On 23rd September, 2011, the SEBI issued revised
SEBI Takeover Regulations, 2011 by repealing the erstwhile SEBI Takeover
Regulations, 1997.
The Takeover Regulations apply when there is a
direct/indirect acquisition of equity shares / voting power/control of a listed
company in excess of the specified limits. Based on the limits, the Acquirer has
to comply with reporting requirements or acquire shares from the public. The
person acquiring the shares / voting power/ control is an Acquirer and
the company whose shares are being acquired is the Target Company.
Disclosure on Acquisition
-
Acquirer acquires (+ shares already held by him) ≥ 5% shares / voting
power in a listed company
-
He
must disclose every acquisition or disposal of shares representing 2% or more
shares or voting rights
-
He
must make the disclosure to the target company and stock exchanges within 2
working days of acquisition
Continual Disclosures
|
Disclosure
to be made by |
Due Date |
|
Every person who holds
≥ 25% shares/voting power to the Company |
Holding as on 31st
March of each year by 7th April |
|
Promoters to the
Company |
Disclosure of Encumbered Shares
-
The promoter
group shall inform the company the details of the shares of the company
encumbered by them
-
They shall disclose details of invocation/release of such encumbrance
-
The
disclosure should be made within 7 working days from the creation / invocation
/ release of pledge
-
The
disclosure should be made to the target company and the stock exchange(s)
What is a Public Announcement ("PA")
Any Acquirer who acquires shares /voting in excess
of the limits have to make a Public Announcement (i.e., an advertisement)
through a Merchant Banker specifying that he desires to acquire a minimum of
26% of the voting capital of the company from the public.
When is a PA required to be made
-
Acquisition (+ shares already held) of shares /voting rights ≥ 25% by
an Acquirer /Persons Acting in Concert ("PACs")
-
Acquisition of shares /voting rights ≥ 5% in any Financial Year by an
Acquirer /PACs already holding ≥ 25% but ≤ 75% (popularly known as "Creeping
Acquisition")
-
Acquisition of Control over a Target Company (with or without
shares/voting)
Indirect Acquisition
It means acquisition of shares/voting
rights/control over a company/entity enabling a person and its PACs to exercise
such percentage of voting rights/control over a Target Company, the acquisition
of which would otherwise attract obligation to make PA of an open offer. (R.
5(1))
R. 5(2)
In case of Indirect Acquisition under R. 5(1) where
-
the
proportionate NAV of Target Company as a % of consolidated NAV of the
entity/business being acquired;
-
the
proportionate sales turnover of Target Company as a % of consolidated sales
turnover of the entity/business being acquired; or
-
the
proportionate market capitalisation of Target Company as a % of consolidated
enterprise value for the entity/business being acquired;
is in excess of 80%, such Indirect Acquisition
shall be regarded as Direct Acquisition of Target Company for the purposes of
TOR Regulations.
It may be noted that a Public Announcement for an
acquisition of shares from the public is not required if the acquisition falls
within the exemptions contained in R. 10 and fulfils the conditions mentioned
therein.
Exemptions
-
The
Regulations contain various scenarios under which an exemption is available
from making an Open Offer.
-
SEBI also has powers to give relaxation from some of the provisions of the
Regulations on an application made by the Target Company
Timing of the PA
|
Type of Acquisition
|
Due Date 4 working
days |
|
Acquisitions
referred to in (i) to (ii)
|
On Date of entering
into Agreement or Deciding to Acquire shares /voting |
|
By market purchase
|
Prior to placement of
Purchase Order with the Stock Broker to acquire shares |
|
On conversion of
convertible securities
(without fixed date of
conversion or on conversion
of depository receipts)
|
Same day as the date of
exercise of conversion option |
|
On conversion
of convertible securities
(with fixed
date of conversion) |
2nd working
day preceding the scheduled conversion date |
|
On Disinvestment
|
Same day on execution
of agreement |
|
Indirect Acquisition
(parameters of R. 5(2)
are not met) |
Within 4 working days
from the earlier of
|
|
Indirect Acquisition
(parameters of R. 5(2) are met) |
Earlier of
|
|
Under
Preferential Issue |
Date on which special
resolution is passed u/s. 81(1A) |
|
Buy-back not
qualifying for exemption |
Not later than 90th day
from the date of increase in the voting rights |
|
Date of Acquisition is
beyond the control of
Acquirer |
Not later than 2
working days from the date of receipt of intimation of having acquired
title |
|
On Voluntary Offer
under R. 6 |
Same day on which
decision to make voluntary PA of an open offer is taken |
Pursuant to PA, a detailed public statement shall be
published through the manager to the open offer not later than 5 working days of
the PA
What must the PA contain
-
The
PA must be made in 1 English, 1 Hindi and 1 regional language daily newspaper
(all 3 having wide circulations) circulating in the state where the Target
Companys Registered Office is located and the Stock Exchange where the shares
are most frequently traded
-
1
copy of the PA must be given to the Target Company, stock exchanges where it
is listed and to SEBI through the Merchant Banker
-
The
PA must contain the prescribed particulars and be in a form as near to the one
specified by the Regulations.
Letter of Offer
-
Within 5 working days of the detailed public statement, the Acquirer must file
the draft Letter of Offer ("LO") with SEBI
-
The
LO must be despatched to the shareholders not later than 7 working days from
the date of receipt of comments from SEBI or where there are no comments,
within 21 working days after it has been filed with SEBI
-
The
LO must be in a form as near to the Standard LO prescribed by the Regulations
-
It
must contain the Minimum Offer Price calculated as under :
-
R.
8(1): The open offer shall be made at a price not lower than
-
R. 8(2):
For direct acquisition and indirect acquisition (parameters of R. 5(2) are
met), the offer price shall be the highest of,
the highest negotiated price per share of the target company for any
acquisition under the agreement attracting PA;
the volume-weighted average price paid/payable, by the acquirer or its PACs,
during the 52 weeks immediately preceding the date of the PA;
the highest price paid/payable, by the acquirer or its PACs, during the 26
weeks immediately preceding the date of the PA;
the volume-weighted average market price of such shares for 60 trading days
immediately preceding the date of the PA as traded on the stock exchange where
the maximum volume of trading in the shares of the target company are recorded
during such period, provided such shares are frequently traded;
where the shares are
not frequently traded, the price determined by the acquirer and the manager to
the open offer taking into account valuation parameters including, book value,
comparable trading multiples, and such other parameters as are customary for
valuation of shares of such companies; and
the per share value computed under R. 8(5), if applicable.
-
R. 8(3): Provides the method of computing the offer price for indirect
acquisition of shares when parameters of R. 5(2) are not met.
-
The
offer price may be paid in cash, listed equity shares/listed secured debt
instruments/convertible debt securities or a combination
Other Conditions
