CONTENTS

CHAPTER I: PRELIMINARY

1. Short title and commencement
2. Definitions
3. Applicability of the Regulation
4. The Takeover Panel
5. Power of the Board to grant exemption

6. Transitional provision
7.Acquisition of 5% and more shares of a company
8. Continual disclosures
9. Power to call for information

10. Transitional provision
11. Acquisition of 5% and more shares of a company
12. Acquisition of control over a company
13. Appointment of a Merchant Banker
14. Timing of the Public Announcement of Offer
15. Public Announcement of Offer
16. Contents of the Public Announcement of Offer
17. Brochures, advertising material etc.
18. Submission of Letter of offer to the Board
19. Specified date
20. Offer price
21. Minimum number of shares to be acquired
22. General Obligations of the acquirer
23. General Obligations of the board of directorsof the target company
24. General obligations of the merchant banker
25. Competitive bid
26. Upward Revision of Offer
27. Withdrawal of Offer
28. Provision of Escrow
29. Payment of consideration

30. Bail out takeovers
31. Manner of acquisition of shares
32. Manner of evaluation of bids
33. Person acquiring shares to make an offer
34. Person acquiring shares to make public announcement
35. Competitive Bid
36. Exemption from the operations of Chapter III
37. Acquisition of shares by a state level publicfinancial institution

38. Board's right to investigate
39. Notice before investigation
40. Obligations on investigation by the Board
41. Submission of Report to the Board
42. Communication of findings
43. Appointment of Auditor
44. Directions by the Board.
45. Penalties for non-compliance
46. Appeal to the Securities Appellate Tribunal
47. Repeal and saving

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: -
 
 

Short title and commencement

1 (1) These Regulations shall be called the Securities and ExchangeBoard of India (Substantial Acquisition of Shares and Takeovers) Regulations,1997.

(2) These Regulations shall come into force on the date of their publicationin the Official Gazette.

Definitions

2 (1) In these Regulations, unless the context otherwise requires:-

(a) "Act" means the Securities and Exchange Board of IndiaAct, 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, eitherby himself or with any person acting in concert with the acquirer;

(c) "control" shall include the right to appoint majority of the directorsor to control the management or policy decisions exercisable by a personor persons acting individually or in concert, directly or indirectly, includingby virtue of their shareholding or management rights or shareholders agreementsor 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 deemedto 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 votingrights and / or control in a listed Public Sector Undertaking;]

(d) "investigating officer" means any person appointed by the Boardunder Regulation 38;

(e) "person acting in concert" comprises, -

(1) persons who, for a common objective or purpose of substantialacquisition of shares or voting rights or gaining control over the targetcompany, pursuant to an agreement or understanding (formal or informal),directly or indirectly co-operate by acquiring or agreeing to acquire sharesor voting rights in the target company or control over the target company.

(2) Without prejudice to the generality of this definition, the followingpersons will be deemed to be persons acting in concert with other personsin 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 eitherindividually or together with each other;

(ii) a company with any of its directors, or any person entrusted withthe 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 orwith any company, which is a holding company or a subsidiary of the acquireror with a relative of the acquirer, is by way of providing normal commercialbanking services or such activities in connection with the offer such asconfirming availability of funds, handling acceptances and other registrationwork.

(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 thepaid-up capital of that company or with any other investment company inwhich such person or his associate holds not less than 2% of the paid upcapital 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 theCompanies Act, 1956 (1 of 1956); and

(b) family trusts and Hindu Undivided Families.

(f) "⁴[offerperiod’ means the period between the date of entering into Memorandum ofUnderstanding or the public announcement, as the case may be and the dateof completion of offer formalities relating to the offer made under theseregulations.];

(g) "panel" means a panel constituted by the Board for the purpose ofRegulation4;

⁵
(h).^5a”Promoter’ means -

 
(a)   any person who is in control of the target company;

(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 financialinstitution as defined in Section 4A of the Companies Act, 1956.
^6*[(ii)"Public Sector Undertaking" means a company in which the Central Government⁷[ora State Government] holds 50% or more of its equity capital or is incontrol of the company;]

^7a(j)“publicshareholding” means shareholding held by persons other than promoters asdefined under clause

(k) "shares" means shares in the share capitalof a company carrying voting rights and includes any security which wouldentitle the holder to receive shares with voting rights ⁸[butshall not include preference shares].

^8a(ka)" acquisition of shares in terms of guidelines or regulations regardingdelisting of securities specified or framed by the Board”.

(l) "sick industrial company" shall have the same meaning assigned toit in clause (o) of sub-section (1) of Section 3 of the Sick IndustrialCompanies (Special Provisions) Act, 1985 (1 of 1986) or any statutory re-enactmentthereof.

(m) "state level financial institution" means a state financial corporationestablished under Section 3 of the State Financial Institutions Act, 1951and includes development corporation established as a company by a StateGovernment with the object of development of industries or agriculturalactivities in the state;

(n) "stock exchange" means a stock exchange which has been granted recognitionunder Section 4 of the Securities Contracts (Regulation) Act, 1956 (42of 1956);

(o) "target company" means a listed company whose shares or voting rightsor control is directly or indirectly acquired or is being acquired;

⁹[(p) "workingdays" shall mean the working days of the Board."]
 

Applicability of the Regulation

3 (1) Nothing contained in Regulations 10, Regulation11 and Regulation 12 of these regulations shallapply to :

(a) allotment in pursuance of anapplication made to a public issue.

Provided that if such an allotment is made pursuant to a firmallotment in the public issues, such allotment shall be exempt only iffull disclosures are made in the prospectus about the identity of the acquirerwho has agreed to acquire the shares, the purpose of acquisition, consequentialchanges in voting rights, shareholding pattern of the company and in theBoard of Directors of the Company, if any, and whether such allotment wouldresult in change in control over the company.

(b) allotment pursuant to an applicationmade by the shareholder for rights issue,

(i) to the extent of his entitlement; and

(ii) upto the percentage specifiedin Regulation 11:

Provided that the limit mentioned in sub-clause(ii) will not apply to the acquisition by any person presently in controlof the company and who has in the rights letter of offer made disclosuresthat they intend to acquire additional shares beyond their entitlementif the issue is undersubscribed.

Provided further that this exemption shall not be availablein case the acquisition of securities results in the change of controlof management;

¹⁰*[(c)]

(d) allotment to the underwriterspursuant to any underwriting agreement;

(e) interse transfer of shares amongst :-

¹¹[(i)group coming within the definition of group as defined in the Monopoliesand Restrictive Trade Practices Act, 1969 (54 of 1969) where persons constitutingsuch group have been shown as group in the last published Annual Reportof the target company. ];

(ii) relatives within the meaning of Section 6 of the CompaniesAct, 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 sharesin the target company for a period of at least three years prior to theproposed acquisition.];

^12a“Explanation: Forthe purpose of the exemption under sub-clause (iii) the term “ ^12b [qualifying] promoter"means -
(i) any person who is directly or indirectlyin control of the company; or
(ii) any person named as promoter in any documentfor offer of securities to the public or existing shareholders or in theshareholding pattern disclosed  by the company under the provisionsof the Listing  Agreement, whichever is later;
and includes,

(a) where the ^12c[qualifying] promoter is an individual, -
(1) a relative of the ^12d[qualifying] promoter within the meaningof section 6 of the Companies Act, 1956 (1 of 1956);
(2) any firm or company, directly or indirectly,controlled by the ^12e[qualifying] promoter or a relative of the [qualifying] promoter or a firm or Hinduundivided family in which the^12f[qualifying] promoter or his relative is a partner or a coparcener or a combination thereof:

Provided that, in case of a partnership firm,the share of the ^12g[qualifying] promoter or his relative, as the case may be, in suchfirm should not be less than fifty per cent.(50%)";

(b) where the ^12h [qualifying] promoter is a body corporate,-
(1) a subsidiary or holding company of that body;or
(2) any firm or company, directly or indirectly,controlled by the ¹²ⁱ[qualifying] promoter of that body corporate or by his relative ora firm or Hindu undivided family in which the^12j[qualifying] promoter or his relativeis a partner or coparcener or a combination thereof:

Provided that, in case of a partnership firm,the share of such ^12k [qualifying] promoter or his relative, as the case may be, in suchfirm should not be less than fifty per cent.(50%).”

¹³[(iv)the acquirer and persons acting in concert with him, where such transferof shares takes place three years after the date of closure of the publicoffer made by them under these Regulations.]

¹⁴[Explanation.- (1) The exemption under sub-clauses (iii) and (iv) shall not be availableif inter se transfer of shares is at a price exceeding 25% of the priceas determined in terms of sub-regulations (4) and (5) of regulation20.";

2. The benefit of availing exemption under this clause, from applicabilityof the Regulations for increasing shareholding or inter se transferof shareholding shall be subject to such transferor(s)and transferee(s) having complied with Regulation 6,Regulation7 and Regulation 8."]

(f) acquisition of shares in the ordinary course of business by,-

(i) a registered stock-broker of a stock exchange on behalfof clients;

(ii) a registered market maker of a stock exchange in respect of sharesfor 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) theInternational Finance Corporation, Asian Development Bank, InternationalBank for Reconstruction and Development, Commonwealth Development Corporationand such other international financial institutions,

(vi) a merchant banker or a promoter of the target company pursuantto a scheme of safety net under the provisions of the Securities and ExchangeBoard of India (Disclosure and Investor Protection) Guidelines, 2000 inexcess of limit specified in sub-regulation (1) of Regulation 11.]

¹⁶[(ff)acquisition of shares by a person in exchange of shares received undera public offer made under these Regulations.]

(g) acquisition of shares by way of transmission on successionor inheritance;

(h) acquisition of shares by governmentcompanies within the meaning of Section 617 of the Companies Act, 1956(1 of 1956) and statutory corporations;

¹⁷[Providedthatthis exemption shall not be applicable if a Government company acquiresshares or voting rights or control of a listed Public Sector Undertakingthrough the competitive bidding process of the Central Government ¹⁸[orthe State Government as the case may be] for the purpose of disinvestment."]

(i) transfer of shares from state levelfinancial institutions, including their subsidiaries, to co-promoter(s)of the company ¹⁹[ortheir successors or assignee(s) or an acquirer who has substituted an erstwhilepromoter] pursuant to an agreement  between such financial institutionand such co-promoter(s);

²⁰[(ia) transferof shares from venture capital funds or foreign venture capital investorsregistered with the Board to promoters of a venture capital undertakingor venture capital undertaking pursuant to an agreement between such venturecapital fund or foreign venture capital investors with such promoters orventure 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 mergeror demerger under any law or regulation, Indian or foreign.

^20a(ja) change in controlby takeover of management of the borrower target company by the securedcreditor or by restoration of management to the said target company bythe said secured creditor in terms of the Securitization and Reconstructionof Financial Assets and Enforcement of Security Interest Act, 2002 (54of 2002).

(k) acquisition of shares in companies whose shares are not listed onany stock exchange;

Explanation: The exemption under clause(k) above shall not be applicable if by virtue of acquisition or changeof control of any unlisted company, whether in India or abroad, the acquireracquires shares or voting rights or control over a listed company.

(1) ²¹[*]other cases as may be exempted from the applicability of ChapterIII by the Board under Regulation 4.

(2) Nothing contained in Chapter III of theRegulations shall apply to the acquisition of Global Depository Receiptsor American Depository Receipts so long as they are not converted intoshares carrying voting rights.

(3) In respect of acquisitions under clauses²²[*](e),(h)and (i) of sub-regulation (1), the stock exchangeswhere the shares of the company are listed shall, for information of thepublic, be notifiedof the details of the proposed transactions at least 4 working daysin advance of the date of the proposed acquisition, in case of acquisitionexceeding 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 acquirershall, within 21 days of the date of acquisition, submita report along with suppporting documents to the Board giving all detailsin respect of acquisitions which (taken together with shares or votingrights, if any, held by him or by persons acting in concert with him) wouldentitle 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 dateof 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 chequeor demand draft in favour of the Securities and Exchange Board of India,payable at Mumbai.

The Takeover Panel

4. (1) The Board shall for the purposes of this Regulation constitutea Panel of majority of independent persons from within the categories mentionedin sub-section (5) of Section 4 of the Act.

(2) For seeking exemption underclause (l) of sub-regulation (1) of Regulation (3), the acquirer shallfile an application ²⁷[supportedby a duly sworn affidavit] with the Board, giving details of the proposedacquisition and the grounds on which the exemption has been sought.[Formatof application]

(3) The acquirer shall, along with the application referred to undersub-regulation(2), pay a fee of ^27a [one lakh rupees] to the Board, either by a bankers chequeor demand draft in favour of the Securities and Exchange Board of India,payable at Mumbai.

