EXTRACT OF THE PRESENTATION - FOR THE CASE LAWS COVERED IN THE SESSION & SEMINARS, FEEL FREE TO EMAIL ME.
SPECIAL THANKS TO CS SHAILASHRI BHASKAR MA'AM, CS PAVAN KUMAR VIJAY SIR FOR THEIR GUIDANCE.
The document summarizes key aspects of the SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 2011 regarding takeover of listed companies in India. It defines important terms like acquirer, acquisition, control and outlines the regulations around substantial acquisition of shares or voting rights that trigger an open offer like acquiring over 25% under Regulation 3(1) or creeping acquisition of up to 5% annually under Regulation 3(2). It also describes the process and compliance requirements for open offers including appointment of a merchant banker, contents of public announcement, escrow account, competing offers, exemptions and general obligations of acquirers.
The document discusses various exemptions provided under the SEBI Takeover Code regulations. It explains key terms related to takeovers and the provisions of Regulations 10, 11, and 12 from which exemptions can be provided under Regulation 3. It then explores the various categories of exemptions provided under Regulations 3(1) including inter-se transfers, acquisitions in ordinary course of business, and transfers pursuant to schemes of arrangement. It also discusses conditions for availing exemptions and matters of debate addressed by SEBI in relation to certain cases.
I. The document discusses the requirements for opening an escrow account under SEBI (SAST) Regulations, 2011 for an open offer.
II. The acquirer must open an escrow account at least two working days before making the detailed public statement. The escrow amount depends on the total consideration but must be at least 25% of the first Rs. 500 crores and 10% of the balance.
III. The escrow amount can be deposited in cash, bank guarantee, or securities and is intended to ensure the acquirer can fulfill payment obligations of the open offer.
This document outlines the contents of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations 2011, which provides the legal framework for takeover bids and acquisitions of Indian public companies. It discusses the objectives of the regulations, key definitions, triggers for mandatory open offers, offer size and pricing requirements, escrow accounts, the open offer process, obligations of acquirers and target companies, exemptions, and penalties for non-compliance. The regulations aim to protect investors and ensure fair acquisition processes along with timely disclosure of information.
Related Party Transactions by Dipti Mehta Partner Mehta & Mehta Company Secretary
Both under the 2013 Act , requirements concerning related party transactions may be divided into four key parts, viz., identification of related parties, related party transactions, approval process and disclosure requirements. It is clear from discussion below that in most cases, The definition of ‘related party’ under RC49 is likely to result in identification of significantly higher number of related party. Unlike the 2013 Act, RC49 does not exempt related party transactions from special resolution of disinterested shareholders based on criteria, viz., (i) transaction is in the ordinary course of business and at arm’s length, or (ii) prescribed threshold regarding transaction value and share capital are not breached.
Disclaimer: Disclaimer: This presentation is based on my internal research. It is notified that the presenter and any other person related to him shall be responsible for any damage or loss of any action taken based on this presentation. It is suggested to seek professional advice before initiating any action.
The document provides an overview of the SEBI Takeover Regulations, 2011. It discusses the need for takeover regulations in India due to changes in the capital market scenario. The key highlights of the regulations include thresholds for open offers, exemption limits for disclosure requirements, and obligations of acquirers and merchant bankers. Key definitions under the regulations relate to acquirer, acquisition, control, frequently traded shares, and enterprise value calculation.
The document discusses various aspects of SEBI Takeover Code regulations including key definitions, compliance requirements, disclosure obligations, thresholds, exemptions and pricing provisions. Some key highlights include:
- Definitions of acquirer, shares, person acting in concert and what constitutes control.
- Disclosure obligations for acquisitions above certain thresholds (5%, 15% etc.) and timelines to comply.
- Exemptions available for inter-se transfers between qualifying persons subject to certain conditions.
- Determination of open offer price based on highest negotiated price or volume weighted average price for frequently/infrequently traded shares.
- Issues around interpretation of creeping acquisition limits and applicability of regulations.
The document summarizes the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015. Some key points:
- The regulations came into force on May 13, 2015 and contain 5 chapters covering preliminary aspects, restrictions on insider trading, disclosure requirements, codes of conduct, and miscellaneous items.
- Important definitions include connected person, generally available information, insider, and unpublished price sensitive information.
- Insiders are restricted from trading based on unpublished price sensitive information or communicating such information, except on a need-to-know basis.
