquisition, submit a
report along with supporting documents to the Board giving all details in
respect of acquisitions which (taken together with shares or voting rights, if
any, held by him or by persons acting in concert with him) would entitle such
person to exercise 25*[15%]or
more of the voting rights in a company. 26[Explanation- For the purposes of sub-regulations (3) and
(4), the relevant date incase of securities which are convertible into shares
shall be the date of conversion of such securities.] (5) The acquirer shall, along with the report
referred to under sub-regulation(4),
pay a fee of 26a [twenty
five thousand rupees ] to the Board, either by a bankers cheque or demand draft
in favour of the Securities and Exchange Board of India, payable at Mumbai. 4. (1) The Board shall for the purposes of this
Regulation constitute a Panel of majority of independent persons from within
the categories mentioned in sub-section (5) of Section 4 of the Act. (2) For seeking exemption underclause (l) of
sub-regulation (1) of Regulation (3), the acquirer shall file an
application 27[supported by a duly sworn affidavit] with the Board,
giving details of the proposed acquisition and the grounds on which the
exemption has been sought.[Formatof
application] (3) The acquirer shall, along with the application
referred to under sub pay a fee of 27a
[one lakh rupees] to the Board, either by a bankers cheque or demand
draft in favor of the Securities and Exchange Board of India, payable at
Mumbai. (4) The Board shall within 5 days of the receipt of
an application under sub-regulation(2)
forward the application to the Panel. (5) The Panel shall within 15 days from the date of
receipt of application make a recommendation on the application to the Board. (6) The Board shall after
affording reasonable opportunity to the concerned parties and after considering
all the relevant facts including the recommendations, if any, pass a reasoned
order on the application under sub-regulation
(2) within 30days thereof. (7) The order of the Board under sub-regulation(6)
shall be published by the Board. Power of the Board to grant
exemption 5. In order to remove any difficulties in the
interpretation or application of the provisions of these Regulations, the Board
shall have the power to issue directions through guidance notes or circulars: Provided that where any direction is issued by the
Board in a specific case relating to interpretation or application of any
provision of these Regulations, it shall be done only after affording a
reasonable opportunity to the concerned parties and after recording reasons for
the direction. CHAPTER
II 6. (1) Any person, who holds more than five percent
shares or voting rights in any company, shall within two months of notification
of these Regulations disclose his aggregate shareholding in that company, to
the company. (2) Every company whose shares are held by the
persons referred to in sub-regulation(1)
shall, within three months from the date of notification of these Regulations,
disclose to all the stock exchanges on which the shares of the company are
listed, the aggregate number of shares held by each person. (3) A promoter or any
person having control over a company shall within two months of notification of
these Regulations disclose the number and percentage of shares or voting rights
held by him and by person(s) acting in concert with him in that company, to the
company. (4) Every company, whose shares are listed on a
stock exchange, shall within three months of notification of these Regulations,
disclose to all the stock exchanges on which the shares of the company are
listed, the names and addresses of promoters and, or person(s) having control
over the company, and number and percentage of shares or voting rights held by
each such person. Acquisition of 5% and more
shares of a company 28[7.(1) Any acquirer, who acquires shares or voting rights which(taken together with shares or voting rights, if any,
held by him) would entitle him to more than five per cent or ten per cent. or
fourteen percent.28aor fifty four per cent. or
seventy four per cent shares or voting rights ina company, in any manner
whatsoever, shall disclose at every stage the aggregate of his shareholding or
voting rights in that company to the company and to the stock exchanges where
shares of the target company are listed.] 29[(1A) Any acquirer who has acquired shares or voting rights
of a company under sub-regulation(1) of regulation 11, shall disclose purchase
or sale aggregating two percent. or more of the share capital of the target
company to the target company, and the stock exchanges where shares of the
target company are listed within two days of such purchase or sale along with
the aggregate shareholding after such acquisition or sale.] 30[Explanation- for the purposes of sub-regulations (1) and
(1A), the term 'acquirer’ shall include a pledgee, other than a bank or a
financial institution and such pledgee shall make disclosure to the target
company and the stock exchange within two days of creation of pledge.] (2) The disclosures mentioned in 31*[sub-regulations(1)
and (1A)]
shall be made within 32[twodays], - (a) the receipt of intimation of
allotment of shares; or (b) the acquisition of shares or
voting rights, as the case may be. 33["(2A) The stock exchange shall immediately display the
information received from the acquirer under sub-regulations (1) and (1A) on
the trading screen, the notice board and also on its website.] (3) Every company, whose shares are acquired in a
manner referred to in 34*[sub-regulation(1)
and (1A)]
shall disclose to all
the stock exchanges on which the shares of the said company are listed the
aggregate number of shares held by each of such persons referred above within
seven days of receipt of information under35*[sub-regulations(1)
and (1A)]
8. (1) Every person, including a person mentioned
in Regulation6
who holds more than (2) A promoter or every
person having control over a company shall, within 21 days from the financial
year ending March31, as well as the record date of the company for the purposes
of declaration of dividend, disclose the number and
percentage of shares or voting rights held by him and by persons acting in
concert with him, in that company to the company. (3) Every company whose shares are listed on a
stock exchange, shall within 30 days from the financial year ending March 31,
as well as the record date of the company for the purposes of declaration of dividend,
make yearly
disclosures to all the stock exchanges on which the shares of the company
are listed, the changes, if any, in respect of the holdings of the persons
referred to under sub-regulation
(1) and also holdings of promoters or person(s) having control over the
company as on 31st March. (4) Every company whose shares are listed on a
stock exchange shall maintain a register in the
specified format to record the information received under sub-regulation(3)
of Regulation 6, sub-regulation (1)
of Regulation7 and sub-regulation
(2) of Regulation 8. 9. The stock exchanges and the company shall
furnish to the Board information with regard to the disclosures made under Regulations6,Regulation 7 and
Regulation8
as and when required by the Board. CHAPTER III Acquisition of37*[fifteen]
or more of the shares or voting rights of any company. 10. No acquirer shall acquire shares or voting
rights which (taken together with shares or voting rights, if any, held by him
or by persons acting in concert with him), entitle such acquirer to exercise37*[fifteen
] percent or more of the voting rights in a company, unless such acquirer makes
a public announcement to acquire shares of such company in accordance with the
Regulations. 11. (1) No acquirer who, together with persons
acting in concert with him, has acquired, in accordance with the provisions of
law, 38*[15per
cent or more but less than 38afiftyfive per cent.(55%) ] of the shares or voting
rights in a company, shall acquire, either by himself or through or with
persons acting in concert with him, additional shares or voting rights
entitling him to exercise more than 39*[40[5%]]of the voting rights, 41[in any financial year ending on 31st March], unless such
acquirer makes a public announcement to acquire shares in accordance with the
Regulations. 42[(2) 42a No acquirer, who
together with persons acting in concert with him holds, fifty five per cent.
(55%) or more but less than seventy five per cent. (75%) of the shares or
voting rights in a target company, shall acquire either by himself or through
persons acting in concert with him any additional shares or voting rights
therein, unless he makes a public announcement to acquire shares in accordance
with these Regulations: Provided that in a case
where the target company had obtained listing of its shares by making an offer
of at least ten per cent. (10%) of issue size to the public in terms of clause
(b) of sub-rule (2) of rule 19 of the Securities Contracts (Regulation) Rules,
1957, or in terms of any relaxation granted from strict enforcement of the said
rule, this sub-regulation shall apply as if for the words and figures ‘seventy
five per cent. (75%)’, the words and figures ‘ninety per cent. (90%)’ were
substituted. 42b (2A) [42c] Where an
acquirer who (together with persons acting in concert with him) holds fifty
five per cent. (55%) or more but less than seventy five per cent. (75%) of the
shares or voting rights in a target company, is desirous of consolidating his
holding while ensuring that the public shareholding in the target company does
not fall below the minimum level permitted by the Listing Agreement, he may do
so only by making a public announcement in accordance with these regulations:
Provided that in a case
where the target company had obtained listing of its shares by making an offer
of at least ten per cent. (10%) of issue size to the public in terms of clause
(b) of sub-rule (2) of rule 19 of the Securities Contracts (Regulation) Rules,
1957, or in terms of any relaxation granted from strict enforcement of the said
rule, this sub-regulation shall apply as if for the words and figures ‘seventy
five per cent. (75%)’, the words and figures ‘ninety per cent. (90%)’ were
substituted. 43*[
(3)Not withstanding anything contained in Regulations10,
11 and 12, in case of
disinvestment of a Public Sector Undertaking , an acquirer who together with
persons acting in concert with him, has made a public announcement, shall not
be required to make another public announcement at the subsequent stage of
further acquisition of shares or voting rights or control of the Public Sector
Undertaking provided:- (i) both the
acquirer and the seller are the same at all the stages of acquisition, and (ii) disclosures regarding all the
stages of acquisition, if any, are made in the letter of offer issued in terms
of Regulation 18 and in the first public announcement.] Explanation:- For the purposes of Regulation 10
andRegulation11,
acquisition shall mean and include,- (a) direct acquisition in a listed
company to which the Regulations apply; (b) indirect acquisition by virtue of acquisition
of44[*]companies,
whether listed or unlisted, whether in Acquisition
of control over a company 12. Irrespective of whether or not there has been
any acquisition of shares or voting rights in a company, no acquirer shall
acquire control over the target company, unless such person makes a public announcement
to acquire shares and acquires such shares in accordance with the Regulations. Provided that nothing contained herein shall apply
to any change in control which takes place in pursuance to a 45[special
resolution] passed by the shareholders in a general meeting. 46["Provided
further that for passing of the special resolution facility of voting through
postal ballot as specified under the Companies (Passing of the Resolutions by
Postal Ballot) Rules, 2001 shall also be provided.] Explanation: 47[For
the purposes of this Regulation, acquisition shall include direct or indirect
acquisition of control of target company by virtue of acquisition of companies,
whether listed or unlisted and whether in Appointment
of a Merchant Banker 13. Before making any public announcement of offer
referred to in Regulation10
or Regulation
11 or Regulation12,
the acquirer shall appoint a merchant banker in Category-I holding a
certificate of registration granted by the Board, who is not associate of or
group of the acquirer or the target company Timing of the Public
Announcement of Offer 14. (1) The public announcement referred to in Regulation10
or Regulation
11 shall be made by the merchantbanker not later than four working days of
entering into an agreement for acquisition of shares or voting rights or
deciding to acquire shares or voting rights exceeding the respective percentage
specified therein: 48*[Provided
that in case of disinvestment of a Public Sector Undertaking, the public