(4) The Board shall within 5 days of the receipt of an application undersub-regulation(2) forward the application to the Panel.

(5) The Panel shall within 15 days from the date of receipt of applicationmake a recommendation on the application to the Board.

(6) The Board shall after affording reasonableopportunity to the concerned parties and after considering all the relevantfacts including the recommendations, if any, pass a reasoned order on theapplication 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 applicationof the provisions of these Regulations, the Board shall have the powerto issue directions through guidance notes or circulars:

Provided that where any direction is issued by the Board in a specificcase relating to interpretation or application of any provision of theseRegulations, it shall be done only after affording a reasonable opportunityto the concerned parties and after recording reasons for the direction.

5 [1] substitutedvideSEBI (Substantial Acquisation of Shares and Takeovers) Amendment Regulations,2004 published in the Official Gazette of India on 03/01/2005. Prior tothe substitution, the clause read as under:
[(h)[promoter"means -
(i) the person or persons who are in controlof the company,directly or indirectly, whether as a shareholder, directoror otherwise; or
(ii) person or persons named as promotersin any document of offer of securities to the public or existing hareholders,
and includes,
(a) where the promoter is an individual, -
(1) a relative of the promoter within themeaning of section 6 of the Companies Act, 1956 (1 of 1956);
(2) any firm or company, directly or indirectly,controlled by the promoter or a relative of the promoter or a firm or Hinduundivided family in which the promoter or his relative is a partner ora coparcener or a combination thereof:
Provided that, in case of a partnership firm,the share of the promoter or his relative, as the case may be, in suchfirm should not be less than 50%.";
(b) where the promoter is a body corporate,-
(1) a subsidiary or holding company of thatbody; or
(2) any firm or company, directly or indirectly,controlled by the promoter of that body corporate or by his relative ora firm or Hindu undivided family in which the promoter or his relativeis a partner or coparcener or a combination thereof:
Provided that, in case of a partnership firm,the share of such promoter or his relative, as the case may be, in suchfirm should not be less than 50%.].

[2] Earliar this clause was substituted vide SEBI (SubstantialAcquisition of Shares and Takeovers) (Second Amendment) Regulations, 2002dated 9th September, 2002. Prior to the substitution, it read as under:
[(h) "promoter" means
 (1) (i) the person or persons who are in control of the company,or
 (ii) person or persons named in any offer document as promoters;
 (2) a relative of the promoter within the meaning of section6 of the Companies Act, 1956 (1 of 1956);and
  (3) in case of a corporate body,
  (i) a subsidiary or holding company of that body, or
  (ii) any company in which the `Promoter' holds 10% or moreof the equity capital or which holds 10% or more of the equity capitalof the Promoter, or
   (iii) any corporate body in which a group of individualsor corporate bodies or combinations thereof who hold 20% or more of theequity capital in that company also hold 20% or more of the equity capitalof the `Promoter'; and
   (4) in case of an individual,
   (i) any company in which 10% or more of the share capitalis held by the `Promoter' or a relative of the `Promoter' or a firm orHindu undivided family in which the `Promoter' or his relative is a partneror co-parcener or a combination thereof,
   (ii) any company in which a company specified in (i)above, holds 10% or more of the share capital, or
   (iii) any HUF or firm in which the aggregate shareof the Promoter and his relatives is equal to or more than 10% of the total.]

^5asubstituted vide SEBI (Substantial Acquisation of Shares and Takeovers) Amendment Regulations,2006 published in the Official Gazette of India on 26/05/2006. Prior tothe substitution, the clause read as under:(h)"promoter", unless otherwise provided elsewhere, means-

(i)  any person who is directly or indirectlyin control of the company; or
(ii) any person named as promoter in any documentfor offer of securities to the public or existing shareholders or in theshareholding pattern disclosed  by the company under the provisionsof the Listing  Agreement, whichever is later; or
(iii) any person named as person acting in concertwith the promoter in any disclosure made in terms of the Listing Agreementwith the stock exchange or any other regulations or guidelines made orissued by the Board under the Act.

 and includes,
(a) where such person is an individual,

(i)  his  spouse , parents, brothers,sisters or children;
(ii) any company in which twenty six per cent.(26%)or more of the equity share capital is held by him or by the persons mentionedin sub-clause (i) or any firm or Hindu Undivided Family in which he orany of the persons mentioned in sub-clause (i) is a partner or member;
(iii) any company in which a company specifiedin sub-clause (ii), holds more than fifty per cent.(50%) of the equityshare capital;
(iv)any firm in which the aggregate of his holdingand the holdings of the persons mentioned in sub-clause (i) is  morethan fifty per cent.(50%) .

(b)where such person is a body corporate,

(i) a subsidiary or holding  company of thatbody corporate;
(ii) any company in which the said body corporateholds twenty six per cent.(26%) or more of the equity share capital;
(iii) any company which holds twenty six percent.(26%)  or more of the equity share capital of the said body corporate;
(iv) any company in which persons acting in concerthold twenty six per cent.(26%) or more of the equity share capital andthose persons acting in concert also hold twenty six per cent.(26%) or more of the equity share capital in such  body corporate;
(v)any other body corporate under the same managementas the said body corporate within the meaning of sub-section (1B) of section370 of the Companies Act, 1956;

Explanation I: A financial institution, scheduledcommercial bank, foreign institutional investor, mutual fund and a venturecapital fund shall not be deemed to be a promoter merely by virtue of itsshareholding.

Explanation II: A financial institution, scheduledcommercial bank, foreign institutional investor or a venture capital fundshall be deemed to be a promoter of its subsidiary and of the mutual fundsponsored by it, as applicable.

 Provided that,-
(i) board Resolution in respect of the proposed preferential allotmentis sent to all the stock exchanges on which the    shares of the company are listed for being notified on the notice board;

(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 allottedsuch number of shares as would increase his holding to 5% or more of thepost issued capital, then in such cases, the price at which the allotmentis proposed, the identity of such person(s), the purpose of and reasonfor such allotment,
consequential changes, if any, in the board of directors of the companyand in voting rights, the shareholding pattern of the company, and whethersuch allotment would result in change in control over the company are alldisclosed in the notice of the General Meeting called for the purpose ofconsideration of the preferential allotment;]Omittedvide SEBI(Substantial Acquisition of Shares and Takeovers) (SecondAmendment) Regulations, 2002 dated 9th September, 2002

¹¹The earlier definition [(i) groupcompanies, coming within the definition of group as defined in the Monopoliesand Restrictive Trade Practices Act, 1969 (25 of 1969) ;] Substitutedvide SEBI (Substantial Acquisition of Shares and Takeovers) (SecondAmendment) Regulations, 2002 dated 9th September, 2002

^11aInserted vide SEBI (Substantial Acquisation of Shares and Takeovers) Amendment Regulations,2006 published in the Official Gazette of India on 26/05/2006

^11aa Inserted vide SEBI (Substantial Acquisation of Shares and Takeovers) Amendment Regulations,2006 published in the Official Gazette of India on 26/05/2006
¹² The proviso read as [Providedthat the transferor(s) as well as the transferee(s) in sub-clauses (a)and (b) have been holding individually or collectively not less than 5%sharesin the target company for a period of at least three years prior to theproposed acquisition;] Substituted vide SEBI (SubstantialAcquisition of Shares and Takeovers) (Second Amendment) Regulations, 2002dated 9th September, 2002
12a insertedvide vide SEBI (Substantial Acquisition of Shares and Takeovers)Amendment Regulations, 2004 published in the Official Gazette of Indiaon 03/01/2005

^12bInserted vide SEBI (Substantial Acquisation of Shares and Takeovers) Amendment Regulations,2006 published in the Official Gazette of India on 26/05/2006
^12c Inserted vide SEBI (Substantial Acquisation of Shares and Takeovers) Amendment Regulations,2006 published in the Official Gazette of India on 26/05/2006
^12d inserted vide SEBI (Substantial Acquisation of Shares and Takeovers) Amendment Regulations,2006 published in the Official Gazette of India on 26/05/2006

12e inserted vide SEBI (Substantial Acquisation of Shares and Takeovers) Amendment Regulations,2006 published in the Official Gazette of India on 26/05/2006

12f inserted vide SEBI (Substantial Acquisation of Shares and Takeovers) Amendment Regulations,2006 published in the Official Gazette of India on 26/05/2006

12g inserted vide SEBI (Substantial Acquisation of Shares and Takeovers) Amendment Regulations,2006 published in the Official Gazette of India on 26/05/2006

12h inserted vide SEBI (Substantial Acquisation of Shares and Takeovers) Amendment Regulations,2006 published in the Official Gazette of India on 26/05/2006

12i inserted vide SEBI (Substantial Acquisation of Shares and Takeovers) Amendment Regulations,2006 published in the Official Gazette of India on 26/05/2006

12j  inserted vide SEBI (Substantial Acquisation of Shares and Takeovers) Amendment Regulations,2006 published in the Official Gazette of India on 26/05/2006

12k  inserted vide SEBI (Substantial Acquisation of Shares and Takeovers) Amendment Regulations,2006 published in the Official Gazette of India on 26/05/2006

¹³InsertedvideSEBI (Substantial Acquisition of Shares and Takeovers) (Second Amendment)Regulations, 2002 dated 9th September, 2002
¹⁴[Explanation: The benefit of availingof exemption from applicability of Regulations for increasing shareholdingor inter se transfer of shareholding among group companies, relatives andpromoters shall be subject to such group companies or relatives or promotersfiling statements concerning group and individual shareholding as requiredunder Regulations 6, Regulation 7 and Regulation 8.] Substitutedvide SEBI (Substantial Acquisition of Shares and Takeovers) (SecondAmendment) Regulations, 2002 dated 9th September, 2002
¹⁵InsertedvideSEBI(Substantial Acquisition of Shares and Takeovers) (Second Amendment)Regulations, 2002 dated 9th September, 2002
¹⁶InsertedvideSEBI (Substantial Acquisition of Shares and Takeovers) (Second Amendment)Regulations, 2002 dated 9th September, 2002
¹⁷Proviso insertedby SEBI (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations,2002 published in the official Gazette of India dated 29.1.2002
¹⁸ Insertedvide SEBI (Substantial Acquisition of Shares and Takeovers) (SecondAmendment) Regulations, 2002 dated 9th September, 2002
¹⁹ InsertedvideSEBI (Substantial Acquisition of Shares and Takeovers) (Second Amendment)Regulations, 2002 dated 9th September, 2002
²⁰ Sub-regulation (ja)insertedby SEBI (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations,2000 published in the official Gazette of India dated 30.12.2000
^20a Sub-regulation (ja) insertedbySEBI (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations,2004 published in the official Gazette of India dated 03.09.2004
²¹ The word [such]Omittedvide SEBI (Substantial Acquisition of Shares and Takeovers) (SecondAmendment) Regulations, 2002 dated 9th September,2002
21a  Inserted vide vide SEBI (Substantial Acquisitionof Shares and Takeovers) Amendment Regulations, 2004 published in the OfficialGazette of India on 03/01/2005 - [The benefit of availing exemption under the relevant clauses of sub-regulation(1), shall be subject to compliance with requirement specified in sub-regulation(2A) of regulation 11]
^21aaSubstituted vide SEBI (Substantial Acquisation of Shares and Takeovers) Amendment Regulations,2006 published in the Official Gazette of India on 26/05/2006

²² Thebrackets and the word c Omittedvide SEBI (Substantial Acquisition of Shares and Takeovers)(Second Amendment) Regulations, 2002 dated 9th September, 2002
23. Substituted for "2%" by theSEBI (Substantial Acquisition of Shares and Takeovers (Amendment) Regulations,1998 published in the official Gazette of India dated 28.10.1998.
²⁴ The brackets and the word[(c)]Omittedvide SEBI (Substantial Acquisition of Shares and Takeovers) (SecondAmendment) Regulations, 2002 dated 9th September, 2002
²⁵Substituted for "10%" by the SEBI (SubstantialAcquisition of Shares and Takeovers) (Amendment) Regulations, 1998 publishedin the official Gazette of India dated 28.10.1998.
²⁶ Explanation Inserted vide SEBI(SubstantialAcquisition of Shares and Takeovers) (Second Amendment) Regulations, 2002dated 9th September, 2002
^26a Substituted for "Rs 10,000/-"  vide SEBI (Substantial Acquisition of Shares and Takeovers) (SecondAmendment) Regulations, 2006 published in the Official Gazette of India on 21.08.2006
²⁷Insertedvide SEBI (Substantial Acquisition of Shares and Takeovers) (SecondAmendment) Regulations, 2002 dated 9th September, 2002
^27a Substituted for "Rs.25,000/-"  vide SEBI (Substantial Acquisition of Shares and Takeovers) (SecondAmendment) Regulations, 2006 published in the Official Gazette of India on 21.08.2006

Transitional provision

6. (1) Any person, who holds more than five percent shares or votingrights in any company, shall within two months of notification of theseRegulations disclose his aggregate shareholding in that company, to thecompany.