- Exceptions allow for communication of unpublished information for transactions approved as being in the company's best interest, provided it is disclosed to the public afterwards
The document summarizes key aspects of the SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 2011 regarding takeover of listed companies in India. It defines important terms like acquirer, acquisition, control and outlines the regulations around substantial acquisition of shares or voting rights that trigger an open offer like acquiring over 25% under Regulation 3(1) or creeping acquisition of up to 5% annually under Regulation 3(2). It also describes the process and compliance requirements for open offers including appointment of a merchant banker, contents of public announcement, escrow account, competing offers, exemptions and general obligations of acquirers.
The document discusses various exemptions provided under the SEBI Takeover Code regulations. It explains key terms related to takeovers and the provisions of Regulations 10, 11, and 12 from which exemptions can be provided under Regulation 3. It then explores the various categories of exemptions provided under Regulations 3(1) including inter-se transfers, acquisitions in ordinary course of business, and transfers pursuant to schemes of arrangement. It also discusses conditions for availing exemptions and matters of debate addressed by SEBI in relation to certain cases.
I. The document discusses the requirements for opening an escrow account under SEBI (SAST) Regulations, 2011 for an open offer.
II. The acquirer must open an escrow account at least two working days before making the detailed public statement. The escrow amount depends on the total consideration but must be at least 25% of the first Rs. 500 crores and 10% of the balance.
III. The escrow amount can be deposited in cash, bank guarantee, or securities and is intended to ensure the acquirer can fulfill payment obligations of the open offer.
This document outlines the contents of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations 2011, which provides the legal framework for takeover bids and acquisitions of Indian public companies. It discusses the objectives of the regulations, key definitions, triggers for mandatory open offers, offer size and pricing requirements, escrow accounts, the open offer process, obligations of acquirers and target companies, exemptions, and penalties for non-compliance. The regulations aim to protect investors and ensure fair acquisition processes along with timely disclosure of information.
Related Party Transactions by Dipti Mehta Partner Mehta & Mehta Company Secretary
Both under the 2013 Act , requirements concerning related party transactions may be divided into four key parts, viz., identification of related parties, related party transactions, approval process and disclosure requirements. It is clear from discussion below that in most cases, The definition of ‘related party’ under RC49 is likely to result in identification of significantly higher number of related party. Unlike the 2013 Act, RC49 does not exempt related party transactions from special resolution of disinterested shareholders based on criteria, viz., (i) transaction is in the ordinary course of business and at arm’s length, or (ii) prescribed threshold regarding transaction value and share capital are not breached.
Disclaimer: Disclaimer: This presentation is based on my internal research. It is notified that the presenter and any other person related to him shall be responsible for any damage or loss of any action taken based on this presentation. It is suggested to seek professional advice before initiating any action.
The document provides an overview of the SEBI Takeover Regulations, 2011. It discusses the need for takeover regulations in India due to changes in the capital market scenario. The key highlights of the regulations include thresholds for open offers, exemption limits for disclosure requirements, and obligations of acquirers and merchant bankers. Key definitions under the regulations relate to acquirer, acquisition, control, frequently traded shares, and enterprise value calculation.
The document discusses various aspects of SEBI Takeover Code regulations including key definitions, compliance requirements, disclosure obligations, thresholds, exemptions and pricing provisions. Some key highlights include:
- Definitions of acquirer, shares, person acting in concert and what constitutes control.
- Disclosure obligations for acquisitions above certain thresholds (5%, 15% etc.) and timelines to comply.
- Exemptions available for inter-se transfers between qualifying persons subject to certain conditions.
- Determination of open offer price based on highest negotiated price or volume weighted average price for frequently/infrequently traded shares.
- Issues around interpretation of creeping acquisition limits and applicability of regulations.
The document summarizes the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015. Some key points:
- The regulations came into force on May 13, 2015 and contain 5 chapters covering preliminary aspects, restrictions on insider trading, disclosure requirements, codes of conduct, and miscellaneous items.
- Important definitions include connected person, generally available information, insider, and unpublished price sensitive information.
- Insiders are restricted from trading based on unpublished price sensitive information or communicating such information, except on a need-to-know basis.
- Exceptions allow for communication of unpublished information for transactions approved as being in the company's best interest, provided it is disclosed to the public afterwards
Recovery of debt due to bank and financial institutions, 1993ACS Shalu Saraf
1. The document discusses the establishment, jurisdiction, powers, and procedures of Tribunals and Appellate Tribunals established under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.