announcement shall be made by the merchant banker not later than 4 working days
of the acquirer executing the Share Purchase Agreement or Shareholders
Agreement with the Central Government 49[or
the State Government as the case may be] for the acquisition of shares or
voting rights exceeding the percentage of share holding referred to in Regulation 10
or Regulation11
or the transfer of control over a target Public Sector Undertaking] (2) In case of an acquirer acquiring securities,
including Global Depositories Receipts or American Depository Receipts which,
when taken together with the voting rights, if any already held by him or
persons acting in concert with him, would entitle him to voting rights,
exceeding the percentage specified in Regulation 10
or Regulation11,
the public announcement referred to in sub-regulation(1)
shall be made not later than four working days before he acquires voting rights
on such securities upon conversion, or exercise of option, as the case may be. (3) The public announcement referred to in Regulation12
shall be made by the merchant banker not later than four working days after any
such change or changes are decided to be made as would result in the
acquisition of control over the target company by the acquirer. 50[(4)
Incase of indirect acquisition or change in control, a public announcement
shall be made by the acquirer within three months of consummation of such
acquisition or change in control or restructuring of the parent or the company
holding shares of or control over the target company in India.] 15. (1) The public announcement to be made under Regulations10
or Regulation
11 or Regulation12
shall be made in all editions of one English national daily with wide
circulation, one Hindi national daily with wide circulation and a regional
language daily with wide circulation at the place where the registered office
of the target company is situated and at the place of the stock exchange where
the shares of the target company are most frequently traded. 51[2)
Simultaneously with publication of the announcement in the
newspaper in terms of sub-regulation (1), a copy of the public announcement
shall be, (i) submitted to the
Board through the merchant banker, 52[(3)]
(4) The
offer under these Regulations shall be deemed to have been made on the date on
which the public announcement has appeared in any of the newspapers referred to
in sub-regulation
(1). Contents of the Public
Announcement of Offer 16. The public announcement
referred to in Regulations
10 orRegulation11
or Regulation
12 shall contain the following particulars, namely :- (i)
the paid up share capital of the target company, the number of fully paid up
and partly paid up shares; (ii) the total
number and percentage of shares proposed to be acquired from the public,
subject to a minimum as specified in sub-regulation(1)
of Regulation 21; (iii) the
minimum offer price for each fully paid-up or partly paid up share; (iv) mode of
payment of consideration; (v) the identity
of the acquirer(s) and in case the acquirer is a company or companies, the
identity of the promoters and, or the persons having control over such
company(ies) and the group, if any, to which the company(ies) belong; (vi) the
existing holding, if any, of the acquirer in the shares of the target company,
including holdings of persons acting in concert with him; 52a(via)the
existing shareholding, if any, of the merchant banker in the target company ;
(vii) salient
features of the agreement, if any, such as the date, the name of the seller,
the price at which the shares are being acquired, the manner of payment of the
consideration and the number and percentage of shares in respect of which he
acquirer has entered into the agreement to acquire the shares or the
consideration, monetary or otherwise, for the acquisition of control over the
target company, as the case maybe; (viii)
the highest and the average price paid by the acquirer or persons acting in
concert with him for acquisition, if any, of shares of the target company made
by him during the twelve month period prior to the date of public announcement;
(ix) Object and
purpose of the acquisition of the shares and future plans, if any, of the
acquirer for the target company, including disclosures whether the acquirer
proposes to dispose of or otherwise encumber any assets of the target company
in the succeeding two years, except in the ordinary course of business of the
target company Provided that where the future
plans are set out , the public announcement shall also set out how the
acquirers propose to implement such future plans. 53["Provided
further that the acquirer shall not sell, dispose of or otherwise encumber any
substantial asset of the target company except with the prior approval of the
shareholders. (ixa) an undertaking that
the acquirer shall not sell, dispose of or otherwise encumber any substantial
asset of the target company except with the prior approval of the
shareholders.] (x) the
`specified date' as mentioned in Regulation19; (xi) the date by
which individual letters of offer would be posted to each of the shareholders; (xii) the date
of opening and closure of the offer and the manner in which and the date by
which the acceptance or rejection of the offer would be communicated to the
shareholders; (xiii) the date
by which the payment of consideration would be made for the shares in respect
of which the offer has been accepted; (xiv) disclosure
to the effect that firm arrangement for financial resources required to
implement the offer is already in place, including details regarding the
sources of the funds whether domestic i.efrom banks, financial institutions, or
otherwise or foreign i.e., from Non-Resident Indians or otherwise. (xv) provision
for acceptance of the offer by person(s)who own the shares but are not the
registered holders of such shares; (xvi) statutory
approvals, if any, required to be obtained for the purpose of acquiring the
shares under the Companies Act,1956 (1 of 1956), the Monopolies and Restrictive
Trade Practices Act, 1969(54 of 1969), The Foreign Exchange Regulation Act,
1973, (46 of 1973) and/or any other applicable laws; (xvii) approvals of banks or financial institutions required, if any; (xviii)
whether the offer is subject to a minimum
level of acceptance from the shareholders; and (xix)
such other information as is essential for the shareholders to make an informed
decision in regard to the offer. Brochures,
advertising material etc. 17. The public announcement of the offer or any
other advertisement, circular, brochure, publicity material or letter of offer
issued in relation to the acquisition of shares shall not contain any
misleading information. Submission of Letter of
offer to the Board 18 (1) Within fourteen days from the date of public
announcement made under Regulation 10,
Regulation11
or Regulation
12 as the case may be, the acquirer shall, through its merchant banker,
file with the Board, the
draft of the letter of offer, containing disclosures as specified by the Board.
(2) The letter of offer shall be dispatched to the
shareholders not earlier than 21 days from its submission to the Board under sub-regulation(1).
Provided that if, within 21 days from the date of
submission of the letter of offer, the Board specifies changes, if any, in the
letter of offer, (without being under any obligation to do so) the merchant banker
and the acquirer shall carry out such changes before the letter of offer is dispatched
to the shareholders. 54 [Provided
further that if the disclosures in the draft letter of offer are inadequate or
the Board has received any complaint or has initiated any enquiry or investigation
in respect of the public offer, the Board may call for revised letter of offer
with or without rescheduling the date of opening or closing of the offer and
may offer its comments to the revised letter of offer within seven working days
of filing of such revised letter of offer.] (3)54a The acquirer shall, while filing the draft letter of offer
with the Board under sub-regulation (1), pay a fee as mentioned in the
following table, by bankers’ cheque or demand draft drawn in favour of the
‘Securities and Exchange Board of India’, payable at Mumbai:
19.The public announcement shall specify a date,
which shall be the specified date' for the purpose of determining the names of
the shareholders to whom the letter of offer should be sent. Provided that such specified date shall not be
later than the thirtieth day from the date of the public announcement. 55[Offer price. 20(1) The offer to acquire shares under regulations10,11 or 12 shall be made
at a price not lower than the price determined as per sub-regulations (4)and
(5). (2) The offer price shall be payable - (b) by issue, exchange
and, or transfer of shares (other than preference shares) of acquirer company,
if the person seeking to acquire the shares is a listed body corporate; or (c) by issue, exchange
and, or transfer of secured instruments of acquirer company with a minimum ‘A’
grade rating from a credit rating agency registered with the Board; (d) a combination of clause (a),(b)or
(c)
: Provided that where the payment has been made in
cash to any class of shareholders for acquiring their shares under any
agreement or pursuant to any acquisition in the open market or in any other
manner during the immediately preceding twelve months from the date of public announcement,
the letter of offer shall provide an option to the shareholders to accept
payment either in cash or by exchange of shares or other secured
instruments referred to above: Provided further that the mode of payment of
consideration may be altered in case of revision in offer price or size subject
to the condition that the amount to be paid in cash as mentioned in any
announcement or the letter of offer is not reduced. (3) In case the offer price consists of
consideration payable in the form of securities issuance of which
requires approval of the shareholders, such approval shall be obtained by the
acquirer within 55i[seven
days] from the date of closure of the offer: (4) For the purposes of sub-regulation (1), the
offer price shall be the highest of - (a) the negotiated price under the agreement
referred to in sub-regulation(1) of regulation 14;
(b) price paid by the acquirer or persons
acting in concert with him for acquisition, if any, including by way of
allotment in a public or rights or preferential issue during the twenty six
week period prior to the date of public announcement, whichever is higher; (c) the average of the weekly high and low of the
closing prices of the shares of the target company as quoted on the stock
exchange where the shares of the company are most frequently traded during the twenty-six
weeks or the average of the daily high and low of the 55ia{deleted}prices
of the shares as quoted on the stock exchange where the shares of the company
are most frequently traded during the two weeks preceding the date of public
announcement, whichever is higher. 55a[Provided
that the requirement of average of the daily high and low of the closing prices
of the shares as quoted on the stock exchange where the shares of the company
are most frequently traded during the two weeks preceding the date of public
announcement, shall not be applicable in case of disinvestment of a Public
Sector Undertaking.] Explanation: In case of disinvestment of a Public Sector
Undertaking, the relevant date for the calculation of the average of the weekly
prices of the shares of the Public Sector Undertaking, as quoted on the stock
exchange where its shares are most frequently traded, shall be the date
preceding the date when the Central Government or the State Government
opens the financial bid. (5) Where the shares of the target company are
infrequently traded, the offer price shall be determined by the acquirer
and the merchant banker taking into account the following factors: (a) the negotiated price under the agreement
referred to in sub-regulation(1) of regulation 14; (b) the highest price paid by the acquirer or
persons acting in concert with him for acquisitions, if any, including by
way of allotment in a public or rights or preferential issue during the twenty
six week period prior to the date of public announcement; (c) other parameters including return on net worth,
book value of the shares of the target company, earning per share, price
earning multiple vis-à-vis the industry average: Provided that where considered necessary, the Board
may require valuation of such infrequently traded shares by an independent
merchant banker (other than the manager to the offer) or an independent
chartered accountant of minimum ten Explanation :- (i) For the purpose of sub-regulation (5), shares
shall be deemed to be infrequently traded if on the stock exchange, the annualized
trading turnover in that share during the preceding six calendar months prior to
the month in which the public announcement is made is less than five percent.