(2) Every company whose shares are held by the persons referred to insub-regulation(1) shall, within three months from the date of notification of theseRegulations, disclose to all the stock exchanges on which the shares ofthe company are listed, the aggregate number of shares held by each person.

(3) A promoter or any person having controlover a company shall within two months of notification of these Regulationsdisclose the number and percentage of shares or voting rights held by himand 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, shallwithin three months of notification of these Regulations, disclose to allthe stock exchanges on which the shares of the company are listed, thenames and addresses of promoters and, or person(s) having control overthe company, and number and percentage of shares or voting rights heldby each such person.

Acquisition of 5% and more shares of a company

²⁸[7.(1) Anyacquirer, who acquires shares or voting rights which(taken together with shares or voting rights, if any, held by him) wouldentitle him to more than five per cent or ten per cent. or fourteen percent.^28aorfifty four per cent. or seventy four per cent shares or voting rights ina company, in any manner whatsoever, shall disclose at every stage theaggregate of his shareholding or voting rights in that company to the companyand to the stock exchanges where shares of the target company are listed.]

²⁹[(1A) Anyacquirer 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 targetcompany, and the stock exchanges where shares of the target company arelisted within two days of such purchase or sale alongwith the aggregateshareholding 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 andsuch pledgee shall make disclosure to the target company and the stockexchange 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 casemay be.

(3) Every company, whose shares are acquired in a manner referred toin ^34*[sub-regulation(1) and (1A)] shalldisclose to all the stock exchanges on which the shares of the saidcompany are listed the aggregate number of shares held by each of suchpersons referred above within seven days of receipt of information under^35*[sub-regulations(1) and (1A)]

Continual disclosures

8. (1) Every person, including a person mentioned in Regulation6 who holds more than
^36*[fifteen]percent shares or voting rights in any company, shall, within 21 days fromthe financial year ending March 31, makeyearly disclosures to the company, in respect of his holdings as on31st March.

(2) A promoter or every person having controlover 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 declarationof dividend, disclosethe number and percentage of shares or voting rights held by him and bypersons acting in concert with him, in that company to the company.

(3) Every company whose shares are listed on a stock exchange, shallwithin 30 days from the financial year ending March 31, as well as therecord date of the company for the purposes of declaration of dividend,make yearlydisclosures to all the stock exchanges on which the shares of the companyare listed, the changes, if any, in respect of the holdings of the personsreferred to under sub-regulation (1) and also holdingsof promoters or person(s) having control over the company as on 31st March.

(4) Every company whose shares are listed on a stock exchange shallmaintain a registerin 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.

Power to call for information

9. The stock exchanges and the company shall furnish to the Board informationwith regard to the disclosures made under Regulations6,Regulation 7 and Regulation8 as and when required by the Board.

²⁸ The earlier sub regulationread as [(1) Any acquirer, who acquires shares or voting rights which (takentogether with shares or voting rights, if any, held by him) would entitlehim to more than five percent shares or voting rights in a company, inany manner whatsoever, shall disclose the aggregate of his shareholdingor voting rights in that company, to the company.] Substitutedvide SEBI (Substantial Acquisition of Shares and Takeovers) (SecondAmendment) Regulations, 2002 dated 9th September, 2002

28a [or fifty four per cent.or seventy four per cent] Insertedvide SEBI(Substantial Acquisition of Shares and Takeovers) AmendmentRegulations, 2004 published in the Official Gazette of India on 03/01/2005
²⁹ Theearlier provision which read as follows [(1A) Any acquirer who hasacquired shares or voting rights of a company under sub-regulation (1)of regulation 11, shall disclose purchase or saleaggregatingtwo per cent.or more of the share capital of the target company to the target company,and the stock exchanges where shares of the target company arelisted within two days of such purchase or sale alongwith the aggregateshareholding after such acquisition or sale.] Substitutedvide SEBI (Substantial Acquisition of Shares and Takeovers) (SecondAmendment) Regulations, 2002 dated 9th September, 2002
³⁰Explanationinserted vide SEBI (Substantial Acquisition of Shares and Takeovers)(Second Amendment) Regulations, 2002 dated 9th September, 2002
³¹Substituted for "sub-regulation(1)" by SEBI (Substantial Acquisition of Shares and Takeovers) (Third Amendment)Regulations, 2001 published in the official Gazette of India dated24.10.2001
³² The words [four working daysof] substituted vide SEBI(Substantial Acquisitionof Shares and Takeovers) (Second Amendment) Regulations, 2002 dated 9thSeptember, 2002
³³Sub Regulation(2A)inserted vide SEBI(Substantial Acquisition of Shares and Takeovers)(Second Amendment) Regulations, 2002 dated 9th September, 2002
³⁴Substituted for "sub-regulation(1)" by SEBI (Substantial Acquisition of Shares and Takeovers) (Third Amendment)Regulations, 2001 published in the official Gazette of India dated24.10.2001
³⁵Substituted for"sub-regulation (1)" by SEBI (Substantial Acquisition of Shares and Takeovers)(Third Amendment) Regulations, 2001 published in the official Gazette ofIndia dated24.10.2001
³⁶Substituted for"ten" by the SEBI (Substantial Acquisition of Shares and Takeovers) (Amendment)Regulations, 1998 published in the official Gazette of India dated 28.10.1998.

Acquisition of^37*[fifteen] or more of the shares or voting rights of any company.

10. No acquirer shall acquire shares or voting rights which (taken togetherwith shares or voting rights, if any, held by him or by persons actingin concert with him), entitle such acquirer to exercise^37*[fifteen ] percent or more of the voting rights in a company, unless suchacquirer makes a public announcement to acquire shares of such companyin accordance with the Regulations.

^37a

Consolidation of holdings

11. (1) No acquirer who, together with persons acting in concert withhim, 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, shallacquire, either by himself or through or with persons acting in concertwith him, additional shares or voting rights entitling him to exercisemore than ^39*[⁴⁰[5%]]of the voting rights, ⁴¹[inany financial year ending on 31st March], unless such acquirer makes apublic 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 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)Notwithstandinganythinganything contained in Regulations10, 11 and 12, in caseof disinvestment of a Public Sector Undertaking , an acquirer who togetherwith persons acting in concert with him, has made a public announcement,shall not be required to make another public announcement at the subsequentstage of further acquisition of shares or voting rights or control of thePublic Sector Undertaking provided:-

(i) both the acquirer and the seller are the same at all thestages of acquisition, and

(ii) disclosures regarding all the stages of acquisition, if any, aremade in the letter of offer issued in terms of Regulation 18 and in thefirst public announcement.]

(a) direct acquisition in a listed company to which the Regulationsapply;

(b) indirect acquisition by virtue of acquisition of⁴⁴[*]companies, whether listed or unlisted, whether in India or abroad.

12. Irrespective of whether or not there has been any acquisition ofshares or voting rights in a company, no acquirer shall acquire controlover the target company, unless such person makes a public announcementto acquire shares and acquires such shares in accordance with the Regulations.

Provided that nothing contained herein shall apply to any change incontrol which takes place in pursuance to a ⁴⁵[specialresolution] passed by the shareholders in a general meeting.

⁴⁶["Providedfurther that for passing of the special resolution facility of voting throughpostal ballot as specified under the Companies (Passing of the Resolutionsby Postal Ballot) Rules, 2001 shall also be provided.]

Explanation:

⁴⁷[Forthe purposes of this Regulation, acquisition shall include direct or indirectacquisition of control of target company by virtue of acquisition of companies,whether listed or unlisted and whether in India or abroad]

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 holdinga certificate of registration granted by the Board, who is not associateof 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 foracquisition of shares or voting rights or deciding to acquire shares orvoting rights exceeding the respective percentage specified therein:

^48*[Providedthat in case of disinvestment of a Public Sector Undertaking, the publicannouncement shall be made by the merchant banker not later than 4 workingdays of the acquirer executing the Share Purchase Agreement or ShareholdersAgreement with the Central Government ⁴⁹[orthe State Government as the case may be] for the acquisition of sharesor voting rights exceeding the percentage of share holding referred toin 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 DepositoriesReceipts or American Depository Receipts which, when taken together withthe voting rights, if any already held by him or persons acting in concertwith him, would entitle him to voting rights, exceeding the percentagespecified 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 acquiresvoting 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 workingdays after any such change or changes are decided to be made as would resultin the acquisition of control over the target company by the acquirer.

⁵⁰[(4) Incase of indirect acquisition or change in control, a public announcementshall be made by the acquirer within three months of consummation of suchacquisition or change in control or restructuring of the parent or thecompany holding shares of or control over the target company in India.]

Public Announcement of Offer

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 withwide circulation, one Hindi national daily with wide circulation and aregional language daily with wide circulation at the place where the registeredoffice of the target company is situated and at the place of the stockexchange where the shares of the target company are most frequently traded.

⁵¹[2) Simultaneouslywith publication of the public announcementin the   newspaper in terms of sub-regulation (1), a copy ofthe public announcement shall be,

      (i) submitted to the Board through themerchant banker,
      (ii) sent to all the stock exchangeson which the shares of the company are listed for being notified on thenotice board,
     (iii) sent to the target company at its registeredoffice for being  placed before the Board of Directors of the company.]

⁵²[(3)]

(3) Simultaneous with the submission of the public announcement to theBoard, the public announcement shall also be sent to all the stock exchangeson which the shares of the company are listed for being notified on thenotice board, and to the target company at its registered office for beingplaced before the board of directors of the Company.

(4) The offer under these Regulations shall be deemed to have been madeon the date on which the public announcement has appeared in any of thenewspapers referred to in sub-regulation (1).

Contents of the Public Announcement of Offer

16. The publicannouncement referred to in Regulations 10 orRegulation11 or Regulation 12 shall contain the followingparticulars, namely :-

(i)    the paid up share capital of the targetcompany, the number of fully paid up and partly paid up shares;

(ii)    the total number and percentage of shares proposedto 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 paidup or partly paid up share;

(iv)    mode of payment of consideration;

(v)    the identity of the acquirer(s) and in case theacquirer is a company or companies, the identity of the promoters and,or the persons having control over such company(ies) and the group, ifany, to which the company(ies) belong;

(vi)    the existing holding, if any, of the acquirerin the shares of the target company, including holdings of persons actingin 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, suchas the date, the name of the seller, the price at which the shares arebeing acquired, the manner of payment of the consideration and the numberand percentage of shares in respect of which he acquirer has entered intothe 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 andthe average price paid by the acquirer or persons acting in concert withhim for acquisition, if any, of shares of the target company made by himduring the twelve month period prior to the date of public announcement;

(ix)    Object and purpose of the acquisition of theshares and future plans, if any, of the acquirer for the target company,including disclosures whether the acquirer proposes to dispose of or otherwiseencumber 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 announcementshall also set out how the acquirers propose to implement such future plans.

⁵³["Providedfurther that the acquirer shall not sell, dispose of or otherwise encumberany substantial asset of the target company except with the prior approvalof the shareholders.

 (ixa) an undertaking that the acquirer shall not sell, disposeof or otherwise encumber any substantial asset of the target company exceptwith the prior approval of the shareholders.]

(x)    the `specified date' as mentioned in Regulation19;

(xi)    the date by which individual letters of offerwould be posted to each of the shareholders;

(xii)    the date of opening and closure of the offerand the manner in which and the date by which the acceptance or rejectionof the offer would be communicated to the shareholders;

(xiii)    the date by which the payment of considerationwould be made for the shares in respect of which the offer has been accepted;

(xiv)    disclosure to the effect that firm arrangementfor 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., fromNon-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 beobtained 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/orany other applicable laws;

(xvii)    approvals of banks or financial institutionsrequired, if any;
whether the offer is subject to a minimum level of acceptance fromthe shareholders; and

(xviii)    such other informationas is essential for the shareholders to make an informed decision in regardto the offer.

17. The public announcement of the offer or any other advertisement,circular, brochure, publicity material or letter of offer issued in relationto 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 madeunder Regulation 10, Regulation11 or Regulation 12 as the case may be, the acquirershall, through its merchant banker, file with the Board, thedraft of the letter of offer, containing disclosures as specified by theBoard.

(2) The letter of offer shall be despatched to the shareholders notearlier 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 theletter of offer, the Board specifies changes, if any, in the letter ofoffer, (without being under any obligation to do so) the merchant bankerand the acquirer shall carry out such changes before the letter of offeris despatched to the shareholders.