2. Tribunals have the jurisdiction to entertain and decide applications from banks and financial institutions for recovery of debts. Appellate Tribunals have jurisdiction over appeals against Tribunal orders.
3. Tribunals are headed by a Presiding Officer, while Appellate Tribunals are headed by a Chairperson. Their qualifications, terms, resignation process, and removal process are outlined.
4. The document also describes the application and appeal procedures before these bodies, their powers, and the process
The document discusses the Copyright Board of India, which is constituted under the Copyright Act of 1957. It has the following key responsibilities:
1. The Copyright Board hears appeals against orders of the Registrar of Copyright and has powers to regulate its own procedures.
2. It is deemed to be a civil court and has powers like a civil court, such as summoning witnesses and enforcing attendance.
3. The Copyright Board decides matters like whether a work has been published, settles disputes related to copyright assignment, and grants compulsory licenses in certain situations.
The document summarizes the process of strike off or removal of a company's name from the register of companies under the Companies Act, 2013 in India. There are two modes of strike off - by the Registrar of Companies under Section 248(1) if certain conditions are met, or by a company applying on its own under Section 248(2). The process involves issuing notices, publishing notices, restrictions on certain types of companies, effects of dissolution, penalties for fraudulent applications, and rights of appeal. The summary aims to provide a concise overview of the key details and steps involved in the strike off process for companies in India according to the Companies Act.
The Trade Union Act 1926 established the legal framework for trade unions in India. Some key points:
- It defined what constitutes a trade union and outlined the process for registration with the Registrar.
- Registered trade unions receive certain protections under law, such as exemptions from criminal conspiracy charges and protections from civil suits related to trade disputes.
- The Act specifies the required contents of trade union rules regarding governance, finances, membership requirements and more. It also covers rights of minors to join unions.
- Provisions address changing names, amalgamating unions, dissolving unions and related notification requirements to the Registrar.
The document discusses the winding up process of a company. Winding up refers to the process of dissolving a company and liquidating its assets and debts. There are three main types of winding up: (1) compulsory winding up by court order, (2) voluntary winding up initiated by shareholders or creditors, and (3) winding up under court supervision where the court oversees the voluntary process. Key aspects of winding up include appointing a liquidator to dispose of assets and pay debts, calling meetings of shareholders and creditors, and ultimately dissolving the company.
OBJECTIVE
Merger and Amalgamation (M&A) is one of the forms of Corporate Restructuring. M&A transactions are generally done to diversify the business, reduce competition, exercise increased scale of operations, to focus on core businesses to streamline costs and improve profit margins, etc. Provisions for merger and amalgamation under Companies Act, 2013 also includes demerger. The webinar deals with the provisions of merger and amalgamation enshrined in Companies Act, 2013 read with Rules made there under, legal formalities involved and judicial precedents.
The document discusses a demerger, where an existing company splits into two separate companies. Shareholders of the original company receive equivalent stakes in the new companies. Reasons for demerging include allowing each company to focus on its core activities and comply with different regulations. The document then provides further details about Welspun Corp Ltd, an Indian pipe manufacturer, and its planned demerger into Welspun Corp Ltd and Welspun Enterprises Ltd to simplify its business structure and allow each entity to focus on different operations.
This document discusses mergers and amalgamations under Indian law. It defines mergers as a transaction where one company's assets and liabilities are transferred to another company, which ceases to exist, while its shareholders become shareholders of the acquiring company. Amalgamations involve the transfer of two or more companies' assets and liabilities to a new or existing company, with the amalgamating companies' shareholders becoming shareholders of the transferee company. The document outlines the legal procedures for mergers and amalgamations under the Companies Act of 1956 and describes different types of mergers and amalgamations. It discusses the key motivations for companies to engage in mergers and amalgamations, such as economies of scale, increased market share and revenue, and resource transfers.
Section 230 to 233 of Companies Act, 2013
Procedure for Scheme of Compromise, Amalgamation and Arrangement.
Also it covers the newly introduced Sec. 233 of Companies Act, 2013 for FAST TRACK MERGER
This document provides an overview of the role of directors under the Companies Act 2013 in India. It defines key terms like director, board of directors, managing director, whole-time director, and independent director. It discusses the positions held by directors and the changing role and state of directors under the new law. It outlines the duties and powers of directors, decision making processes, and significant provisions related to the appointment, disqualification, and vacation of director roles. The document is presented by Pavan Kumar Vijay from Corporate Professionals and provides a high-level summary of director responsibilities and governance under the Indian Companies Act.