(by number of shares) of the listed shares. For this purpose, the weighted
average number of shares listed during the said six months period may be taken.
(ii) In case of disinvestment of a Public Sector
Undertaking, the shares of such an undertaking shall be deemed to be
infrequently traded, if on the stock exchange, the annualized trading turnover
in the shares during the preceding six calendar months prior to the month, in
which the Central Government or the State Government as the case may be opens
the financial bid, is less than five per cent. (by the number of shares)
of the listed shares. For this purpose, the weighted average number of
shares listed during the six months period may be taken. (iii)In case of shares which have been listed
within six months preceding the public announcement, the trading turnover may
be annualised with reference to the actual number of days for which the shares
have been listed. (6) Notwithstanding anything contained in
sub-regulation (5), in case of disinvestment of a Public Sector
Undertaking, whose shares are infrequently traded, the minimum offer price
shall be the price paid by the successful bidder to the Central
Government or the State Government, arrived at after the process of
competitive bidding of the Central Government or the State Government for
the purpose of disinvestment. (7) Notwithstanding anything contained in the
provisions of sub-regulations(2), (4),(5) and (6), where the acquirer has
acquired shares in the open market or through negotiation or otherwise, after
the date of public announcement at a price higher than the offer price stated
in the letter of offer, then, the highest price paid for such acquisition shall
be payable for all acceptances received under the offer: Provided that no such acquisition shall be made by
the acquirer during the last seven working days prior to the closure of the offer.
55b[55c Provided further that nothing contained in sub-regulation
(7) shall be construed to authorise an acquirer who makes a public announcement
in terms of sub-regulation (2A) of regulation 11 to acquire any shares during
the offer period in the open market or through negotiation or in any other
manner otherwise than under the public offer. (8) Any payment made to the persons other than the
target company in respect of non compete agreement in excess of twenty five per
cent. of the offer price arrived at under sub-regulations (4) or (5) or
(6)shall be added to the offer price. (9) In case where shares or secured instruments of
the acquirer company are offered in lieu of cash payment, the value of such
shares or secured instruments shall be determined in the same manner as
specified in sub-regulation(4) or sub-regulation (5) to the extent applicable,
as duly certified byan independent merchant banker (other than the manager to
the offer) oran independent chartered accountant of a minimum ten years
standing or a public financial institution. (10) The offer price for partly paid up shares
shall be calculated as the difference between the offer price and the amount
due towards calls-in-arrears or calls remaining unpaid together with
interest, if any, payable on the amount called up but remaining unpaid. (11) The letter of offer shall contain
justification or the basis on which the price has been determined. Explanation:
(i) The highest price under clause (b) or the average price under clause(c) of
sub-regulation (4) may be adjusted
(ii) Where the public announcement of offer is pursuant to acquisition by way
of firm allotment in a public issue or preferential
allotment, the average price under clause (c) of sub-regulation (4) shall be
calculated with reference to twenty six week period preceding the date of the
board resolution which authorized the firm allotment or preferential allotment.
(iii) Where the shareholders have been provided with an option to accept
payment either in cash or by way of exchange of security, the pricing for the
cash offer could be different from that of a share exchange offer or offer for
(iv) Where the offer is subject to a minimum level of acceptance, the acquirer
may, subject to the other provisions of this regulation, indicate a lower price
for the minimum acceptance upto twenty per cent., should the offer not receive
full acceptance. (12) The offer price for indirect acquisition
or control shall be determined with reference to the date of the public announcement
for the parent company and the date of the public announcement for
acquisition of shares of the target company, whichever is higher, in accordance
with sub-regulation (4) or sub-regulation (5).] 56[Acquisition price under creeping acquisition "20A. (1) An acquirer who has made a public
offer and seeks to acquire further shares under sub-regulation (1) of
regulation 11 shall not acquire such shares during the period of 6 months from
the date of closure of the public offer at a price higher than the offer price.
(2) Sub-regulation (1) shall not apply where the
acquisition is made through the stock exchanges.] Minimum number of shares to
be acquired 57[21. (1)The public offer made by the acquirer to the
shareholders of the target company shall be for a minimum twenty per cent of the voting capital of the company.] 58 (2) 58a If the acquisition made in pursuance of a public offer results
in the public shareholding in the target company being reduced below the
minimum level required as per the Listing Agreement, the acquirer shall take
necessary steps to facilitate compliance of the target company with the
relevant provisions thereof, within the time period mentioned therein. 59(3) 59a Where the public offer is made under sub-regulation (2A) of
regulation 11 the minimum size of the public offer shall be the lesser of the
following – (a) twenty
per cent of the voting capital of the company; or (b) such
other lesser percentage of the voting capital of the company as would, assuming
full subscription to the offer, enable the acquirer, together with the persons
acting in concert with him, to increase his holding to the maximum level
possible, which is consistent with the target company meeting the requirements
of minimum public shareholding laid down in the Listing Agreement.” (4) The letter of offer shall state clearly the
option available to the acquirer under sub-regulation
(3). (5) For the purpose of computing the percentage
referred to sub-regulation(1) 59b{Omitted}and
(3)
the voting rights as at the expiration of 59c [fifteen] days after the closure of the public offer shall be
reckoned. (6) Where the number of shares offered for sale by
the shareholders are more than the shares agreed to be acquired by the person
making the offer, such person shall, accept the offers received from the shareholders
on a proportional basis, in consultation with the merchant banker, taking care
to ensure that the basis of acceptance is decided in a fair and equitable
manner and does not result in non-marketable lots. Provided that acquisition of shares from a
shareholder shall not be less than the minimum marketable lot or the entire
holding if it is less than the marketable lot. 60[Offer
conditional upon level of acceptance "21A. (1) Subject to the
provisions of sub-regulation(8) of regulation 22,
an acquirer or any person acting in concert with him may make an offer
conditional as to the level of acceptance which may be less than twenty per
cent: Provided that where the public offer is in
pursuance of a Memorandum of Understanding, the Memorandum of Understanding
shall contain a condition to the effect that in case the desired level of
acceptance is not received the acquirer shall not acquire any shares under the
Memorandum of Understanding and shall rescind the offer.] General Obligations of the
acquirer 22. (1) The public announcement of offer to acquire
the shares of the target company shall be made only when the acquirer is able
to implement the offer. (2) Within 14 days of the public announcement of
the offer, the acquirer shall send a copy of the draft letter of offer to the
target company at its registered office address, for being placed before the
board of directors and to all the stock exchanges where the shares of the
company are listed. (3) The acquirer shall ensure that the letter of
offer is sent to all the shareholders (including non-resident Indians) of the
target company, whose names appear on the register of members of the company as
on the specified date mentioned in the public announcement, so as to reach them
within 45 days from the date of public announcement. Provided that where the public announcement is made
pursuant to an agreement to acquire shares or control over the target company,
the letter of offer shall be sent to shareholders other than the parties to the
agreement. Explanation:-(i) A copy of
the letter of offer shall also be sent to the Custodians of Global Depository
Receipts or American Depository Receipts to enable such persons to participate
in the open offer, if they are entitled to do so. (ii) A copy of the letter of offer
shall also be sent to warrant holders or convertible debenture holders, where
the period of exercise of option or conversion falls within the offer period. (4) The date of opening of the
offer shall be not later than the 60a[fifty-fifth]
day from the date of public announcement. (5) The offer to acquire shares from the
shareholders shall remain open for a period of 60b[twenty]days.
61[(5A)
The shareholder shall have the option to withdraw acceptance tendered by him up
to three working days prior to the date of closure of the offer.] (6) In case the acquirer is a company, the public
announcement of offer, brochure, circular, letter of offer or any other
advertisement or publicity material issued to shareholders in connection with
the offer must state that the directors accept the responsibility for the
information contained in such documents. Provided that if any of the directors desires to
exempt himself from responsibility for the information in such document, such
director shall issue a statement to that effect, together with reasons thereof
for such statement. (7) During the offer
period, the acquirer or persons acting in concert with him shall not be
entitled to be appointed on the board of directors of the target company. 62*[Provided
that in case of acquisition of shares or voting rights or control of a Public
Sector Undertaking pursuant to a public announcement made under the proviso to sub-regulation (1)
of Regulation 14,the provisions of sub-regulation
(8) of Regulation23 shall be applicable] 63[Provided
further that where the acquirer, other than the acquirer who has made an offer
under regulation
21 A, after assuming full acceptances, has deposited in the escrow
account hundred per cent. of the consideration payable in cash where the
consideration payable is in cash and in the form of securities where the consideration
payable is by way of issue, exchange or transfer of securities or combination thereof,
he may be entitled to be appointed on the Board of Directors of the target
company after a period of twenty one days from the date of public
announcement.] (8) Where an offer is made conditional upon minimum
level of acceptances, the acquirer or any person acting in concert with him - (i) shall, irrespective of whether
or not the offer received response to the minimum level of acceptances, acquire
shares from the public to the extent of the minimum percentage specified in sub-regulation(1)
of Regulation 21 Provided that the provisions of
this clause shall not be applicable in case the acquirer has deposited in the
escrow account, in cash, 50%of the consideration payable under the public
offer. (ii) shall not acquire, during the
offer period, any shares in the target company, except by way of fresh issue of
shares of the target company, as provided for under Regulation 3; (iii) shall be liable for penalty
of forfeiture of entire escrow amount, for the non-fulfillment of obligations
under the Regulations; (9) If any of the persons
representing or having interest in the acquirer is already a director on the
board of the target company or is an "insider “within the meaning of
Securities and Exchange Board of India (Insider Trading)Regulations, 1992, he
shall recuse himself and not participate in any matter(s)concerning or
'relating' to the offer including any preparatory steps leading to the offer. (10) On or before the date of issue of public
announcement of offer, the acquirer shall create an escrow account as provided
underRegulation28.