⁵⁴ [Providedfurther that if the disclosures in the draft letter of offer are inadequateor the Board has received any complaint or has initiated any enquiry orinvestigation in respect of the public offer, the Board may call for revisedletter of offer with or without rescheduling the date of opening or closingof the offer and may offer its comments to the revised letter of offerwithin 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:
 

Specified date

19.The public announcement shall specify a date, which shall be the`specified date' for the purpose of determining the names of the shareholdersto whom the letter of offer should be sent.

Provided that such specified date shall not be later than the thirtiethday from the date of the public announcement.

⁵⁵[Offerprice.

20(1) The offer to acquire shares under regulations10,11 or 12 shall be madeat a price not lower than the price determined as per sub-regulations (4)and (5).

(2) The offer price shall be payable -

(a) in cash ;

(b) by issue, exchange and, or transferof shares (other than preference shares) of acquirer company, if the personseeking to acquire the shares is a listed body corporate; or

(c) by issue, exchange and, or transferof secured instruments of acquirer company with a minimum ‘A’ grade ratingfrom 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 ofshareholders for acquiring their shares under any agreement or pursuantto any acquisition in the open market or in any other manner during theimmediately preceding twelve months from the date of public announcement,the letter of offer shall provide an option to the  shareholders toaccept payment either in cash or by exchange of shares or other  securedinstruments referred to above:

Provided further that the mode of payment of consideration may be alteredin case of revision in offer price or size subject to the condition thatthe amount to be paid in cash as mentioned in any announcement or the letterof offer is not reduced.

(3) In case the offer price consists of consideration payable in theform   of securities issuance of which requires approval of theshareholders, such approval shall be obtained by the acquirer within ⁵⁵ⁱ[sevendays] from the date of closure of the offer:
Provided that in case the requisite approval is not obtained, the acquirershall pay the entire consideration in cash.

(4) For the purposes of sub-regulation (1), the offer price shall bethe  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 withhim for acquisition, if any, including by way of allotment in a publicor rights orpreferential issue during the twenty six week period priorto the date of public announcement, whichever is higher;

(c) the average of the weekly high and low of the closing  pricesof the sharesof the target company as quoted on the stock exchange wherethe shares of the company are most frequently traded during the twentysix 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 ofthe company are most frequently traded during the two weeks preceding thedate of public announcement, whichever is higher.

^55a[Provided that therequirement of average of the daily high and low of the closing pricesof the shares as quoted on the stock exchange where the shares of the companyare most frequently traded during the two weeks preceding the date of publicannouncement, shall not be applicable in case of disinvestment of a PublicSector Undertaking.]

Explanation:

In case of disinvestment of a Public Sector Undertaking, the relevantdate for the calculation of the average of the weekly or daily high andlow 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 Governmentor 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 merchantbanker 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 concertwith  him for acquisitions, if any, including by way of allotmentin a public or rights or preferential issue during the twenty six weekperiod prior to the date of public announcement;

(c) other parameters including return on networth, book value of theshares of the target company, earning per share, price earning multiplevis-a-vis the industry average:

Provided that where considered necessary, the Board may require valuationof such infrequently traded shares by an independent merchant banker (otherthan the manager to the offer) or an independent chartered accountant ofminimum ten
years’ standing or a public financial institution.

Explanation :-

(i) For the purpose of sub-regulation (5), shares shall be deemed tobe infrequently traded if on the stock exchange, the annualised tradingturnover in that share during the preceding six calendar months prior tothe month in which the public announcement is made is less than five percent. (by number of shares) of the listed shares. For this purpose, theweighted average number of shares listed during the said six months periodmay be taken.

(ii) In case of disinvestment of a Public Sector Undertaking, the sharesof  such an undertaking shall be deemed to be infrequently traded,if on the stock exchange, the annualised trading turnover in the sharesduring the preceding six calendar months prior to the month, in which theCentral Government or  the State Government as the case may be opensthe financial bid, is less than  five per cent. (by the number ofshares) of the listed shares. For this purpose,  the weighted averagenumber of shares listed during the six months period may be taken.

(iii)In case of shares which have been listed within six months precedingthe public announcement, the trading turnover may be annualised with referenceto the actual number of days for which the shares have been listed.

(6) Notwithstanding anything contained in sub-regulation (5), in caseof disinvestment  of a Public Sector Undertaking, whose shares areinfrequently traded, the minimum offer price shall be the price paid bythe successful bidder to the Central Government  or the State Government,arrived at after the process of competitive bidding of the  CentralGovernment 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 openmarket or through negotiation or otherwise, after the date of public announcementat 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 acceptancesreceived under the offer:

Provided that no such acquisition shall be made by the acquirer duringthe 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 inrespect of non compete agreement in excess of twenty five per cent. ofthe 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 companyare offered in lieu of cash payment, the value of such shares or securedinstruments 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 ora public financial institution.

(10) The offer price for partly paid up shares shall be calculated asthe difference between the offer price and the amount due towards calls-in-arrearsor calls remaining  unpaid together with interest, if any, payableon the amount called up but remaining unpaid.

(11) The letter of offer shall contain justification or the basis onwhich 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
            for quotations, if any, on cum-rights or cum-bonus or cum-dividend basisduring the said period.

               (ii) Where the public announcement of offer is pursuant to acquisitionby way of firm allotment in a public issue or     preferentialallotment, the average price under clause (c) of sub-regulation (4) shallbe calculated with reference to twenty six week period preceding the dateof the board resolution which authorised the firm allotment or preferentialallotment.

               (iii) Where the shareholders have been provided with an option to acceptpayment either in cash or by way of exchange of security, the pricing forthe cash offer could be different from that of a share exchange offer oroffer for
               exchange with secured instruments provided that the disclosures in theletter of offer contains suitable justification for such differential pricingand the pricing is subject to other provisions of this regulation.

              (iv) Where the offer is subject to a minimum level of acceptance, the acquirermay, subject to the other provisions of this regulation, indicate a lowerprice for the minimum acceptance upto twenty per cent., should the ofernot receive full acceptance.

 (12) The offer price for indirect acquisition or control shallbe determined with  reference to the date of the public announcementfor the parent company and the date of  the public announcement foracquisition of shares of the target company, whichever is higher, in accordancewith sub-regulation (4) or sub-regulation (5).]

⁵⁶[Acquisitionprice under creeping acquisition

"20A. (1) An acquirer who has made a public offer and seeks to acquirefurther shares under sub-regulation (1) of regulation 11 shall not acquiresuch shares during the period of 6 months from the date of closure of thepublic offer at a price higher than the offer price.

(2) Sub-regulation (1) shall not apply where the acquisition is madethrough 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 targetcompany shall be for a minimum twenty per cent ofthe voting capital of the company.]

^57a

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 tothe 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 atthe 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 shareholdersare more than the shares agreed to be acquired by the person making theoffer, such person shall, accept the offers received from the shareholderson a proportional basis, in consultation with the merchant banker, takingcare to ensure that the basis of acceptance is decided in a fair and equitablemanner and does not result in non-marketable lots.

Provided that acquisition of shares from a shareholder shall not beless than the minimum marketable lot or the entire holding if it is lessthan the marketable lot.

⁶⁰[Offerconditional upon level of acceptance

"21A. (1) Subject to the provisions of sub-regulation(8) of regulation 22, an acquirer or any person actingin concert with him may make an offer conditional as to the level of acceptancewhich may be less than twenty per cent:

Provided that where the public offer is in pursuance of a Memorandumof Understanding, the Memorandum of Understanding shall contain a conditionto the effect that in case the desired level of acceptance is not receivedthe acquirer shall not acquire any shares under the Memorandum of Understandingand shall rescind the offer.]

General Obligations of the acquirer

22. (1) The public announcement of offer to acquire the shares of thetarget company shall be made only when the acquirer is able to implementthe offer.

(2) Within 14 days of the public announcement of the offer, the acquirershall send a copy of the draft letter of offer to the target company atits registered office address, for being placed before the board of directorsand 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 allthe shareholders (including non-resident Indians) of the target company,whose names appear on the register of members of the company as on thespecified date mentioned in the public announcement, so as to reach themwithin 45 days from the date of public announcement.

Provided that where the public announcement is made pursuant to an agreementto acquire shares or control over the target company, the letter of offershall be sent to shareholders other than the parties to the agreement.

Explanation:-(i) A copy of the letter of offershall also be sent to the Custodians of Global Depository Receipts or AmericanDepository 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 warrantholders or convertible debenture holders, where the period of exerciseof option or conversion falls within the offer period.

(5) The offer to acquire shares from the shareholders shall remain openfor a period of ^60b[twenty]days.

⁶¹[(5A) Theshareholder shall have the option to withdraw acceptance tendered by him upto 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 publicitymaterial issued to shareholders in connection with the offer must statethat the directors accept the responsibility for the information containedin such documents.

Provided that if any of the directors desires to exempt himself fromresponsibility for the information in such document, such director shallissue a statement to that effect, together with reasons thereof for suchstatement.

(7) During the offer period, the acquirer orpersons acting in concert with him shall not be entitled to be appointedon the board of directors of the target company.

^62*[Providedthat in case of acquisition of shares or voting rights or control of aPublic Sector Undertaking pursuant to a public announcement made underthe proviso to sub-regulation (1) of Regulation 14,the provisions of sub-regulation (8) of Regulation23 shall be applicable]

⁶³[Providedfurther that where the acquirer, other than the acquirer who has made anoffer under regulation 21 A, after assuming fullacceptances, has deposited in  the escrow account hundred per cent.of the consideration payable in cash where  the consideration payableis in cash and in the form of securities where the consideration payableis 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 targetcompany 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 receivedresponse to the minimum level of acceptances, acquire shares from the publicto the extent of the minimum percentage specified in sub-regulation(1) of Regulation 21

Provided that the provisions of this clause shall not be applicablein 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 sharesin the target company, except by way of fresh issue of shares of the targetcompany, as provided for under Regulation 3;

(iii) shall be liable for penalty of forfeiture of entire escrowamount, for the non-fulfilment of obligations under the Regulations;

(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 hasbeen made for fulfilling the obligations under the public offer and suitabledisclosures in this regard shall be made in the public announcement ofoffer.

(12) The acquirer shall, within a period of ^63a[fifteen]daysfrom the date of the closure of the offer, complete all procedures relatingto the offer including payment of consideration to the shareholders whohave accepted the offer and for the purpose open a special account as providedunderRegulation 29.

Provided that where the acquirer is unable to make the payment to theshareholders 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 approvalswas not due to any wilful default or neglect of the acquirer or failureof the acquirer to diligently pursue the applications for such approvals,grant extension of time for the purpose, subject to the acquirer agreeingto 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 approvalsin time on account of willful default or neglect or inaction or non-actionon his part, the amount lying in the escrow account shall be liable tobe forfeited and dealt wit h in the manner provided in clause(e) of sub regulation 12 of Regulation 28, apart from the acquirerbeing 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 thetarget company for a period of six months from the date of public announcementof withdrawal of offer.

(15) In the event of non-fulfillment of obligations underChapterIII or Chapter IV of the Regulations, the acquirershall not make any offer for acquisition of shares of any listed companyfor 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, increaseshis share holding beyond ^64*[15%],then such an agreement for sale of shares shall contain a clause to theeffect 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 theacquirer.

^65*[ Providedthat in case of acquisition of shares of a Public Sector Undertaking pursuantto a public announcement made under the Regulations, the provisions ofsub-regulation(8) of Regulation 23 shall be applicable]

⁶⁶[(17) Wherethe acquirer or persons acting in concert with him has acquired any sharesin terms of sub-regulation (7) of regulation 20 ata price equal to or less or more than the offer price, he shall disclosethe number, percentage, price and the
mode of acquisition of such shares to the stock exchanges on whichthe shares of the target company are listed and to the merchant bankerwithin 24 hours of such acquisition and the stock exchanges shall forthwithdisseminate such information
to the public.]

(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 otherwiseencumber any assets of the target company except in the ordinary courseof business of the target company, the acquirer, where he has acquiredcontrol over the target company, shall be debarred from disposing of orotherwise encumbering the assets of the target company for a period of2 years from the date of closure of the public offer.

⁶⁷[(19) Theacquirer and the persons acting in concert with him shall be jointly andseverally responsible for fulfilment of obligations under these Regulations.]