Presentation on Independent Director as per Companies Act 2013Vishal Dhona, ACS
Presentation is made for understanding what is independent director? what are its roles?
Also by means of this you can understand what are the various provisions applicable to independent director.
Ppt on incorporation of company as per new company act, 2013 (updated)Sandeep Kumar
The document outlines the key steps and requirements for incorporating a company under the Companies Act of 2013 in India. It discusses reserving a company name, drafting the memorandum and articles of association which define the company's constitution and internal management, applying for incorporation and the documents required, and receiving a certificate of incorporation. It also summarizes some of the main contents of a memorandum and articles of association such as membership, rights of members, and limitations.
The document discusses the history and provisions of limitation acts in India. It traces the evolution of limitation laws from Roman laws introduced under British rule to the current Limitation Act of 1963. The key objectives of limitation acts are to fix a time limit for filing legal claims and to avoid indefinite uncertainty regarding legal rights and liabilities. The Limitation Act of 1963 consolidated and standardized limitation periods for different types of legal suits, appeals and applications.
This document provides an overview of key sections from Chapters IV and V of the Arbitration and Conciliation Act relating to the jurisdiction of arbitral tribunals and the conduct of arbitral proceedings. It summarizes sections 16-21 which address an arbitral tribunal's jurisdiction to rule on its own authority, procedures for raising objections, interim measures, place of arbitration, and commencement of proceedings. The document also discusses related case laws that have supported arbitral tribunals' powers to determine procedures and evidence admissibility.
Capital reduction is the process of decreasing a company's shareholder equity through share cancellations and repurchases. It is done for reasons like increasing shareholder value and improving capital structure efficiency. After capital reduction, the number of shares decreases by the reduction amount, though sometimes shareholders receive cash for cancelled shares and other times there is minimal impact. A company must pass a special resolution, provide solvency statements signed by directors, and register documents with the Registrar of Companies for the reduction to take effect. One example given was a company that reduced share face value through a scheme approved by shareholders and court.
The document discusses differential voting rights (DVRs) shares in India. It provides background on DVRs and details rules around their issuance. Key points include: DVRs were allowed in India in 2001 and have inferior or superior voting rights compared to regular shares; companies must meet conditions like having profits for 3+ years to issue DVRs; SEBI prohibited superior voting rights DVRs in 2009; the new Companies Bill may disallow DVRs entirely. Examples of companies issuing DVRs, like Tata Motors and Pantaloon Retail, are provided along with their DVR structures. Overall the document analyzes the concept of DVRs in India.
MEETINGS OF BOARD AND ITS POWERS COMPANIES ACT 2013ABC
The document discusses rules regarding board meetings and loans to directors according to the Companies Act 2013. It states that companies can hold board meetings through video conferencing if they follow certain procedures to ensure security and record accurate minutes. It also prohibits companies from directly or indirectly lending money to directors, with some exceptions. Loans to directors require prior approval from shareholders. Companies must maintain registers of loans, investments, and interests declared by directors.
This document defines mergers and amalgamations under Indian company law. It explains that a merger involves one company absorbing another, while amalgamation creates a new company from two or more existing companies. It outlines the process for calling meetings of creditors/members to approve schemes, requirements for notice and documents to be circulated. The effect and sanctions of approved schemes by the tribunal are described, including provisions for transfers of assets/shares and dissolution of companies. Penalties for non-compliance with the process are also mentioned. The section also discusses cross-border mergers between Indian and foreign companies.
Sebi Substantial Acquisition of shares and Takeover RegulationAliasgarBohra6
This document summarizes the key aspects of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2018 in India. It defines terms like acquirer, target company and control. It outlines the substantial acquisition thresholds that trigger open offer requirements and the creeping acquisition limits. It provides an overview of the open offer process, obligations of parties involved and disclosure requirements regarding shareholding and control. It also discusses miscellaneous provisions like SEBI's power to issue directions in cases of non-compliance.
The document summarizes key aspects of India's takeover code regulations. It discusses how the regulations have evolved over time with SEBI enacting various rules. It explains the key terms like acquirer, person acting in concert, types of acquisitions and offers. It provides examples to illustrate when the initial threshold of 25% shareholding acquisition or creeping acquisition of additional 5% shareholding in a year would trigger mandatory open offer requirements according to the regulations.