(11) The acquirer shall ensure that firm financial
arrangements has-been made for fulfilling the obligations under the public
offer and suitable disclosures in this regard shall be made in the public
announcement of offer. (12) The acquirer shall, within a period of 63a[fifteen]days from the date of the closure of
the offer, complete all procedures relating to the offer including payment of
consideration to the shareholders who have accepted the offer and for the
purpose open a special account as provided under Regulation 29. Provided that where
the acquirer is unable to make the payment to the shareholders who have
accepted the offer before the said period of 63a[fifteen] days due to non-receipt of requisite
statutory approvals, the Board may, if satisfied that non-receipt of requisite
statutory approvals was not due to any wilful default or neglect of the
acquirer or failure of the acquirer to diligently pursue the applications for
such approvals, grant extension of time for the purpose, subject to the
acquirer agreeing to pay interest to the shareholders for delay beyond 63a[fifteen]days,
as may be specified by the Board from time to time. (13) Where the acquirer fails to obtain the
requisite statutory approvals in time on account of willful default or neglect
or inaction or non-action on his part, the amount lying in the escrow account
shall be liable to be forfeited and dealt wit h in the manner provided in clause(e)
of sub regulation 12 of Regulation 28, apart from the acquirer being liable
for penalty as provided in the Regulations. (14) In the event of withdrawal of offer in terms
of the Regulations, the acquirer shall not make any offer for acquisition of
shares of the target company for a period of six months from the date of public
announcement of withdrawal of offer. (15) In the event of non-fulfillment of obligations
under Chapter
III or Chapter
IV of the Regulations, the acquirer shall not make any offer for
acquisition of shares of any listed company for a period of twelve months from
the date of closure of offer. (16) If the acquirer, in
pursuance to an agreement, acquires shares which along with his existing
holding, if any, increases his share holding beyond 64*[15%],then
such an agreement for sale of shares shall contain a clause to the effect that
in ca se of non-compliance of any provisions of this regulation, the agreement
for such sale shall not be acted upon by the seller or the acquirer. 65*[
Provided that in case of acquisition of shares of a Public Sector Undertaking
pursuant to a public announcement made under the Regulations, the provisions of
sub-regulation(8)
of Regulation 23 shall be applicable] 66[(17)
Where the acquirer or persons acting in concert with him has acquired any
shares in terms of sub-regulation (7) of regulation 20
ata price equal to or less or more than the offer price, he shall disclose the
number, percentage, price and the (18) Where the acquirer has not either, in the
public announcement, and, or in the letter of offer, stated his intention to
dispose of or otherwise encumber any assets of the target company except in the
ordinary course of business of the target company, the acquirer, where he has
acquired control over the target company, shall be debarred from disposing of or
otherwise encumbering the assets of the target company for a period of2 years
from the date of closure of the public offer. 67[(19)
The acquirer and the persons acting in concert with him shall be jointly and
severally responsible for fulfilment of obligations under these Regulations.] General Obligations of the
board of directors of the target company 23. (1) Unless the approval of the general body of
shareholders is obtained after the date of the public announcement of offer,
the board of directors of the target company shall not, during the offer
period, - (a)
sell, transfer, encumber or otherwise dispose of or enter into an agreement for
sale, transfer, encumbrance or for disposal of assets otherwise, not being sale
or disposal of assets in the ordinary course of business, of the company or its
subsidiaries; or (b)
issue 68[or
allot] any authorised but unissued securities carrying voting rights during the
offer period; or (c) enter into
any material contracts. 69[Explanation:-
Restriction on issue of securities under clause (b) of sub-regulation(1) shall
not affect -
(i) the right of the target company to issue or allot shares carrying voting
(ii) issue or allotment of shares pursuant to public or rights issue in respect
(2) The target company shall
furnish to the acquirer, within 7 days of the request of the acquirer or within
7 days from the specified date, whichever is later, a list of shareholders or
warrant holders or convertible debenture holders as are eligible for
participation under Explanation(ii)
to sub-regulation (3) of Regulation 22 containing names, addresses, shareholding
and folio number, and of those persons whose applications for registration of
transfer of share s are pending with the company. (3) Once the public announcement has been made, the
board of directors of the target company shall not, - (a) appoint as additional director
or fill in any casual vacancy on the board of directors, by any person(s)
representing or having interest in the acquirer, till the date of certification
by the merchant banker as provided under sub-regulation(6)
below. Provided that upon closure of the
offer and the full amount of consideration payable to the shareholders being
deposited in the special account, changes as would give the acquirer representation
on the Board or control over the company, c an be made by the target company. (b) allow any
person or persons representing or having interest in the acquirer, if he is
already a director on the board of the target company before the date of the
public announcement, to participate in any matter relating to the offer,
including any preparatory steps leading thereto. (4) The board of directors of the
target company may, if they so desire, send their unbiased comments and
recommendations on the offer(s) to the shareholders, keeping in mind the
fiduciary responsibility of the directors to the shareholders an d for the
purpose seek the opinion of an independent merchant banker or a Committee of
Independent Directors; Provided that for any misstatement or for
concealment of material information, the directors shall be liable for action
in terms of these Regulations and the Act. (5) The board of directors of the target company
shall facilitate the acquirer in verification of securities tendered for
acceptances. (6) Upon fulfillment of
all obligations by the acquirers under the Regulations as certified by the
merchant banker, the board of directors of the target company shall transfer
the securities acquired by the acquirer, whether under the agreement or from
open market purchases, in the name of the acquirer and, or allow such changes
in the board of directors as would give the acquirer representation on the
board or control over the company. (7) The obligations provided for in sub-regulation(16)
of regulation 22 shall be complied with by the company in the circumstances
specified therein. 70*[(8)The restrictions- (a) for
appointment of directors on the Board of a target company by the acquirer under
sub-regulation
(7)of Regulation 22. (b) for acting on agreement for
under sub-regulation(16)
of Regulation 22; (c) for appointment of directors
by the target company under clause(a)
of sub-regulation 3 of this Regulation; and (d) for on transfer of securities
or changes in the Board of Directors of the target company under sub-regulation
(6)of this Regulation, shall not be applicable, in case of sale of shares of
a Public Sector Undertaking by the Central Government 71[or the State
Government], and the agreement to sell contains a clause to the effect that in
case of non-compliance of any of the provisions of the Regulations by the
acquirer, transfer of shares or change of management or control of Public
Sector Undertaking shall vest back with the Central Government 71[or the State
Government] and the acquirer shall be liable to such penalty as may be imposed
by the Central Government 71[or
the State Government]. ] General
obligations of the merchant banker 24. (1) Before the public announcement of offer is
made, the merchant banker shall ensure that- (a)
the acquirer is able to implement the offer; (b) the
provision relating to escrow account referred to in Regulation 28
has been made; (c) firm
arrangements for funds and money for payment through verifiable means to fulfil
the obligations under the offer are in place; (d) the public
announcement of offer is made in terms of the Regulations. 71a(e) his
shareholding, if any in the target company is disclosed in the public
announcement and the letter of offer (3) The merchant banker shall ensure that the 72[*]public announcement and the letter of offer is filed
with the Board, target company and also sent to all the stock exchanges on
which the shares of the target company are listed in accordance with the
Regulations. (4) The merchant banker shall ensure that the
contents of the public announcement of offer as well as the letter of offer are
true, fair and adequate and based on reliable sources, quoting the source
wherever necessary. (5) The merchant banker shall ensure compliance of
the Regulations and any other laws or rules as may be applicable in this
regard. 72a (5A)
The merchant banker shall not deal in the shares of the target company during
the period commencing from the date of his appointment in terms of regulation
13 till the expiry of the fifteen days from the date of closure of the offer
(6) Upon fulfillment of all obligations by the
acquirers under the Regulations, the merchant banker shall cause the bank with
whom the escrow amount has been deposited to release the balance amount to the
acquirers. 25. (1) Any person, other than the acquirer who has
made the first public announcement, who is desirous of making any offer, shall,
within 21 days of the public announcement of the first offer, make a public announcement
of his offer for acquisition of the shares of the same target company. Explanation: An offer made under sub-regulation(1)
shall be deemed to be a competitive bid. (2) No public announcement for an offer or
competitive bid shall be made after 21 days from the date of public
announcement of the first offer. 73*[
(2A)No public announcement for a competitive bid shall be made after an acquirer
has already made the public announcement under the proviso to sub pursuant to
entering into a Share Purchase or Shareholders Agreement with the Central
Government74[or
the State Government as the case may be], for acquisition of shares or voting
rights or control of a Public Sector Undertaking] (3) Any competitive offer by an acquirer shall be
for such number of shares which, when taken together with shares held by him
along with persons acting in concert with him, shall be 75[at
least equal to the holding of the first bidder including the number of shares
for which the present offer by the first bidder has been made] (4) Upon the public
announcement of a competitive bid or bids, the acquirer(s) who had made the
public announcement(s) of the earlier offer(s), shall have the option to 76[make
an announcement revising the offer]. Provided that if no such announcement is made
within fourteen days of the announcement of the competitive bid(s), the earlier
offer(s) on the original terms shall continue to be valid and binding on the
acquirer(s) who had made the offer(s) except that the date of closing of the offer
shall stand extended to the date of closure of the public offer under the last
subsisting competitive bid. (5) The provisions of these Regulations shall mutatis-mutandis
apply to the competitive bid(s) made under sub-regulation(1).