General Obligations of the board of directorsof the target company

23. (1) Unless the approval of the general body of shareholders is obtainedafter the date of the public announcement of offer, the board of directorsof the target company shall not, during the offer period, -

(a)    sell, transfer, encumber or otherwisedispose of or enter into an agreement for sale, transfer, encumbrance orfor disposal of assets otherwise, not being sale or disposal of assetsin the ordinary course of business, of the company or its subsidiaries;or

(b)    issue ⁶⁸[orallot] any authorised but unissued securities carrying voting rights duringthe offer period; or

(c)    enter into any material contracts.

               (i) the right of the target company to issue or allot shares carrying voting
               rights upon conversion of debentures already issued or upon exercise of
               option against warrants, as per pre-determined terms of conversion or
               exercise of option.

               (ii) issue or allotment of shares pursuant to public or rights issue inrespect
               of which the offer document has already been filed with the Registrar of
               Companies or Stock Exchanges, as the case may be.]

(2)    The target company shall furnish to the acquirer,within 7 days of the request of the acquirer or within 7 days from thespecified date, whichever is later, a list of shareholders or warrant holdersor convertible debenture holders as are eligible for participation underExplanation(ii) to sub-regulation (3) of Regulation 22 containing names, addresses,shareholding and folio number, and of those persons whose applicationsfor registration of transfer of share s are pending with the company.

(3) Once the public announcement has been made, the board of directorsof the target company shall not, -

(a)    appointas additional director or fill in any casual vacancy on the board of directors,by any person(s) representing or having interest in the acquirer, tillthe date of certification by the merchant banker as provided undersub-regulation(6) below.

Provided that upon closure of the offer and the full amount of considerationpayable to the shareholders being deposited in the special account, changesas would give the acquirer representation on the Board or control overthe company, c an be made by the target company.

(b)    allow any person or persons representing or havinginterest in the acquirer, if he is already a director on the board of thetarget company before the date of the public announcement, to participatein any matter relating to the offer, including any preparatory steps leadingthereto.

Provided that for any misstatement or for concealment of material information,the directors shall be liable for action in terms of these Regulationsand the Act.

(5) The board of directors of the target company shall facilitate theacquirer in verification of securities tendered for acceptances.

(6) Upon fulfillment of all obligations bythe acquirers under the Regulations as certified by the merchant banker,the board of directors of the target company shall transfer the securitiesacquired by the acquirer, whether under the agreement or from open marketpurchases, in the name of the acquirer and, or allow such changes in theboard of directors as would give the acquirer representation on the boardor control over the company.

(7) The obligations provided for in sub-regulation(16) of regulation 22 shall be complied with by the company in thecircumstances specified therein.

^70*[(8)The restrictions-

(a) for appointment of directors on the Board of a targetcompany 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 Directorsof the target company under sub-regulation (6)of this Regulation, shall not be applicable, in case of sale of sharesof a Public Sector Undertaking by the Central Government ⁷¹[orthe State Government], and the agreement to sell contains a clause to theeffect that in case of non-compliance of any of the provisions of the Regulationsby the acquirer, transfer of shares or change of management or controlof Public Sector Undertaking shall vest back with the Central Government ⁷¹[orthe State Government] and the acquirer shall be liable to such penaltyas may be imposed by the Central Government ⁷¹[orthe State Government]. ]

24. (1) Before the public announcement of offer is made, the merchantbanker shall ensure that-

(a)    the acquirer is able to implement theoffer;

(b)    the provision relating to escrow account referredto in Regulation 28 has been made;

(c)    firm arrangements for funds and money for paymentthrough verifiable means to fulfil the obligations under the offer arein place;

(d)    the public announcement of offer is made in termsof the Regulations.

^71a(e) his shareholding,if any in the target company is disclosed in the public announcement andthe letter of offer

(3) The merchant banker shall ensure that the ⁷²[*]public announcement and the letter of offer is filed with the Board, targetcompany and also sent to all the stock exchanges on which the shares ofthe target company are listed in accordance with the Regulations.

(4) The merchant banker shall ensure that the contents of the publicannouncement of offer as well as the letter of offer are true, fair andadequate and based on reliable sources, quoting the source wherever necessary.

(5) The merchant banker shall ensure compliance of the Regulations andany other laws or rules as may be applicable in this regard.

^72a (5A) The merchantbanker shall not deal in the shares of the target company during the periodcommencing from the date of his appointment in terms of regulation 13 tillthe 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 hasbeen deposited to release the balance amount to the acquirers.

(7) The merchantbanker shall send a final report to the Board within 45 days from the dateof closure of the offer.

Competitive bid

25. (1) Any person, other than the acquirer who has made the first publicannouncement, who is desirous of making any offer, shall, within 21 daysof the public announcement of the first offer, make a public announcementof 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 bemade after 21 days from the date of public announcement of the first offer.

^73*[ (2A)Nopublic announcement for a competitive bid shall be made after an acquirerhas already made the public announcement under the proviso tosub-regulation(1) of Regulation 14 pursuant to entering into a Share Purchase orShareholders Agreement with the Central Government⁷⁴[or the State Government as the case may be], for acquisition of shares orvoting rights or control of a Public Sector Undertaking]

(3) Any competitive offer by an acquirer shall be for such number ofshares which, when taken together with shares held by him along with personsacting in concert with him, shall be ⁷⁵[atleast equal to the holding of the first bidder including the number ofshares for which the present offer by the first bidder has been made]

(4) Upon the public announcement of a competitivebid or bids, the acquirer(s) who had made the public announcement(s) ofthe earlier offer(s), shall have the option to ⁷⁶[makean announcement revising the offer].

Provided that if no such announcement is made within fourteen days ofthe announcement of the competitive bid(s), the earlier offer(s) on theoriginal 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 offershall stand extended to the date of closure of the public offer under thelast subsisting competitive bid.

(5) The provisions of these Regulations shall mutatis-mutandisapply 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 respectto the price and the number of shares to be acquired, at any time uptoseven working days prior to the date of closure of the offer:

Provided that the acquirer shall not have the option to change any otherterms and conditions of their offer ⁷⁸[exceptthe mode of payment following an upward revision in offer].

Provided further that any such upward revision shall be made only uponthe acquirer, -

(a)    makinga public announcement in respect of such changes or amendments in all thenewspapers in which the original public announcement was made;

(b)    simultaneously with the issue of public announcementreferred 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 asprovided under sub-regulation (9) of Regulation 28.

Upward Revision of Offer

26. Irrespective of whether or not there is a competitive bid, the acquirerwho has made the public announcement of offer, may make upward revisionsin 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 ofthe offer.

Provided that any such upward revision of offer shall be made only uponthe acquirer -

(a)    making a public announcement in respectof such changes or amendments in all the newspapers in which the originalpublic announcement was made;

(b)    simultaneously with the issue of such public announcement,informing the Board, all the stock exchanges on which the shares of thecompany are listed, and the target company at its registered office.

(c)    increasing the value of the escrow account asprovided under sub-regulation (9) of Regulation 28.

27. (1) No public offer, once made, shall be withdrawn except underthe following circumstances:-

⁷⁹[(a)]

(b)   the statutory approval(s) required have been refused;

(c)    the sole acquirer, being a natural person, hasdied;

(d)    such circumstances as in the opinion of the Boardmerits withdrawal.

(a)    make a public announcement in the samenewspapers in which the public announcement of offer was published, indicatingreasons 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 arelisted; and

(iii) the target company at its registered office.

28. (1) The acquirer shall as and by way of security for performanceof his obligations under the Regulations, deposit in an escrow accountsuch sum as specified in sub-regulation (2).

(2) The escrow amount shall be calculated inthefollowing manner, -

(a) For consideration payableunder the public offer, -
upto and including Rs.100 crores - 25%; exceeding Rs.100 crores - 25%upto Rs.100 crores and 10% thereafter.

(b) For offers which are subject to a minimumlevel of acceptance, and the acquirer does not want to acquire a minimumof 20%, then 50% of the consideration payable under the public offer incash shall be deposited in the escrow amount.

(4) The escrow account referred in sub-regulation(1) shall consist of, -

(a)    cash deposited with a scheduled commercialbank ; or

(b)    bank guarantee in favour of the merchant banker;or

(c)    deposit of acceptable securities with appropriatemargin, with the merchant banker; or

(d)    cash, deposited with a scheduled commercial bankin case of clause (b) of sub-regulation (2)of this Regulation.

(6) Where the escrow account consists of bank guarantee, such bank guaranteeshall be in favour of the merchant banker and shall be valid atleast fora period commencing from the date of public announcement until ^79a[twenty]daysafter the closure of the offer.

(7) The acquirer shall, in case the escrow account consists of securitiesempower the merchant banker to realise the value of such escrow accountby sale or otherwise provided that if there is any deficit on realisationof the value of the securities, the merchant banker shall be liable tomake good any such deficit.

(8) In case the escrow account consists ofbank guarantee or approved securities, these shall not be returned by themerchant banker till after completion of all obligations under the Regulations.

(9) In case there is any upward revision ofoffer, consequent upon a competitive bid or otherwise, the value of theescrow account shall be increased to equal at least 10% of the considerationpayable upon such revision.

(10) Where the escrow account consist of bank guarantee or deposit ofapproved securities, the acquirer shall also deposit with the bank a sumof at least 1% of the total consideration payable, as and by way of securityfor fulfillment of the obligations under the Regulations by the acquirers.

(11) The Board shall in case of non-fulfillment of obligations underthe Regulations by the acquirer forfeit the escrow account either in fullor in part.

⁸⁰[(11A)In case of failure by the acquirer to obtain shareholders' approval requiredunder sub-regulation (3) of regulation 20, the amount in escrow accountmay be forfeited.]

(12) The escrow account deposited with the bank in cash shall be releasedonly in the following manner, -

(a) the entire amount to the acquirer upon withdrawal of offerin terms of Regulation 27 upon certification by themerchant banker;

(b) for transfer to the special account opened in terms ofsub-regulation(1) of Regulation 29.

Provided the amount so transferred shall not exceed 90% ofthe 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 cashdeposit made under clause (a) of sub-Regulation(2) of this Regulation or the cash deposit made undersub-Regulation ⁸¹[(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 allobligations 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 themerchant banker, in the event of forfeiture for non-fulfillment of anyof the obligations under the Regulations, for distribution among the targetcompany, the regional stock exchange and to the shareholders who had acceptedthe 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 exchangefor credit of the investor protection fund or any other similar fund forinvestor education, research, grievance redressal and similar such purposesas may be specified by the Board from time to time;

(iii) residual one third to be distributed pro-rata among theshareholders who have accepted the offer.

Payment of consideration

29. (1) For the amount of consideration payable in cash, the acquirershall, within a period of ^81a[seven]daysfrom the date of closure of the offer, open a special account with a Bankersto an Issue registered with the Board and deposit therein, such sum aswould, together with 90% of the amount lying in the escrow account, ifany, make up the entire sum due and payable to the shareholders as considerationfor acceptances received and accepted in terms of these Regulations andfor this purpose, transfer the funds from the escrow account.

(2) The unclaimed balance lying to the credit of the account referredin sub-regulation (1) at the end of 3 years fromthe date of deposit thereof shall be transferred to the investor protectionfund 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 despatchedto the shareholders.

³⁷Substituted for"10%" by the SEBI (Substantial Acquisition of Shares and Takeovers) (Amendment)Regulations, 1998 published in the official Gazetteof India dated 28.10.1998.

^37ainserted vide SEBI (Substantial Acquisition of Shares and Takeovers) Amendment Regulations,2004  published in the official Gazette of India dated January 3,2005  Providedthat no acquirer shall acquire shares or voting rights, through marketpurchases and preferential allotment pursuant to a resolution passed undersection 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 bypersons acting in concert with him), entitle such acquirer to exercisemore than fifty five per cent. of the voting rights in the company;

 Provided further that if the acquirer hasacquired shares or voting rights through such market purchases or preferentialallotment beyond fifty five per cent. of the voting rights in the company,he shall forthwith disinvest the shares acquired in excess of fifty fiveper cent. and shall be liable for action under these Regulations and theAct.
Explanation : In case of acquisition throughpreferential allotment the limit of fifty five per cent. voting rightsas provided under this regulation shall be reckoned with reference to theincreased share capital pursuant to such preferential allotment. [Omitted] vide  SEBI (Substantial Acquisition of Shares and Takeovers) Amendment Regulations, 2006  published in the official Gazette of India dated 26/05/2006
 

³⁸Substitutedfor "[not less than 10% but not more than 51%]" by the SEBI (SubstantialAcquisition of Shares and Takeovers) (Amendment) Regulations, 1998 publishedin the official Gazette of India dated 28.10.98.