Recovery of debt due to bank and financial institutions, 1993ACS Shalu Saraf
1. The document discusses the establishment, jurisdiction, powers, and procedures of Tribunals and Appellate Tribunals established under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.
2. Tribunals have the jurisdiction to entertain and decide applications from banks and financial institutions for recovery of debts. Appellate Tribunals have jurisdiction over appeals against Tribunal orders.
3. Tribunals are headed by a Presiding Officer, while Appellate Tribunals are headed by a Chairperson. Their qualifications, terms, resignation process, and removal process are outlined.
4. The document also describes the application and appeal procedures before these bodies, their powers, and the process
The document discusses the Copyright Board of India, which is constituted under the Copyright Act of 1957. It has the following key responsibilities:
1. The Copyright Board hears appeals against orders of the Registrar of Copyright and has powers to regulate its own procedures.
2. It is deemed to be a civil court and has powers like a civil court, such as summoning witnesses and enforcing attendance.
3. The Copyright Board decides matters like whether a work has been published, settles disputes related to copyright assignment, and grants compulsory licenses in certain situations.
The document summarizes the process of strike off or removal of a company's name from the register of companies under the Companies Act, 2013 in India. There are two modes of strike off - by the Registrar of Companies under Section 248(1) if certain conditions are met, or by a company applying on its own under Section 248(2). The process involves issuing notices, publishing notices, restrictions on certain types of companies, effects of dissolution, penalties for fraudulent applications, and rights of appeal. The summary aims to provide a concise overview of the key details and steps involved in the strike off process for companies in India according to the Companies Act.
The Trade Union Act 1926 established the legal framework for trade unions in India. Some key points:
- It defined what constitutes a trade union and outlined the process for registration with the Registrar.
- Registered trade unions receive certain protections under law, such as exemptions from criminal conspiracy charges and protections from civil suits related to trade disputes.
- The Act specifies the required contents of trade union rules regarding governance, finances, membership requirements and more. It also covers rights of minors to join unions.
- Provisions address changing names, amalgamating unions, dissolving unions and related notification requirements to the Registrar.
The document discusses the winding up process of a company. Winding up refers to the process of dissolving a company and liquidating its assets and debts. There are three main types of winding up: (1) compulsory winding up by court order, (2) voluntary winding up initiated by shareholders or creditors, and (3) winding up under court supervision where the court oversees the voluntary process. Key aspects of winding up include appointing a liquidator to dispose of assets and pay debts, calling meetings of shareholders and creditors, and ultimately dissolving the company.
OBJECTIVE
Merger and Amalgamation (M&A) is one of the forms of Corporate Restructuring. M&A transactions are generally done to diversify the business, reduce competition, exercise increased scale of operations, to focus on core businesses to streamline costs and improve profit margins, etc. Provisions for merger and amalgamation under Companies Act, 2013 also includes demerger. The webinar deals with the provisions of merger and amalgamation enshrined in Companies Act, 2013 read with Rules made there under, legal formalities involved and judicial precedents.
The document discusses a demerger, where an existing company splits into two separate companies. Shareholders of the original company receive equivalent stakes in the new companies. Reasons for demerging include allowing each company to focus on its core activities and comply with different regulations. The document then provides further details about Welspun Corp Ltd, an Indian pipe manufacturer, and its planned demerger into Welspun Corp Ltd and Welspun Enterprises Ltd to simplify its business structure and allow each entity to focus on different operations.
This document discusses mergers and amalgamations under Indian law. It defines mergers as a transaction where one company's assets and liabilities are transferred to another company, which ceases to exist, while its shareholders become shareholders of the acquiring company. Amalgamations involve the transfer of two or more companies' assets and liabilities to a new or existing company, with the amalgamating companies' shareholders becoming shareholders of the transferee company. The document outlines the legal procedures for mergers and amalgamations under the Companies Act of 1956 and describes different types of mergers and amalgamations. It discusses the key motivations for companies to engage in mergers and amalgamations, such as economies of scale, increased market share and revenue, and resource transfers.
Section 230 to 233 of Companies Act, 2013
Procedure for Scheme of Compromise, Amalgamation and Arrangement.
Also it covers the newly introduced Sec. 233 of Companies Act, 2013 for FAST TRACK MERGER
This document provides an overview of the role of directors under the Companies Act 2013 in India. It defines key terms like director, board of directors, managing director, whole-time director, and independent director. It discusses the positions held by directors and the changing role and state of directors under the new law. It outlines the duties and powers of directors, decision making processes, and significant provisions related to the appointment, disqualification, and vacation of director roles. The document is presented by Pavan Kumar Vijay from Corporate Professionals and provides a high-level summary of director responsibilities and governance under the Indian Companies Act.