(6) The acquirers who have made the public
announcement of offer(s)including the public announcement of competitive
bid(s) 77[*]shall
have the option to make upward revisions in his offer(s), in respect to the
price and the number of shares to be acquired, at any time upto seven working
days prior to the date of closure of the offer: Provided that the acquirer shall not have the
option to change any other terms and conditions of their offer 78[except
the mode of payment following an upward revision in offer]. Provided further that any such upward revision
shall be made only upon the acquirer, - (a) making a public announcement in
respect of such changes or amendments in all the newspapers in which the
original public announcement was made; (b)
simultaneously with the issue of public announcement referred in clause
(a), informing the Board, all the stock exchanges on which the shares of
the company are listed, and the target company at its registered office; (c) increasing
the value of the escrow account as provided under sub-regulation
(9) of Regulation 28. (7) Where there is a competitive
bid, the date of closure of the original bid as also the date of closure of all
the subsequent competitive bids shall be the date of closure of public offer
under the last subsisting competitive bid and the public offers under all the
subsisting bids shall close on the same date. 26. Irrespective of whether or not there is a
competitive bid, the acquirer who has made the public announcement of offer,
may make upward revisions in his offer in respect to the price and the number
of shares to be acquired, at anytime upto seven working days prior to the date
of the closure of the offer. Provided that any such upward revision of offer
shall be made only upon the acquirer - (a)
making a public announcement in respect of such changes or amendments in all
the newspapers in which the original public announcement was made; (b)
simultaneously with the issue of such public announcement, informing the Board,
all the stock exchanges on which the shares of the company are listed, and the
target company at its registered office. (c) increasing
the value of the escrow account as provided under sub-regulation
(9) of Regulation 28. 27. (1) No public offer, once made, shall be
withdrawn except under the following circumstances:- 79[(a)]
(b) the statutory
approval(s) required have been refused; (c) the sole
acquirer, being a natural person, has died; (d) such
circumstances as in the opinion of the Board merits withdrawal. (2) In the event of withdrawal of
the offer under any of the circumstances specified under sub-regulation
(1), the acquirer or the merchant banker shall : (a)
make a public announcement in the same newspapers in which the public
announcement of offer was published, indicating reasons for withdrawal of the
offer. (b)
simultaneously with the issue of such public announcement, inform - (i) the Board; (ii) all the stock exchanges on
which the shares of the company are listed; and (iii) the target company at its
registered office. 28. (1) The acquirer shall as and by way of
security for performance of his obligations under the Regulations, deposit in
an escrow account such sum as specified in sub-regulation
(2). (2) The escrow amount
shall be calculated in the following manner, - (a) For consideration payable under the public offer,
- (b)
For offers which are subject to a minimum level of acceptance, and the acquirer
does not want to acquire a minimum of 20%, then 50% of the consideration
payable under the public offer in cash shall be deposited in the escrow amount. (3) The total consideration payable
under the public offer shall be calculated assuming full acceptances and at the
highest price if the offer is subject to differential pricing, irrespective of
whether the consideration for the offer is payable in cash or otherwise. (4) The escrow account referred in sub-regulation(1)
shall consist of, - (a)
cash deposited with a scheduled commercial bank ; or (b) bank
guarantee in favour of the merchant banker; or (c) deposit of
acceptable securities with appropriate margin, with the merchant banker; or (d) cash,
deposited with a scheduled commercial bank in case of clause
(b) of sub-regulation (2)of this Regulation. (5) Where the escrow account
consists of deposit with a scheduled commercial bank, the acquirer shall, while
opening the account, empower the merchant banker appointed for the offer to
instruct the bank to issue a banker's cheque or demand draft for the amount
lying to the credit of the escrow account, as provided in the Regulations. (6) Where the escrow account consists of bank
guarantee, such bank guarantee shall be in favour of the merchant banker and
shall be valid at least for a period commencing from the date of public
announcement until 79a[twenty]
days after the closure of the offer. (7) The acquirer shall, in case the escrow account
consists of securities empower the merchant banker to realise the value of such
escrow account by sale or otherwise provided that if there is any deficit on realization
of the value of the securities, the merchant banker shall be liable to make
good any such deficit. (8) In case the escrow
account consists of bank guarantee or approved securities, these shall not be
returned by the merchant banker till after completion of all obligations under
the Regulations. (9) In case there is any
upward revision of offer, consequent upon a competitive bid or otherwise, the
value of the escrow account shall be increased to equal at least 10% of the consideration
payable upon such revision. (10) Where the escrow account consist of bank
guarantee or deposit of approved securities, the acquirer shall also deposit
with the bank a sum of at least 1% of the total consideration payable, as and
by way of security for fulfillment of the obligations under the Regulations by
the acquirers. (11) The Board shall in case of non-fulfillment of
obligations under the Regulations by the acquirer forfeit the escrow account
either in full or in part. 80[(11A)In
case of failure by the acquirer to obtain shareholders' approval required under
sub-regulation (3) of regulation 20, the amount in escrow account may be
forfeited.] (12) The escrow account deposited with the bank in
cash shall be released only in the following manner, - (a) the entire amount to the
acquirer upon withdrawal of offer in terms of Regulation 27
upon certification by the merchant banker; (b) for transfer to the special
account opened in terms of sub-regulation(1)
of Regulation 29. Provided the amount so transferred
shall not exceed 90% of the cash deposit made under clause
(a) of sub-regulation(2) of this regulation. (c) to the acquirer, the balance of
10 per cent of the cash deposit made under clause
(a) of sub-Regulation(2) of this Regulation or the cash deposit made under sub81[(10)]of
this Regulation, on completion of all obligations under the Regulations, and
upon certification by the merchant banker; (d) the entire amount to the
acquirer upon completion of all obligations under the Regulations, upon
certification by the merchant banker, where the offer is for exchange of shares
or other secured instruments; (e)
the entire amount to the merchant banker, in the event of forfeiture for
non-fulfillment of any of the obligations under the Regulations, for
distribution among the target company, the regional stock exchange and to the
shareholders who had accepted the offer in the following manner, after
deduction of expenses, if any, of the merchant banker and the registrars to the
offer, - (i) one third of the amount to the
target company; (ii) one third of the amount to the
regional stock exchange for credit of the investor protection fund or any other
similar fund for investor education, research, grievance redressal and similar
such purposes as may be specified by the Board from time to time; (iii) residual one third to be
distributed pro-rata among the shareholders who have accepted the offer. (13) In the event of
non-fulfillment of obligations by the acquirer, the merchant banker shall
ensure realisation of escrow amount by way of foreclosure of deposit,
invocation of bank guarantee or sale of securities and credit proceeds thereof
t o the regional stock exchange of the target company, for the credit of the
Investor Protection Fund or any other similar fund. 29. (1) For the amount of consideration payable in
cash, the acquirer shall, within a period of 81a[seven]days
from the date of closure of the offer, open a special account with a Bankers to
an Issue registered with the Board and deposit therein, such sum as would,
together with 90% of the amount lying in the escrow account, if any, make up
the entire sum due and payable to the shareholders as consideration for
acceptances received and accepted in terms of these Regulations and for this
purpose, transfer the funds from the escrow account. (2) The unclaimed balance lying to the credit of
the account referred in sub-regulation (1)
at the end of 3 years from the date of deposit thereof shall be transferred
to the investor protection fund of the regional stock exchange of the target
company. (3) In respect of consideration payable by way of
exchange of securities, the acquirer shall ensure that the securities are
actually issued and dispatched to the shareholders. 30. (1) The provisions of this Chapter shall apply
to a substantial acquisition of shares in a financially weak company not being
a sick industrial company, in pursuance to a scheme of rehabilitation approved
by a public financial institution or a scheduled bank; (hereinafter referred to
as lead institution). (2) The lead institution shall be responsible for
ensuring compliance with the provisions of this Chapter. (3) The lead institution shall appraise the
financially weak company taking into account the financial viability, and
assess the requirement of funds for revival and draw up the rehabilitation
package on the principle of protection of interests of minority shareholders,
good management, effective revival and transparency. (4) The rehabilitation scheme shall also
specifically provide the details of any change in management. (5) The scheme may provide for acquisition of
shares in the financially weak company in any of the following manner: (a)
outright purchase of shares, or (b) exchange of
shares, or (c) combination
of both. Provided that the scheme as far as
possible may ensure that after the proposed acquisition the erstwhile promoters
do not own any shares in case such acquisition is made by the new promoters
pursuant to such scheme. Explanation: For the purpose of this chapter, the
expression "financially weak company" means a company, which has at
the end of the previous financial year accumulated losses, which has resulted
in erosion of more than 50%but less than 100% of its net worth as at the
beginning of the previous financial year, that is to say, of the sum total of
the paid-up capital and free reserves. Manner of acquisition of shares
31. (1) Before giving effect to any scheme of
rehabilitation the lead institution shall invite offers for acquisition of
shares from atleast three parties. (2) After receipt of the offers under sub-regulation(1),
the lead institution shall select one of the parties having regard to the
managerial competence, adequacy of financial resources and technical capability
of the person acquiring shares to rehabilitate the financially weak company. (3) The lead institution shall provide necessary
information to any person intending to make an offer to acquire shares about
the financially weak company and particularly in relation to its present
management, technology, range of products manufactured, shareholding pattern,
financial holding and performance and assets and liabilities of such company
for a period covering five years from the date of the offer as also the minimum
financial and other commitments expected of from the person acquiring shares for
such rehabilitation. 32. (1) The lead institution shall evaluate the
bids received with respect to the purchase price or exchange of shares, track
record, financial resources, reputation of the management of the person
acquiring shares and ensure fairness and transparency in the process. (2) After making
evaluation as provided in sub-regulation(1),
the offers received shall be listed in order of preference and after
consultation with the persons in the affairs of the management of the
financially weak company accept one of the bids. Person acquiring shares to
make an offer 33. The person acquiring shares who has been
identified by the lead institution under sub-regulation
(2) of Regulation32, shall on receipt of a communication in this behalf
from the lead institution make a formal offer to acquire shares from the
promoters or persons in charge of the affairs of the management of the
financially weak company, financial institutions and also other shareholders of
the company at a price determined by mutual negotiation between the person acquiring