38a Substitutedfor (75%) vide SEBI (Substantial Acquisition of Shares and Takeovers)Amendment Regulations, 2004  published in the official Gazette ofIndia dated January 3, 2005

³⁹Substitutedfor "5%" by the SEBI (Substantial Acquisition of Shares and Takeovers)(Third Amendment) Regulations, 2001, published in the official Gazetteof India dated 24.10.2001. Earlier it was substituted for "2" by the SEBI(Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations,1998 published in the official Gazette of India dated 28.10.98.
⁴⁰ The word and figures ["10% ofthe voting rights"] substituted vide SEBI (SubstantialAcquisition of Shares and Takeovers) (Second Amendment) Regulations, 2002dated 9th September, 2002
⁴¹ The word and figures ["in anyperiod of 12 months" with "in any financial year ending on 31st March"]Substitutedvide  SEBI  (Substantial Acquisition of Shares and Takeovers)(Second Amendment) Regulations, 2002 dated 9th September, 2002
⁴² [1] subsituted videSEBI(Substantial Acquisition of Shares and Takeovers) Amendment Regulations,2004  published in the official Gazette of India dated January 3,2005. Prior to this, the sub-regulation read as:
[(2)No acquirer, who together with persons actingin concert with him has acquired , in accordance with the provisions oflaw, 75% of the shares or voting rights in a company, shall acquire eitherby himself or through persons acting in concert with him any additionalshares or voting rights, unless such acquirer makes a public announcementto acquire shares in accordance with the regulations]

[2] Earliar, the sub-regulation (2) was substitutedby the SEBI (Substantial Acquisition of Shares and Takeovers) (Amendment)Regulations, 1998 published in the official Gazette of India dated 28.10.1998.Prior to the subsitution, the sub-regaultions read as:

[(2) "No acquirer shall acquire sharesor voting rights which (taken together with shares or voting rights, ifany, held by him or by persons acting in concert with him), entitle suchacquirer to exercise more than 51% of the voting rights in a company, unlesssuch acquirer makes a public announcement to acquire share of such companyin 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%) ormore but less than seventy five per cent. (75%) of the shares or votingrights in a target company, may acquire either by himself or through personsacting in concert with him any additional share or voting right, only ifhe makes a public announcement to acquire shares or voting rights in accordancewith these regulations:

Provided that no acquirer shall acquire sharesor voting rights, through market purchases and preferential allotment pursuantto a resolution passed under section 81 of the Companies Act, 1956 or anyother applicable law, which (taken together with shares or voting rights,if any, held by him or by persons acting in concert with him), entitlesuch acquirer to exercise more than fifty five per cent. of the votingrights in the company;

Provided further that if the acquirer has acquiredshares or voting rights through such market purchases or preferential allotmentbeyond fifty five per cent. of the voting rights in the company, he shallforthwith disinvest the shares acquired in excess of fifty five per cent.and shall be liable for action under these Regulations and the Act.
Explanation : In case of acquisition throughpreferential allotment the limit of fifty five per cent. voting rightsas provided under sub - regulation (ii) shall be reckoned with referenceto the increased share capital pursuant to such preferential allotment.]

^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 seeksto acquire any shares or voting rights whereby the public shareholdingin the target company may be reduced to a level below the limit specifiedin the Listing Agreement with the stock exchange for the purpose of listingon continuous basis, may acquire such shares or voting rights, only inaccordance with the of guidelines or regulations regarding delisting ofsecurities specified by the Board:

Provided that, the provisions of this sub-regulationshall not apply in case of acquisition by virtue of global arrangementwhich may result in indirect acquisition of shares or voting rights orcontrol of the target company.
^42cSubstituted vide vide SEBI (Substantial Acquisition of Shares and Takeovers) Amendment Regulations, 2006  published in the official Gazette of India dated 26/05/2006
⁴³ Sub-regulation (3)insertedby the SEBI (Substantial Acquisition of Shares and Takeovers) (Amendment)Regulations, 2001 published in the official Gazette of India dated 17.08.2001.
⁴⁴ The word [holding]Omittedvide SEBI  (Substantial Acquisition of Shares and Takeovers) (SecondAmendment) Regulations, 2002 dated 9th September, 2002
⁴⁵ Substituted for the word [resolution] vide SEBI  (Substantial Acquisition ofShares and Takeovers) (Second Amendment) Regulations, 2002 dated 9th September,2002
⁴⁶Insertedvide SEBI  (Substantial Acquisition of Shares and Takeovers) (SecondAmendment) Regulations, 2002 dated 9th September, 2002
⁴⁷[Explanation:

    (i) For the purposes of this Regulation where thereare two or more persons in control over the target company, the cessorof any one such person from such control shall not be deemed to be a changein control of management nor shall any change in the nature and quantumof control amongst them constitute change in control of management.

    Provided however that if the transfer of joint controlto 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 determinemode of disposal of the shares of the outgoing
    shareholder, by a letter of offer or by block-transferto the existing shareholders in control in accordance with the decisionpassed by a special resolution. Market value in such cases shall be determinedin accordance with Regulation 20.

    (ii) where any person or persons are given jointcontrol, such control shall not be deemed to be a change in control solong as the control given is equal to or less than the control exercisedby person(s) presently having control over the company.] SubstitutedvideSEBI(Substantial Acquisition of Shares and Takeovers) (Second Amendment)Regulations, 2002 dated 9th September, 2002
⁴⁸Proviso insertedby the SEBI (Substantial Acquisition of Shares and Takeovers) (Amendment)Regulations, 2001 published in the official Gazette of India dated 17.08.2001
⁴⁹[or the State Government as thecase may be] inserted vide SEBI  (SubstantialAcquisition of Shares and Takeovers) (Second Amendment) Regulations, 2002dated 9th September, 2002
⁵⁰Insertedvide SEBI  (Substantial Acquisition of Shares and Takeovers) (SecondAmendment) Regulations, 2002 dated 9th September, 2002
⁵¹[(2) A copy of the public announcementto be made under Regulations 10 or Regulation 11 or Regulation 12 shallbe submitted to the Board through the merchant banker at least two workingdays before its issuance]Substituted vide SEBI(SubstantialAcquisition of Shares and Takeovers) (Second Amendment) Regulations, 2002dated 9th September, 2002
⁵²The sub-regulation (3) which readas [(3) Simultaneous with the submission of the public announcement tothe Board, the public announcement shall also be sent to all the stockexchanges on which the shares of the company are listed for being notifiedon the notice board, and to the target company at its registered officefor being placed before the board of directors of the Company.] Omittedvide SEBI  (Substantial Acquisition of Shares and Takeovers) (SecondAmendment) Regulations, 2002 dated 9th September, 2002.
^52aSub-regulation (via) insertedbySEBI (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations,2004  published in the official Gazette of India dated 03.09.2004
⁵³Insertedvide SEBI  (Substantial Acquisition of Shares and Takeovers) (SecondAmendment) Regulations, 2002 dated 9th September, 2002
⁵⁴Insertedvide SEBI  (Substantial Acquisition of Shares and Takeovers) (SecondAmendment) Regulations, 2002 dated 9th September, 2002
^54a Substituted for "The acquirer shall, along with the draft letter of offer referredto in sub-regulation (1), pay a fee of Rs. 50, 000/-to the Board, either by a banker's cheque or demand draft in favour ofthe Securities and Exchange Board of India, payable at Mumbai." vide SEBI (Substantial Acquisition of Shares and Takeovers) (SecondAmendment) Regulations, 2006 published in the Official Gazette of India on 21.08.2006 
⁵⁵[Minimum offer price
20. (1) The offer to acquire the shares under Regulations 10, Regulation11 or Regulation 12
shall be made at a minimum offer price which shall be payable -

    (a)    in cash; or

    (b)    by exchange and, or transferof shares of acquirer company, if the person seeking to acquire the sharesis a listed body corporate; or

    (c)    by exchange and/or transferof secured instruments with a minimum of `A' grade rating from a creditrating agency;

    (d)    a combination of clauses (a),(b) or (c).

Provided that where payment has been made in cash to any class of shareholdersfor acquiring their shares under any agreement or pursuant to any acquisitionin the open market or in any other manner during the preceding 12 monthsfrom the date of public announcement, the offer document shall providethat the shareholders have the option to accept payment either in cashor by exchange of shares or other secured instruments referred to above.

(2) For the purposes of sub-regulation (1), the minimum offer priceshall be the highest of

    (a)    the negotiated price underthe agreement referred to in sub-regulation (1) of Regulation 14;

    (b)    highest price paid by the acquireror persons acting in concert with him for any acquisitions, including byway of allotment in a public or rights issue, if any, during the 26 weekperiod prior to the date of public announcement;

    (c)    the price paid by the acquirerunder a preferential allotment made to him or to persons
    acting in concert with him, at any time during thetwelve month period upto the date of
    closure of the offer;

    (d)    the average of the weekly highand low of the closing prices of the shares of the target
    company as quoted on the stock exchange where theshares of the company are most
    frequently traded during the 26 weeks precedingthe date of public announcement.

[Explanation: In case of disinvestment of Public Sector Undertaking,the relevant date for the calculation of the average of the weekly highand 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 (opensthe 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 bankertaking into account the following factors :

    (a)    the negotiated price underthe agreement referred to in sub-regulation (1) of Regulation 14;

    (b)    highest price paid by the acquireror persons acting in concert with him for acquisitions including by wayof allotment in a public or rights issue, if any, during the twenty sixweek period prior to the date of public announcement;

     (c)    the price paid by theacquirer under a preferential allotment made to him or to persons actingin concert with him, at any time during the twelve month period upto thedate of closure of the offer; and

    (d)    other parameters includingreturn on networth, book value of the shares of the target company, earningper 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
    the stock exchange, the annualised trading turnoverin that share during the preceding 6
    calendar months prior to the month in which thepublic announcement is made is less than
    two percent (by number of shares) of the listedshares. For this purpose, the weighted
    average number of shares listed during the saidsix months period may be taken.

    [(ia)    In case of disinvestmentof Public Sector Undertaking, the shares of such an
    undertaking shall be deemed to be infrequently tradedif on the stockexchange the annualised
    trading turnover in the shares during the precedingsix calendar months prior to the month, in
    which the Central Government (opens the financialbid) is less than two per cent (by the
    number of shares) of the listed shares. For thispurpose the weighted average number of
    shares listed during the six months period may betaken]

    (ii)    In case of shares which havebeen listed within six months preceeding the public
    announcement, the trading turnover may be annualisedwith reference to the actual number of
    days for which the share has been listed.

[(3A) Notwithstanding anything contained in sub-regulation (3), in caseof disinvestment of
Public Sector Undertaking, whose shares are infrequently traded, theminimum offer price shall
be be the price paid by the successful bidder to the Central Government,arrived at after the
process of competitive bidding of the Central Government for the purposeof disinvestment."]

(4) Notwithstanding the provisions of sub-regulations (1),(2) and (3)above, 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 minim um offer pricestated in the letter of offer,
then the highest price paid for such acquisition shall be payable forall acceptances received
under the offer.

[Provided that no such acquisition shall be made by the acquirer duringthe last seven working
days prior to the closure of the offer]

(5) In case where shares or secured instruments of the acquirer companyare offered in lieu of
cash payment, the value of such shares or secured instruments shallbe determined in the same
manner as mentioned in sub-regulations (2) and (3) above to the extentapplicable, as duly
certified by an independent Category I Merchant Banker (other thanthe managers to the offer) or
an independent Chartered Accountant of 10 years standing.

(6) The letter of offer shall contain justification on the basis onwhich the price has been
determined.

Explanation:- (1) The highest price under clause (b) or the averageprice under clause (d) of
sub-regulation (2) may be adjusted for quotations, if any, on cum-rightsor cum-bonus (or
cum-dividend) basis during the said period.

(2) Where the public announcement of offer is pursuant to acquisitionby way of firm allotment in
a public issue or preferential allotment, the average price under clause(d) of sub-regulation 2
shall be calculated with reference to the 26 week period precedingthe date of the board
resolution which authorised the firm, preferential allotment.

(3) Where the shareholders have been provided with an option to acceptpayment either in cash
or by way of exchange of security then subject to the provisions ofRegulation 20, the pricing for
the cash offer could be different from that of a share exchange offeror offer for exchange with
secured instruments, provided that the disclosures in the offer documentcontains suitable
justification for such differential pricing.

(4) Where the offer is subject to a minimum level of acceptances, theacquirer may subject to the
provision of Regulation 20, indicate a lower price for the minimumacceptance of 20%, should
the offer not receive full acceptance. ] Substitutedvide SEBI  (Substantial Acquisition of Shares and Takeovers) (SecondAmendment) Regulations, 2002 dated 9th September, 2002.