the shares and the lead institution. Explanation: Nothing in this regulation shall
prohibit the lead institution offering the shareholdings held by it in the
financially weak company as part of the scheme of rehabilitation. Person acquiring shares
to make public announcement 34. (1) The person acquiring shares from the
promoters or the persons in charge of the management of the affairs of the
financially weak company or the financial institution shall make a public
announcement of his intention for acquisition of shares from the other
shareholders of the company. (2) Such public announcement shall contain relevant
details about the offer including the information about the identity and
background of the person acquiring shares, number and percentage of shares proposed
to be acquired, offer price, the specified date, the date of opening of the offer
and the period for which the offer shall be kept open and such other particulars
as may be required by the board. (3) The letter of offer shall be forwarded to each of
the shareholders other than the promoters or the persons in charge of
management of the financially weak company and the financial institutions. (4) If the offer referred
to in sub-regulation(1)
results in the public shareholding being reduced to 10% or less of the voting
capital of the company, the acquirer shall either - (a) within a period of three months
from the date of closure of the public offer, make an offer to buy out the
outstanding shares remaining with the shareholders at the same offer price,
which may have the effect of delisting the target company; OR (b) undertake to disinvest through
an offer for sale or by a fresh issue of capital to the public which shall open
within a period of 6 months from the date of closure of public offer, such
number of shares so as to satisfy the listing requirements. (5) The letter of offer shall state
clearly the option available to the acquirer under sub-regulation
(4). (6) For the purposes of computing the percentage
referred to in the sub the voting rights as at the expiration of 81b[twenty]days
after the closure of the public offer shall be reckoned. (7) While accepting the offer from the shareholders
other than the promoters or persons in charge of the financially weak company
or the financial institutions, the person acquiring shares shall offer to
acquire from the individual shareholder his entire holdings if such holding is
upto hundred shares of the face value of rupees ten each or ten shares of the
face value of rupees hundred each. 35. No person shall make a competitive bid for
acquisition of shares of the financially weak company once the lead institution
has evaluated the bid and accepted the bid of the acquirer who has made the
public announcement of offer for acquisition of shares from the shareholders
other than the promoters or the persons in charge of the management of the financially
weak company. Exemption from the
operations of Chapter III
36. (1) Every offer which has been made in
pursuance ofRegulation30
shall be accompanied with an application to the Board for exempting such
acquisitions from the provisions of Chapter III
of these Regulations. (2) For considering such request the Board may call
for such information from the company as also from the lead institution, in
relation to the manner of vetting the offers, evaluation of such offers and
similar other matters. (3) Notwithstanding grant of exemption by the
board, the lead institution or the acquirer as far as may be possible, shall
adhere to the time limits specified for various activities for public offer
specified in Chapter
III. Acquisition of shares by a
state level public financial institution 37. Where proposals for acquisition of shares in
respect of a financially weak company is made by a state level public financial
institution, the provisions of these Regulations in so far as they relate to
scheme of rehabilitation prepared by a public financial institution, shall
apply except that in such a case the Industrial Development Bank of India, a
corporation established under the Industrial Development Bank of India Act,
1964 shall be the agency or ensuring the compliance of these Regulations for
acquisition of shares in the financially weak company. CHAPTER V 38. The Board may appoint one or more persons as
investigating officer to undertake investigation for any of the following
purposes, namely:- (a) to investigate into the
complaints received from the investors, the intermediaries or any other person
on any matter having a bearing on the allegations of substantial acquisition of
shares and takeovers; (b) to investigate suo-moto upon its own knowledge
or information, in the interest of securities market or investors interests,
for any breach of the Regulations ; (c) to ascertain whether the provisions of the Act
and the Regulations are being complied with. 39. (1) Before ordering an investigation under Regulation38,
the Board shall give not less than 10 days notice to the acquirer, the seller,
the target company, the merchant banker, as the case may be. (2) Notwithstanding anything contained in sub-regulation(1),
where the Board is satisfied that in the interest of the investors no such
notice should be given, it may, by an order in writing direct that such
investigation be taken up without such notice. (3) During the course of an investigation, the
acquirer, the seller, the target company, the merchant banker, against whom the
investigation is being carried out shall be bound to discharge his obligation
as provided in Regulation
40. Obligations on
investigation by the Board 40. (1) It shall be the duty of the acquirer, the
seller, the target company, the merchant banker whose affairs are being
investigated and of every director, officer and employee thereof, to produce to
the investigating officer such books, securities, accounts, records and other
documents in its custody or control and furnish him with such statements and
information relating to his activities as the investigating officer may
require, within such reasonable period as the investigating officer may
specify. (2) The acquirer, the seller, the target company,
the merchant banker and the persons being investigated shall allow the
investigating officer to have reasonable access to the premises occupied by him
or by any other person on his behalf and also extend reasonable facility for examining
any books, records, documents and computer data in the possession of the
acquirer, the seller, the target company, the merchant banker or such other
person and also provide copies of documents or other materials which, in the
opinion of the investigating officer are relevant for the purposes of the
investigation. (3) The investigating officer, in the course of
investigation, shall be entitled to examine or to record the statements of any
director, officer or employee of the acquirer, the seller, the target company,
the merchant banker. (4) It shall be the duty of every director, officer
or employee of the acquirer, the seller, the target company, the merchant
banker to give to the investigating officer all assistance in connection with
the investigation, which the investigating officer may reasonably require. Submission of Report to the
Board 41. The investigating officer shall, as soon as
possible, on completion of the investigation, submit a report to the Board:
Provided that if directed to do so by the Board, he may submit interim reports.
42. (1) The Board shall, after consideration of the
investigation report referred to in Regulation 41, communicate the findings of
the investigating officer to the acquirer, the seller, the target company, the
merchant banker, as the case may be, and give him an opportunity of being heard.
(2) On receipt of the reply if any, from the
acquirer, the seller, the target company, the merchant banker, as the case may
be, the Board may call upon him to take such measures as the Board may deem fit
in the interest of the securities market and for due compliance with the
provisions of the Act and the Regulations. 43. Notwithstanding anything contained in this
Regulation, the Board may appoint a qualified auditor to investigate into the
books of account or the affairs of the person concerned: Provided that the
auditor so appointed shall have the same powers of the investigating authority
as stated inRegulation38
and the obligations of the person concerned in Regulation40
shall be applicable to the investigation under this Regulation. 82[
"44.Without prejudice to its right to initiate action under Chapter VIA
and section 24 of the Act, the Board may, in the
interest of securities market or for protection of interest of investors,
issue such directions as it deems fit including: - (a) directing appointment of a
merchant banker for the purpose of causing (b) directing transfer of any proceeds or
securities to the investors protection Fund of a recognised stock exchange; (c) directing the target company or depository to
cancel the shares where an (d) directing the target company or the depository
not to give effect to transfer or further freeze the transfer of any such
shares and not to permit the acquirer or any nominee or any proxy of the
acquirer to exercise any voting or other rights attached to such shares
acquired in violation of regulations 10,
11or 12; (e) debarring any person concerned from accessing
the capital market or dealing in securities for such period as may be
determined by the Board; (f) directing the person concerned to make public
offer to the shareholders of the target company to acquire such number of
shares at such offer price as determined by the Board; (g) directing disinvestment of such shares as are
in excess of the percentage of the shareholding or voting rights specified for
disclosure requirement under the regulations 6,7 or8; (h) directing the person concerned not to dispose
of assets of the target company contrary to the undertaking given in the
letter of offer; (i) directing the person concerned, who has
failed to make a public offer or 45. (1) Any person violating any provisions of the
Regulations shall be liable for action in terms of the Regulations and the Act.
(2) If the acquirer or any person acting in concert
with him, fails to carry out the obligations under the Regulations, the entire
or part of the sum in the escrow amount shall be liable to be forfeited and the
acquirer or such a person shall also be liable for action in terms of the
Regulations and the Act. (3) The board of directors of the target company
failing to carry out the obligations under the Regulations shall be liable for
action in terms of the Regulations and Act. (4) The Board may, for failure to carry out the
requirements of the Regulations by an intermediary, initiate action for
suspension or cancellation of registration of an intermediary holding a
certificate of registration under section 12 of the Act. Provided that no such certificate of registration
shall be suspended or cancelled unless the procedure specified in the
Regulations applicable to such intermediary is complied with. (5) For any mis-statement to the shareholders or
for concealment of material information required to be disclosed to the
shareholders, the acquirers or the directors where he acquirer is a body
corporate, the directors of the target company, the merchant banker to the
public offer and the merchant banker engaged by the target company for
independent advice would be liable for action in terms of the Regulations and
the Act. (6) The penalties referred to in sub-regulation (1)
to (5) may include- (a) criminal prosecution under
section 24 of the Act; (b) monetary penalties under section 15 H of the
Act; (c) directions under the provisions of Section 11B
of the Act. 82a(d)directions under section 11(4) of
the Act; 82b(e)cease and desist order in
proceedings under section 11D of the Act; 82c(f)adjudication proceedings under
section 15HB of the Act. Appeal to
the Securities Appellate Tribunal 46. 83*[Any
person aggrieved by an order of the Board made, on and after the commencement
of the Securities Laws (Second Amendment) Act, 1999, (i.e., after 16thDecember
1999), under these regulations may prefer an appeal to a Securities Appellate
Tribunal having jurisdiction in the matter] 47. (1) The Securities and Board of (2) Notwithstanding such repeal :- (a) Anything done or any action
taken or purported to have been done or taken including approval of letter of
offer, exemption granted, fees collected any adjudication, enquiry or
investigation commenced or show cause notice issued under the said regulations
shall be deemed to have been done or taken under the corresponding provisions
of these regulations; (b) Any application made to the
Board under the said regulations and pending before it shall be deemed to have
been made under the corresponding provisions of these regulations. (c) Any appeals preferred to the
Central Government under the said regulations and pending before it shall be
deemed to have been preferred under the corresponding provisions of these
regulations.