⁵⁵ⁱSubstituted for"twenty one days" by SEBI (Substantial Acquisition of Shares and Takeovers)(Amendment) Regulations, 2004 published in the official Gazette of Indiadated 03.09.2004.
^55ia The word "closing" deleted vide the SEBI (Substantial Acquisition of Shares and Takeovers) (Amendment)Regulations, 2004 published in the official Gazette of India dated 03.09.2004.
^55a Inserted videSEBI (Substantial Acquisition of Shares and Takeovers) (Third Amendment)Regulations, 2002 dated 18th December, 2002

55b  inserted vide SEBI (Substantial Acquisition of Shares and Takeovers) AmendmentRegulations, 2004  published in the official Gazette of India datedJanuary 3, 2005 - Provided furtherthat the shares or voting rights so acquired taken together with the acquisitionunder the public offer and shares or voting rights, if any, held by himor by persons acting in concert with him, do not result in public shareholdingin the target company being reduced to a level below the limit specifiedin the Listing Agreement with the stock exchange for the purpose of listingon continuous basis.

 ^55c substituted vide SEBI (Substantial Acquisition of Shares and Takeovers) Amendment Regulations, 2006  published in the official Gazette of India dated 26/05/2006.

⁵⁶Insertedvide SEBI  (Substantial Acquisition of Shares and Takeovers) (SecondAmendment) Regulations, 2002 dated 9th September, 2002
⁵⁷The sub-regulation (1) and provisowhich read as [(1) The public offer shall be made to the shareholders ofthe target company to acquire from them an aggregate minimum of 20% ofthe voting capital of the company. Provided that where the open offer ismade in pursuance to sub-regulation (2) of Regulation 11, the public offershall be for such percentage of the voting capital of the company as maybe decided by the acquirer.] Substituted videSEBI  (Substantial Acquisition of Shares and Takeovers) (SecondAmendment) Regulations, 2002 dated 9th September,2002

^57a Inserted videSEBI (Substantial Acquisition of Shares and Takeovers) Amendment Regulations,2004  published in the official Gazette of India dated January 3,2005 - Providedthat where any public offer is made in pursuance of sub-regulation (2)of regulation 11, such public offer shall be for such percentage of votingcapital of the target company so that the acquisition does not result inthe public shareholding in such company being reduced to a level belowthe limit specified in the Listing Agreement with the stock exchange forthe 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 Sharesand Takeovers) Amendment Regulations, 2004  published in the officialGazette of India dated January 3, 2005 - Where an acquirer acquires more than fifty five per cent. (55%) sharesor voting rights in the target company through an agreement or memorandumof understanding and the public offer made under regulation 10 or sub-regulation(1) of regulation 11 to acquire minimum percentage of voting capital asspecified in sub regulation (1) of regulation 21 results in public shareholdingbeing reduced to a level below the limit specified in the Listing Agreementwith the stock exchange for the purpose of listing on continuous basis,the acquirer shall acquire only such number of shares under the agreementor the memorandum of understanding so as to maintain the minimum specifiedpublic shareholding in the target company;

^58aSubstituted vide SEBI (Substantial Acquisition of Shares and Takeovers) Amendment Regulations, 2006  published in the official Gazette of India dated 26/05/2006.

[2]  The sub-regulation (2) was earliar omittedvide SEBI (Substantial Acquisition of Shares and Takeovers) (SecondAmendment) Regulations, 2002 dated 9th September, 2002. Prior toomission the sub-regulation read as:

[(2) Where the offer is conditional upon minimum level of acceptancesfrom 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 arrangementreferred to in proviso to sub regulation (2A) of regulation 11, the publicshareholding falls to a level below the limit specified in the ListingAgreement with the stock exchange for the purpose of listing on continuousbasis, the acquirer shall undertake to raise the level of public shareholdingto the levels specified for continuous listing specified in the ListingAgreement with the stock exchange, within a period of twelve months fromthe date of closure of the public offer, by
        (i)issue of new shares by the company in compliance with the provisions ofthe Companies Act, 1956 and the Securities and Exchange Board of India(Disclosure and Investor Protection) Guidelines, 2000; or
(ii)   disinvestment through an offerfor sale in compliance with the provisions of the Companies Act, 1956 andthe Securities and Exchange Board of India (Disclosure and Investor Protection)Guidelines, 2000, of such number of shares held by him so as to satisfythe listing requirements; or
 (iii) sale of his holdings through thestock exchange.

    Provided that in case of acquisitionof shares or voting rights or control in a target company where the publicshareholding is below the limit specified for the purpose of listing oncontinuous basis in terms of the Listing Agreement with the stock exchange,the acquirer shall undertake to raise the level of public shareholdingto the levels specified for continuous listing in terms of the listingconditions specified in the Listing Agreement with the stock exchange,within the period specified under the Listing Agreement.] substituted videSEBI (Substantial Acquisition of Shares and Takeovers) Amendment Regulations,2004  published in the official Gazette of India dated January 3,2005. The earlier sub-regulation read as:

[If the public offer results in the public shareholdingbeing reduced to 10% or less of the voting capital of the company, or ifthe public offer is in respect of a company which has public shareholdingof less than 10% of the voting capital of the company, the acquirer shalleither,
(a) make an offer to buy the outstanding sharesremaining with the shareholders in accordance with the Guidelines specifiedby the Board in respect of Delisting of Securities; or
(b)    undertake to dis-investthrough 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 ofthe public offer, such number of shares so as to satisfy the listing requirements.]

[2] Earlier clause (a) thereof was substitutedvide SEBI (Substantial Acquisition of Shares and Takeovers) (SecondAmendment) Regulations, 2002 dated 9th September, 2002. Prior to the substituion,the clause (a) read as under:

[(a) within a period of 3 months from the dateof closure of the public offer, make an  offer to buy out the outstandingshares remaining with the shareholders at the same  offer price, whichmay 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 India dated 26/05/2006.

^59b The word ",(2)" omitted  vide the SEBI (Substantial Acquisitionof Shares and Takeovers) (Amendment) Regulations, 2004 published in theofficial Gazette of India dated 03.09.2004.

^59c Substituted for "30 days" by SEBI (Substantial Acquisition of Shares and Takeovers)(Amendment) Regulations, 2004 published in the official Gazette of Indiadated 03.09.2004
⁶⁰Insertedvide SEBI  (Substantial Acquisition of Shares and Takeovers) (SecondAmendment) Regulations, 2002 dated 9th September, 2002
^60aSubstitutedfor"sixteith day" by SEBI (Substantial Acquisition of Shares and Takeovers)(Amendment) Regulations, 2004 published in the official Gazette of Indiadated 03.09.2004
^60bSubstitutedfor"30 days" by SEBI (Substantial Acquisition of Shares and Takeovers) (Amendment)Regulations, 2004 published in the official Gazette of India dated 03.09.2004
⁶¹Insertedvide SEBI  (Substantial Acquisition of Shares and Takeovers) (SecondAmendment) Regulations, 2002 dated 9th September, 2002
⁶²Proviso insertedby the SEBI (Substantial Acquisition of Shares and Takeovers) (Second Amendment)Regulations, 2001 published in the official Gazette of India dated 12.09.2001
⁶³Insertedvide SEBI  (Substantial Acquisition of Shares and Takeovers) (SecondAmendment) Regulations, 2002 dated 9th September, 2002
^63a Substitutedfor "30 days" by SEBI (Substantial Acquisition of Shares and Takeovers)(Amendment) Regulations, 2004 published in the official Gazette of Indiadated 03.09.2004
⁶⁴Substituted for"10" by SEBI (Substantial Acquisition of Shares and Takeovers) (Amendment)Regulations, 1998 published in the official Gazette of India dated 28.10.98.
⁶⁵Proviso insertedby the SEBI (Substantial Acquisition of Shares and Takeovers) (Amendment)Regulations, 2001 published in the official Gazette of India dated 17.08.2001
⁶⁶Earlier  sub-regulation 17which read as [(17) Where the acquirer or persons acting in concert withhim has acquired any shares 27*[in terms of sub- regulation (4) of regulation20] he, shall disclose the number, percentage, price and the mode of acquisitionof such shares to the stock exchanges on which the shares of the targetcompany are listed and to the merchant banker, within 24 hours of suchacquisition.]
Substituted vide SEBI (Substantial Acquisitionof Shares and Takeovers) (Second Amendment) Regulations, 2002 dated 9thSeptember, 2002
⁶⁷Insertedvide SEBI  (Substantial Acquisition of Shares and Takeovers) (SecondAmendment) Regulations, 2002 dated 9th September, 2002
⁶⁸Insertedvide SEBI  (Substantial Acquisition of Shares and Takeovers) (SecondAmendment)Regulations, 2002 dated 9th September, 2002
⁶⁹The earlier Explanation read as[Explanation:- Restriction on issue of securities under clause (b) of sub-regulation(1) shall not affect the right of the target company to issue and allotshares carrying voting rights upon conversion of debentures already issuedor upon exercise of option against warrants, as per pre-determined termsof conversion/ exercise of option. ] Substitutedvide SEBI (Substantial Acquisition of Shares and Takeovers) (SecondAmendment) Regulations, 2002 dated 9th September, 2002
⁷⁰ Sub-regulation 8 insertedby the SEBI (Substantial Acquisition of Shares and Takeovers) (Second Amendment)Regulations, 2001 published in the official Gazette of India dated 12.09.2001.

“(8) The obligations provided for in the proviso to clause(a) of sub-regulation (3) and sub-regulation (6) of this regulation, shallnot be applicable where the agreement to sell shares of a Public SectorUndertaking contains a clause to the effect that in case of non-complianceof any of the provisions of the Regulations, the shares or the controlof the Public Sector Undertaking shall revert back to the Central Governmentand the acquirers shall be liable to such penalty as may be imposed bythe Central Government.”

"(2A) No public announcement for a competitive bid shallbe made after an acquirer has already made the public announcement underthe proviso to sub-regulation (1) of Regulation 14 pursuant to enteringinto a Share Purchase or Shareholders' Agreement with the Central Governmentfor acquisition of shares or voting rights or control of a Public SectorUndertaking."

    (a)    revising the offer; or

    (b)    withdrawing the offer, withthe prior approval of the Board.] Substitutedvide SEBI  (Substantial Acquisition of Shares and Takeovers) (SecondAmendment) Regulations, 2002 dated 9th September, 2002
⁷⁷The words [but have not withdrawnthe offer in terms of sub-regulation (4)] Omittedvide SEBI (Substantial Acquisition of Shares and Takeovers) (SecondAmendment) Regulations, 2002 dated 9th September, 2002
⁷⁸Insertedvide SEBI  (Substantial Acquisition of Shares and Takeovers) (SecondAmendment) Regulations, 2002 dated 9th September, 2002
⁷⁹The earlier clause which read as[(a)  the withdrawal is consequent upon any competitive bid; ] Omittedvide SEBI  (Substantial Acquisition of Shares and Takeovers) (SecondAmendment) Regulations, 2002 dated 9th September, 2002
^79a Substitutedfor "30 days" by SEBI (Substantial Acquisition of Shares and Takeovers)(Amendment) Regulations, 2004 published in the official Gazette of Indiadated 03.09.2004
⁸⁰Insertedvide SEBI  (Substantial Acquisition of Shares and Takeovers) (SecondAmendment) Regulations, 2002 dated 9th September, 2002
⁸¹The earlier bracket and figure[(8)] Substituted vide SEBI  (SubstantialAcquisition of Shares and Takeovers) (Second Amendment) Regulations, 2002dated 9th September, 2002
^81aSubstitutedfor "21 days" by SEBI (Substantial Acquisition of Shares and Takeovers)(Amendment) Regulations, 2004 published in the official Gazette of Indiadated 03.09.2004

30. (1) The provisions of this Chapter shall apply to a substantialacquisition of shares in a financially weak company not being a sick industrialcompany, in pursuance to a scheme of rehabilitation approved by a publicfinancial institution or a scheduled bank; (hereinafter referred to aslead institution).

(2) The lead institution shall be responsible for ensuring compliancewith the provisions of this Chapter.

(3) The lead institution shall appraise the financially weak companytaking into account the financial viability, and assess the requirementof funds for revival and draw up the rehabilitation package on the principleof protection of interests of minority shareholders, good management, effectiverevival and transparency.

(4) The rehabilitation scheme shall also specifically provide the detailsof any change in management.

(5) The scheme may provide for acquisition of shares in the financiallyweak company in any of the following manner:

(a)    outright purchase of shares, or

(b)    exchange of shares, or

(c)    combination of both.

Explanation: For the purpose of this chapter, the expression "financiallyweak company" means a company, which has at the end of the previous financialyear accumulated losses, which has resulted in erosion of more than 50%but less than 100% of its networth as at the beginning of the previousfinancial year, that is to say, of the sum total of the paid-up capitaland free reserves.