Format for filing the information with SEs by
acquirer as requiredu/r 3(3)
FOOTNOTES
5 [1]
substituted vide SEBI (Substantial Acquisition of Shares and Takeovers)
Amendment Regulations,2004 published in the Official Gazette of [2] Earlier this clause was substituted vide
SEBI (Substantial Acquisition of Shares and Takeovers) (Second Amendment)
Regulations, 2002dated 5asubstituted vide SEBI (Substantial
Acquisition of Shares and Takeovers) Amendment Regulations,2006 published in
the Official Gazette of (i) any person who is directly or indirectly in
control of the company; or and includes, (i) his spouse , parents, brothers, sisters or
children; (b)where such person is a body corporate, (i) a subsidiary or holding company of that body
corporate; Explanation I: A financial institution, scheduled
commercial bank, foreign institutional investor, mutual fund and a venture
capital fund shall not be deemed to be a promoter merely by virtue of its
shareholding. Explanation II: A financial institution, scheduled
commercial bank, foreign institutional investor or a venture capital fund shall
be deemed to be a promoter of its subsidiary and of the mutual fund sponsored
by it, as applicable. 6Sub -regulation (ii) inserted by SEBI (Substantial
Acquisition of Shares and Takeovers) (Amendment) Regulations,2001 published in
the official Gazette of India dated 17.8.2001 Provided that,- (ii) full disclosures
of the identity of the class of the proposed allottee (s) is made, and if any
of the proposed allottee (s) is to be allotted such number of shares as would
increase his holding to 5% or more of the post issued capital, then in such
cases, the price at which the allotment is proposed, the identity of such
person(s), the purpose of and reason for such allotment, 11The
earlier definition [(i) group companies, coming within the definition of group
as defined in the Monopolies and Restrictive Trade Practices Act, 1969 (25 of
1969) ;] Substituted vide SEBI (Substantial Acquisition of Shares and
Takeovers) (Second Amendment) Regulations, 2002 dated 9th September, 2002 11aInserted vide SEBI (Substantial Acquisition of Shares and Takeovers)
Amendment Regulations,2006 published in the Official Gazette of 11aa Inserted vide SEBI (Substantial Acquisition of Shares and Takeovers)
Amendment Regulations,2006 published in the Official Gazette of India on
26/05/2006 12bInserted
vide SEBI (Substantial Acquisition of Shares and Takeovers) Amendment
Regulations,2006 published in the Official Gazette of India on 26/05/2006
12e inserted
vide SEBI (Substantial Acquisition of Shares
and Takeovers) Amendment Regulations,2006 published in the Official Gazette of 12f inserted
vide SEBI (Substantial Acquisition of Shares
and Takeovers) Amendment Regulations,2006 published in the Official Gazette of 12g
inserted vide SEBI (Substantial Acquisition of
Shares and Takeovers) Amendment Regulations,2006 published in the Official
Gazette of 12h
inserted vide SEBI (Substantial Acquisition of
Shares and Takeovers) Amendment Regulations,2006 published in the Official
Gazette of 12i inserted
vide SEBI (Substantial Acquisition of Shares
and Takeovers) Amendment Regulations,2006 published in the Official Gazette of 12j inserted vide
SEBI (Substantial Acquisition of Shares and
Takeovers) Amendment Regulations,2006 published in the Official Gazette of 12k
inserted vide SEBI (Substantial Acquisition of
Shares and Takeovers) Amendment Regulations,2006 published in the Official
Gazette of 13InsertedvideSEBI (Substantial Acquisition of Shares and
Takeovers) (Second Amendment)Regulations, 2002 dated 9th September, 2002 22 The brackets and
the word c Omitted vide SEBI (Substantial
Acquisition of Shares and Takeovers)(Second Amendment) Regulations, 2002 dated 28 The earlier sub regulation read
as [(1) Any acquirer, who acquires shares or voting rights which (taken together
with shares or voting rights, if any, held by him) would entitle him to more
than five percent shares or voting rights in a company, inany manner
whatsoever, shall disclose the aggregate of his shareholding or voting rights
in that company, to the company.] Substituted
vide SEBI (Substantial Acquisition of Shares and Takeovers) (Second Amendment)
Regulations, 2002 dated 28a
[or fifty four per cent. or seventy four per cent] Inserted
vide SEBI(Substantial Acquisition of Shares and Takeovers) Amendment Regulations,
2004 published in the Official Gazette of India on 03/01/2005 37Substituted
for"10%" by the SEBI (Substantial Acquisition of Shares and
Takeovers) (Amendment)Regulations, 1998 published in the official Gazette of 37ainserted vide SEBI (Substantial
Acquisition of Shares and Takeovers) Amendment Regulations,2004 published
in the official Gazette of India dated January 3,2005 Provided that no acquirer shall acquire shares or voting
rights, through market purchases and preferential allotment pursuant to a resolution
passed under section 81 of the Companies Act, 1956 or any other applicable law,
which(taken together with shares or voting rights, if any, held by him or by
persons acting in concert with him), entitle such acquirer to exercise more
than fifty five per cent. of the voting rights in the company; Provided further
that if the acquirer has acquired shares or voting rights through such market
purchases or preferential allotment beyond fifty five per cent. of the voting
rights in the company, he shall forthwith disinvest the shares acquired in
excess of fifty five per cent. and shall be liable for action under these
Regulations and the Act. 38Substitutedfor
"[not less than 10% but not more than 51%]" by the SEBI (Substantial
Acquisition of Shares and Takeovers) (Amendment) Regulations, 1998 published in
the official Gazette of 38a Substituted
for (75%) vide SEBI (Substantial Acquisition of Shares and Takeovers)Amendment
Regulations, 2004 published in the official Gazette of 39Substitutedfor
"5%" by the SEBI (Substantial Acquisition of Shares and
Takeovers)(Third Amendment) Regulations, 2001, published in the official
Gazette of [2] Earlier, the sub-regulation (2) was substituted by the
SEBI (Substantial Acquisition of Shares and Takeovers) (Amendment)Regulations,
1998 published in the official Gazette of [(2) "No acquirer shall acquire shares or
voting rights which (taken together with shares or voting rights, if any, held
by him or by persons acting in concert with him), entitle such acquirer to
exercise more than 51% of the voting rights in a company, unless such acquirer
makes a public announcement to acquire share of such company in accordance with
the Regulations"] 42aSubstituted vide SEBI
(Substantial Acquisition of Shares and Takeovers) Amendment Regulations,2006
published in the official Gazette of India dated 26/05/2006 for [An acquirer, who together with persons acting in concert
with him has acquired, in accordance with the provisions of law, fifty five per
cent.(55%) or more but less than seventy five per cent. (75%) of the shares or
voting rights in a target company, may acquire either by himself or through
person acting in concert with him any additional share or voting right, only if
he makes a public announcement to acquire shares or voting rights in accordance
with these regulations: Provided that no acquirer
shall acquire shares or voting rights, through market purchases and
preferential allotment pursuant to a resolution passed under section 81 of the
Companies Act, 1956 or any other applicable law, which (taken together with
shares or voting rights, if any, held by him or by persons acting in concert
with him), entitle such acquirer to exercise more than fifty five per cent. of
the voting rights in the company; Provided further that if
the acquirer has acquired shares or voting rights through such market purchases
or preferential allotment beyond fifty five per cent. of the voting rights in
the company, he shall forthwith disinvest the shares acquired in excess of
fifty five per cent. and shall be liable for action under these Regulations and
the Act. 42bInserted vide SEBI (Substantial
Acquisition of Shares and Takeovers) Amendment Regulations,2004 published
in the official Gazette of India dated January 3,2005 - Unless otherwise provided in these regulations, an
acquirer, who seeks to acquire any shares or voting rights whereby the public
shareholding in the target company may be reduced to a level below the limit
specified in the Listing Agreement with the stock exchange for the purpose of
listing on continuous basis, may acquire such shares or voting rights, only in accordance
with the of guidelines or regulations regarding delisting of securities
specified by the Board: Provided that, the
provisions of this sub-regulation shall not apply in case of acquisition by
virtue of global arrangement which may result in indirect acquisition of shares
or voting rights or control of the target company. (i) For the purposes of this
Regulation where there are two or more persons in control over the target
company, the cessor of any one such person from such control shall not be
deemed to be a change in control of management nor shall any change in the
nature and quantum of control amongst them constitute change in control of
management. Provided however that if the
transfer of joint control to sole control is through sale at less than the
market value of the shares, a shareholders meeting of the target company shall
be convened to determine mode of disposal of the shares of the outgoing (ii) where any person or persons
are given joint control, such control shall not be deemed to be a change in
control so long as the control given is equal to or less than the control
exercised by person(s) presently having control over the company.] Substituted
vide SEBI(Substantial Acquisition of Shares and Takeovers) (Second
Amendment)Regulations, 2002 dated 9th September, 2002 (a) in cash;
or (b) by
exchange and, or transfer of shares of acquirer company, if the person seeking
to acquire the shares is a listed body corporate; or (c) by
exchange and/or transfer of secured instruments with a minimum of `A' grade
rating from a credit rating agency; (d) a
combination of clauses (a),(b) or (c). Provided that where payment has been made in cash
to any class of shareholders for acquiring their shares under any agreement or
pursuant to any acquisition in the open market or in any other manner during
the preceding 12 months from the date of public announcement, the offer
document shall provide that the shareholders have the option to accept payment
either in cash or by exchange of shares or other secured instruments referred
to above. (2) For the purposes of sub-regulation (1), the
minimum offer price shall be the highest of (a) the
negotiated price under the agreement referred to in sub-regulation (1) of
Regulation 14; (b) highest price
paid by the acquirer or persons acting in concert with him for any
acquisitions, including byway of allotment in a public or rights issue, if any,
during the 26 week period prior to the date of public announcement; (c) the price
paid by the acquirer under a preferential allotment made to him or to persons (d) the
average of the weekly high and low of the closing prices of the shares of the
target [Explanation: In case of disinvestment of Public
Sector Undertaking, the relevant date for the calculation of the average of the
weekly high and low of the closing prices of the shares of the Public Sector Undertaking,
as quoted on the stock exchange where its shares are most frequently traded,
shall be the date preceding the date when the Central Government (opens the
financial bid)] (3) Where the shares of the target company are
infrequently traded, the offer price shall be determined by the issuer and the
merchant banker taking into account the following factors : (a) the
negotiated price under the agreement referred to in sub-regulation (1) of
Regulation 14; (b) highest
price paid by the acquirer or persons acting in concert with him for
acquisitions including by way of allotment in a public or rights issue, if any,
during the twenty six week period prior to the date of public announcement; (c) the
price paid by the acquirer under a preferential allotment made to him or to
persons acting in concert with him, at any time during the twelve month period
upto the date of closure of the offer; and (d) other
parameters including return on net worth, book value of the shares of the
target company, earning per share, price earning multiple vis-a-vis the
industry average. Explanation: (i) For the
purpose of this clause, shares will be deemed to be infrequently traded if on [(ia) In case
of disinvestment of Public Sector Undertaking, the shares of such an (ii) In case
of shares which have been listed within six months preceding the public [(3A) Notwithstanding anything contained in
sub-regulation (3), in case of disinvestment of (4) Notwithstanding the provisions of
sub-regulations (1),(2) and (3)above, where the acquirer [Provided that no such acquisition shall be made by
the acquirer during the last seven working (5) In case where shares or secured instruments of
the acquirer company are offered in lieu of (6) The letter of offer shall contain justification
on the basis on which the price has been Explanation:- (1) The highest price under clause
(b) or the average price under clause (d) of (2) Where the public announcement of offer is
pursuant to acquisitionby way of firm allotment in (3) Where the shareholders have been provided with
an option to accept payment either in cash (4) Where the offer is subject to a minimum level
of acceptances, the acquirer may subject to the 55iSubstituted for "twenty
one days" by SEBI (Substantial Acquisition of Shares and
Takeovers)(Amendment) Regulations, 2004 published in the official Gazette of 55b
inserted vide
SEBI (Substantial Acquisition of Shares and Takeovers) Amendment Regulations,
2004 published in the official Gazette of India dated January 3, 2005 - Provided further that the shares or voting rights so acquired taken
together with the acquisition under the public offer and shares or voting
rights, if any, held by him or by persons acting in concert with him, do not
result in public shareholding in the target company being reduced to a level
below the limit specified in the Listing Agreement with the stock exchange for
the purpose of listing on continuous basis. 55c substituted vide SEBI (Substantial
Acquisition of Shares and Takeovers) Amendment Regulations, 2006
published in the official Gazette of 56Insertedvide
SEBI (Substantial Acquisition of Shares and Takeovers) (Second
Amendment) Regulations, 2002 dated 9th September, 2002 57a Inserted vide
SEBI (Substantial Acquisition of Shares and Takeovers) Amendment
Regulations,2004 published in the official Gazette of India dated January
3,2005 – Provided that where any public
offer is made in pursuance of sub-regulation (2)of regulation 11, such public
offer shall be for such percentage of voting capital of the target company so
that the acquisition does not result in the public shareholding in such company
being reduced to a level below the limit specified in the Listing Agreement
with the stock exchange for the purpose of listing on continuous basis
-[Omitted] vide SEBI (Substantial Acquisition of Shares and Takeovers)
Amendment Regulations, 2006 published in the official Gazette of India
dated 26/05/2006. 58[1] Inserted vide SEBI (Substantial
Acquisition of Shares and Takeovers) Amendment Regulations, 2004
published in the official Gazette of India dated January 3, 2005 - Where an
acquirer acquires more than fifty five per cent. (55%) shares or voting rights
in the target company through an agreement or memorandum of understanding and
the public offer made under regulation 10 or sub-regulation(1) of regulation 11
to acquire minimum percentage of voting capital as specified in sub regulation
(1) of regulation 21 results in public shareholding being reduced to a level
below the limit specified in the Listing Agreement with the stock exchange for
the purpose of listing on continuous basis, the acquirer shall acquire only
such number of shares under the agreement or the memorandum of understanding so
as to maintain the minimum specified public shareholding in the target company;
58aSubstituted vide SEBI (Substantial
Acquisition of Shares and Takeovers) Amendment Regulations, 2006
published in the official Gazette of [2] The
sub-regulation (2) was earlier omitted vide SEBI (Substantial Acquisition of
Shares and Takeovers) (Second Amendment) Regulations, 2002 dated [(2) Where the offer is conditional upon minimum
level of acceptances from the shareholders as provided for in clause (xviii) of
Regulation 16,the provisions of sub-regulation (1) of this regulation shall not
be applicable, if the acquirer has deposited in the escrow account in cash a
sum of 50%of the consideration payable under the public offer.] 59 [1] [ If consequent to the public offer made in pursuance
of global arrangement referred to in proviso to sub regulation (2A) of
regulation 11, the public shareholding falls to a level below the limit
specified in the Listing Agreement with the stock exchange for the purpose of
listing on continuous basis, the acquirer shall undertake to raise the level of
public shareholding to the levels specified for continuous listing specified in
the Listing Agreement with the stock exchange, within a period of twelve months
from the date of closure of the public offer, by
Provided that in case of acquisition of shares or voting rights or control in a
target company where the public shareholding is below the limit specified for
the purpose of listing on continuous basis in terms of the Listing Agreement
with the stock exchange, the acquirer shall undertake to raise the level of
public shareholding to the levels specified for continuous listing in terms of
the listing conditions specified in the Listing Agreement with the stock exchange,
within the period specified under the Listing Agreement.] substituted vide SEBI
(Substantial Acquisition of Shares and Takeovers) Amendment
Regulations,2004 published in the official Gazette of [If the public offer
results in the public shareholding being reduced to 10% or less of the voting
capital of the company, or if the public offer is in respect of a company which
has public shareholding of less than 10% of the voting capital of the company,
the acquirer shall either, [2] Earlier clause (a)
thereof was substituted vide SEBI (Substantial Acquisition of Shares and
Takeovers) (Second Amendment) Regulations, 2002 dated [(a) within a period of 3
months from the date of closure of the public offer, make an offer to buy
out the outstanding shares remaining with the shareholders at the same
offer price, which may result in de-listing of the target company; or] 59aSubstituted vide SEBI (Substantial
Acquisition of Shares and Takeovers) Amendment Regulations,2006 published in
the official Gazette of 59b The word ",(2)"
omitted vide the SEBI (Substantial Acquisition of Shares and Takeovers)
(Amendment) Regulations, 2004 published in the official Gazette of 59c Substituted for "30 days"
by SEBI (Substantial Acquisition of Shares and Takeovers)(Amendment) Regulations,
2004 published in the official Gazette of India dated 03.09.2004 “(8) The obligations provided
for in the proviso to clause(a) of sub-regulation (3) and sub-regulation (6) of
this regulation, shall not be applicable where the agreement to sell shares of
a Public Sector Undertaking contains a clause to the effect that in case of
non-compliance of any of the provisions of the Regulations, the shares or the
control of the Public Sector Undertaking shall revert back to the Central
Government and the acquirers shall be liable to such penalty as may be imposed
by the Central Government.” The above sub-regulation (8) was
inserted by the SEBI (Substantial Acquisition of Shares and Takeovers)
(Amendment) Regulations, 2001 published in the official Gazette of India dated
17.08.2001 "(2A) No public announcement
for an offer or competitive bid shall be made after the central government has
entered into a Share Purchase or Shareholder’s Agreement with the acquirer who
has made the public announcement for acquisition of shares or voting rights or
control of a Public Sector Undertaking.” The above sub-regulation (2A)
was inserted by the SEBI (Substantial Acquisition of Shares and Takeovers)
(Amendment) Regulations, 2001 published in the official Gazette of India dated
17.08.2001 (a) revising
the offer; or (b)
withdrawing the offer, with the prior approval of the Board.] Substituted vide
SEBI (Substantial Acquisition of Shares and Takeovers) (Second
Amendment) Regulations, 2002 dated 9th September, 2002 81bSubstitutedfor"30
days" by SEBI (Substantial Acquisition of Shares and Takeovers)
(Amendment)Regulations, 2004 published in the official Gazette of 82 The earlier regulation 44which
read as follows: [Directions by the Board. 44. The Board may, in the interests of the
securities market, without prejudice to its right to initiate action including
criminal prosecution under section 24 of the Act give such directions as it
deems fit including: (a) directing the person
concerned not to further deal in securities; (b) prohibiting the person
concerned from disposing of any of the securities acquired in violation
of these Regulations; (c) directing the person
concerned to sell the shares acquired in violation of the provisions of these
Regulations; (d) taking action against the
person concerned.]Substituted
vide SEBI (Substantial Acquisition of Shares and Takeovers) (Second Amendment)
Regulations, 2002 dated 82a Inserted vide SEBI
(Substantial Acquisition of Shares and Takeovers) Amendment
Regulations,2004 published in the official Gazette of 82b Inserted vide SEBI
(Substantial Acquisition of Shares and Takeovers) Amendment
Regulations,2004 published in the official Gazette of 82c Inserted vide SEBI
(Substantial Acquisition of Shares and Takeovers)Amendment Regulations,
2004 published in the official Gazette of 83Substituted for the
following by SEBI (Appeal to the Securities Appellate Tribunal)
(Amendment)Regulations, 2000, published in the official Gazette of "Appeal to the Central
Government Any person being aggrieved by an order of the
Board may prefer an appeal to the Central Government." 84.
Substituted for
"1993"by a corrigendum published in the Gazette of F.No.SEBI/LE/XVII/1/541/97
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