Manner of acquisition of shares

31. (1) Before giving effect to any scheme of rehabilitation the leadinstitution shall invite offers for acquisition of shares from atleastthree parties.

(2) After receipt of the offers under sub-regulation(1), the lead institution shall select one of the parties having regardto the managerial competence, adequacy of financial resources and technicalcapability of the person acquiring shares to rehabilitate the financiallyweak company.

(3) The lead institution shall provide necessary information to anyperson intending to make an offer to acquire shares about the financiallyweak company and particularly in relation to its present management, technology,range of products manufactured, shareholding pattern, financial holdingand performance and assets and liabilities of such company for a periodcovering five years from the date of the offer as also the minimum financialand other commitments expected of from the person acquiring shares forsuch rehabilitation.

Manner of evaluation of bids

32. (1) The lead institution shall evaluate the bids received with respectto the purchase price or exchange of shares, track record, financial resources,reputation of the management of the person acquiring shares and ensurefairness and transparency in the process.

(2) After making evaluation as provided insub-regulation(1), the offers received shall be listed in order of preference andafter consultation with the persons in the affairs of the management ofthe 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 leadinstitution under sub-regulation (2) of Regulation32, shall on receipt of a communication in this behalf from the leadinstitution make a formal offer to acquire shares from the promoters orpersons in charge of the affairs of the management of the financially weakcompany, financial institutions and also other shareholders of the companyat a price determined by mutual negotiation between the person acquiringthe shares and the lead institution.

Explanation: Nothing in this regulation shall prohibit the lead institutionoffering the shareholdings held by it in the financially weak company aspart of the scheme of rehabilitation.

Person acquiring shares to make public announcement

34. (1) The person acquiring shares from the promoters or the personsin charge of the management of the affairs of the financially weak companyor the financial institution shall make a public announcement of his intentionfor acquisition of shares from the other shareholders of the company.

(2) Such public announcement shall contain relevant details about theoffer including the information about the identity and background of theperson acquiring shares, number and percentage of shares proposed to beacquired, offer price, the specified date, the date of opening of the offerand the period for which the offer shall be kept open and such other particularsas may be required by the board.

(3) The letter of offer shall be forwarded to each of the shareholdersother than the promoters or the persons in charge of management of thefinancially 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 lessof the voting capital of the company, the acquirer shall either -

(a) within a period of three months from the date of closureof the public offer, make an offer to buy out the outstanding shares remainingwith the shareholders at the same offer price, which may have the effectof delisting the target company; OR

(b) undertake to disinvest through an offer for sale or bya fresh issue of capital to the public which shall open within a periodof 6 months from the date of closure of public offer, such number of sharesso as to satisfy the listing requirements.

(6) For the purposes of computing the percentage referred to in thesub-regulation(4), the voting rights as at the expiration of ^81b[twenty]daysafter the closure of the public offer shall be reckoned.

(7) While accepting the offer from the shareholders other than the promotersor persons in charge of the financially weak company or the financial institutions,the person acquiring shares shall offer to acquire from the individualshareholder his entire holdings if such holding is upto hundred sharesof the face value of rupees ten each or ten shares of the face value ofrupees hundred each.

Competitive Bid

35. No person shall make a competitive bid for acquisition of sharesof the financially weak company once the lead institution has evaluatedthe bid and accepted the bid of the acquirer who has made the public announcementof offer for acquisition of shares from the shareholders other than thepromoters or the persons in charge of the management of the financiallyweak company.

Exemption from the operations of ChapterIII

36. (1) Every offer which has been made in pursuance ofRegulation30 shall be accompanied with an application to the Board for exemptingsuch acquisitions from the provisions of Chapter IIIofthese Regulations.

(2) For considering such request the Board may call for such informationfrom the company as also from the lead institution, in relation to themanner of vetting the offers, evaluation of such offers and similar othermatters.

(3) Notwithstanding grant of exemption by the board, the lead institutionor the acquirer as far as may be possible, shall adhere to the time limitsspecified for various activities for public offer specified in ChapterIII.

Acquisition of shares by a state level publicfinancial institution

37. Where proposals for acquisition of shares in respect of a financiallyweak company is made by a state level public financial institution, theprovisions of these Regulations in so far as they relate to scheme of rehabilitationprepared by a public financial institution, shall apply except that insuch a case the Industrial Development Bank of India, a corporation establishedunder the Industrial Development Bank of India Act, 1964 shall be the agencyfor ensuring the compliance of these Regulations for acquisition of sharesin the financially weak company.

^81bSubstitutedfor"30 days" by SEBI (Substantial Acquisition of Shares and Takeovers) (Amendment)Regulations, 2004 published in the official Gazette of India dated 03.09.2004

Board's right to investigate

38. The Board may appoint one or more persons as investigating officerto 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 onthe allegations of substantial acquisition of shares and takeovers;

(b) to investigate suo-moto upon its own knowledge or information, inthe interest of securities market or investors interests, for any breachof the Regulations ;

(c) to ascertain whether the provisions of the Act and the Regulationsare 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 investorsno such notice should be given, it may, by an order in writing direct thatsuch 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 investigationis being carried out shall be bound to discharge his obligation as providedin Regulation 40.

Obligations on investigation by the Board

40. (1) It shall be the duty of the acquirer, the seller, the targetcompany, the merchant banker whose affairs are being investigated and ofevery director, officer and employee thereof, to produce to the investigatingofficer such books, securities, accounts, records and other documents inits custody or control and furnish him with such statements and informationrelating to his activities as the investigating officer may require, withinsuch reasonable period as the investigating officer may specify.

(2) The acquirer, the seller, the target company, the merchant bankerand the persons being investigated shall allow the investigating officerto have reasonable access to the premises occupied by him or by any otherperson on his behalf and also extend reasonable facility for examiningany books, records, documents and computer data in the possession of theacquirer, the seller, the target company, the merchant banker or such otherperson and also provide copies of documents or other materials which, inthe opinion of the investigating officer are relevant for the purposesof the investigation.

(3) The investigating officer, in the course of investigation, shallbe entitled to examine or to record the statements of any director, officeror employee of the acquirer, the seller, the target company, the merchantbanker.

(4) It shall be the duty of every director, officer or employee of theacquirer, the seller, the target company, the merchant banker to give tothe 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 completionof the investigation, submit a report to the Board: Provided that if directedto do so by the Board, he may submit interim reports.

Communication of findings

42. (1) The Board shall, after consideration of the investigation reportreferred to in Regulation 41, communicate the findings of the investigatingofficer 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, thetarget company, the merchant banker, as the case may be, the Board maycall upon him to take such measures as the Board may deem fit in the interestof the securities market and for due compliance with the provisions ofthe Act and the Regulations.

Appointment of Auditor

43. Notwithstanding anything contained in this Regulation, the Boardmay appoint a qualified auditor to investigate into the books of accountor the affairs of the person concerned: Provided that the auditor so appointedshall 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.

Directions by the Board.

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 marketor  for protection of interest of investors, issue such directionsas it deems fit  including: -

(a) directing appointment of a merchant banker for the purposeof causing
disinvestment of shares acquired in breach of regulations 10, 11 or12 either  through public auction or market mechanism, in its entiretyor in small lots or  through offer for sale;

 (b) directing transfer of any proceeds or securities to the investorsprotection Fund of a recognised stock exchange;

(c) directing the target company or depository to cancel the shareswhere an
 acquisition of shares pursuant to an allotment is in breach ofregulations10,11 or 12;

(d) directing the target company or the depository not to give effectto transfer or further freeze the transfer of any such shares and not topermit the acquirr or any  nominee or any proxy of the acquirer toexercise any voting or other rights attached to such shares acquired inviolation of regulations 10, 11or 12;

(e) debarring any person concerned from accessing the capital marketor dealing in securities for such period as may be determined by the Board;

(f) directing the person concerned to make public offer to the shareholdersof the target company to acquire such number of shares at such offer priceas determined by the Board;

(g) directing disinvestment of such shares as are in excess of the percentageof the shareholding or voting rights specified for disclosure requirementunder the regulations 6,7 or8;

(h) directing the person concerned not to dispose of assets of the targetcompany  contrary to the undertaking given in the letter of offer;

 (i) directing the person concerned, who has failed to make a publicoffer or
delayed the making of a public offer in terms of these Regulations,to pay to the  shareholders, whose shares have been accepted in thepublic offer made after the delay, the consideration amount along withinterest at the rate not less than the applicable rate of interest payableby banks on fixed deposits.]

45. (1) Any person violating any provisions of the Regulations shallbe liable for action in terms of the Regulations and the Act.

(2) If the acquirer or any person acting in concert with him, failsto carry out the obligations under the Regulations, the entire or partof the sum in the escrow amount shall be liable to be forfeited and theacquirer or such a person shall also be liable for action in terms of theRegulations and the Act.

(3) The board of directors of the target company failing to carry outthe obligations under the Regulations shall be liable for action in termsof the Regulations and Act.

(4) The Board may, for failure to carry out the requirements of theRegulations by an intermediary, initiate action for suspension or cancellationof registration of an intermediary holding a certificate of registrationunder section 12 of the Act.

Provided that no such certificate of registration shall be suspendedor cancelled unless the procedure specified in the Regulations applicableto such intermediary is complied with.

(5) For any mis-statement to the shareholders or for concealment ofmaterial information required to be disclosed to the shareholders, theacquirers or the directors where he acquirer is a body corporate, the directorsof the target company, the merchant banker to the public offer and themerchant banker engaged by the target company for independent advice wouldbe 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.
 

46. ^83*[Anyperson aggrieved by an order of the Board made, on and after the commencementof the Securities Laws (Second Amendment) Act, 1999, (i.e., after 16thDecember 1999), under these regulations may prefer an appeal to a SecuritiesAppellate Tribunal having jurisdiction in the matter]

Repeal and Saving

47. (1) The Securities and Board of India (Substantial Acquisition ofShares and Takeovers) Regulations,^84*[1994]are hereby repealed.

(2) Notwithstanding such repeal :-

(a) Anything done or any action taken or purported to havebeen done or taken including approval of letter of offer, exemption granted,fees collected any adjudication, enquiry or investigation commenced orshow cause notice issued under the said regulations shall be deemed tohave been done or taken under the corresponding provisions of these regulations;

(b) Any application made to the Board under the said regulationsand pending before it shall be deemed to have been made under the correspondingprovisions of these regulations.

(c) Any appeals preferred to the Central Government under thesaid regulations and pending before it shall be deemed to have been preferredunder the corresponding provisions of these regulations.

⁸² The earlier regulation  44which read as follows:

[Directions by the Board.

44. The Board may, in the interests of the securities market, withoutprejudice to its right to initiate action including criminal prosecutionunder section 24 of the Act give such directions as it deems fit including:

    (a) directing the person concerned not to furtherdeal in securities;

    (b) prohibiting the person concerned from disposingof any of the securities acquired  in violation of these Regulations;

    (c) directing the person concerned to sell the sharesacquired in violation of the provisions of these Regulations;

    (d) taking action against the person concerned.]Substitutedvide SEBI  (Substantial Acquisition of Shares and Takeovers) (SecondAmendment) Regulations, 2002 dated 9th September,2002

82a Insertedvide SEBI (Substantial Acquisition of Shares and Takeovers) Amendment Regulations,2004  published in the official Gazette of India dated January 3,2005

82b InsertedvideSEBI (Substantial Acquisition of Shares and Takeovers) Amendment Regulations,2004  published in the official Gazette of India dated January 3,2005

82c Inserted vide SEBI (Substantial Acquisition of Shares and Takeovers)Amendment Regulations, 2004  published in the official Gazette ofIndia dated January 3, 2005
 

⁸³Substituted forthe following by SEBI (Appeal to the Securities Appellate Tribunal) (Amendment)Regulations, 2000, published in the official Gazette of India dated 28.03.2000

"Appeal to the Central Government

Any person being aggrieved by an order of the Board may prefer anappeal to the Central Government."

Format for filing the information with SEs by acquirer as requiredu/r 3(3)
 
 

Name of the Target Company(T.C)
Name of acquirer(s) alongwithPAC { Referred together as "acquirers " hereinafter}
Share holding / voting rightsof acquirer(s) in T.C	Before the saidAcquisition		Proposed afterthe said Acquisition
	No of shares	% (shares /votingrights)		No of shares	% (shares /voting rights)
Type of acquisition (By wayof public /rights /preferential allotment/inter-se-transfer) Please specify
In case, the acquisitionis by way of inter-se transfer as per regulations, disclose names of transferorsand their share holding in T.C before transfer
No and % of shares / votingrights of T.C proposed to be acquired through the acquisition.
Acquisition price per share
Date of proposed acquisition