Presentation on Independent Director as per Companies Act 2013Vishal Dhona, ACS
Presentation is made for understanding what is independent director? what are its roles?
Also by means of this you can understand what are the various provisions applicable to independent director.
Ppt on incorporation of company as per new company act, 2013 (updated)Sandeep Kumar
The document outlines the key steps and requirements for incorporating a company under the Companies Act of 2013 in India. It discusses reserving a company name, drafting the memorandum and articles of association which define the company's constitution and internal management, applying for incorporation and the documents required, and receiving a certificate of incorporation. It also summarizes some of the main contents of a memorandum and articles of association such as membership, rights of members, and limitations.
The document discusses the history and provisions of limitation acts in India. It traces the evolution of limitation laws from Roman laws introduced under British rule to the current Limitation Act of 1963. The key objectives of limitation acts are to fix a time limit for filing legal claims and to avoid indefinite uncertainty regarding legal rights and liabilities. The Limitation Act of 1963 consolidated and standardized limitation periods for different types of legal suits, appeals and applications.
This document provides an overview of key sections from Chapters IV and V of the Arbitration and Conciliation Act relating to the jurisdiction of arbitral tribunals and the conduct of arbitral proceedings. It summarizes sections 16-21 which address an arbitral tribunal's jurisdiction to rule on its own authority, procedures for raising objections, interim measures, place of arbitration, and commencement of proceedings. The document also discusses related case laws that have supported arbitral tribunals' powers to determine procedures and evidence admissibility.
Capital reduction is the process of decreasing a company's shareholder equity through share cancellations and repurchases. It is done for reasons like increasing shareholder value and improving capital structure efficiency. After capital reduction, the number of shares decreases by the reduction amount, though sometimes shareholders receive cash for cancelled shares and other times there is minimal impact. A company must pass a special resolution, provide solvency statements signed by directors, and register documents with the Registrar of Companies for the reduction to take effect. One example given was a company that reduced share face value through a scheme approved by shareholders and court.
The document discusses differential voting rights (DVRs) shares in India. It provides background on DVRs and details rules around their issuance. Key points include: DVRs were allowed in India in 2001 and have inferior or superior voting rights compared to regular shares; companies must meet conditions like having profits for 3+ years to issue DVRs; SEBI prohibited superior voting rights DVRs in 2009; the new Companies Bill may disallow DVRs entirely. Examples of companies issuing DVRs, like Tata Motors and Pantaloon Retail, are provided along with their DVR structures. Overall the document analyzes the concept of DVRs in India.
MEETINGS OF BOARD AND ITS POWERS COMPANIES ACT 2013ABC
The document discusses rules regarding board meetings and loans to directors according to the Companies Act 2013. It states that companies can hold board meetings through video conferencing if they follow certain procedures to ensure security and record accurate minutes. It also prohibits companies from directly or indirectly lending money to directors, with some exceptions. Loans to directors require prior approval from shareholders. Companies must maintain registers of loans, investments, and interests declared by directors.
This document defines mergers and amalgamations under Indian company law. It explains that a merger involves one company absorbing another, while amalgamation creates a new company from two or more existing companies. It outlines the process for calling meetings of creditors/members to approve schemes, requirements for notice and documents to be circulated. The effect and sanctions of approved schemes by the tribunal are described, including provisions for transfers of assets/shares and dissolution of companies. Penalties for non-compliance with the process are also mentioned. The section also discusses cross-border mergers between Indian and foreign companies.
Sebi Substantial Acquisition of shares and Takeover RegulationAliasgarBohra6
This document summarizes the key aspects of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2018 in India. It defines terms like acquirer, target company and control. It outlines the substantial acquisition thresholds that trigger open offer requirements and the creeping acquisition limits. It provides an overview of the open offer process, obligations of parties involved and disclosure requirements regarding shareholding and control. It also discusses miscellaneous provisions like SEBI's power to issue directions in cases of non-compliance.
The document summarizes key aspects of India's takeover code regulations. It discusses how the regulations have evolved over time with SEBI enacting various rules. It explains the key terms like acquirer, person acting in concert, types of acquisitions and offers. It provides examples to illustrate when the initial threshold of 25% shareholding acquisition or creeping acquisition of additional 5% shareholding in a year would trigger mandatory open offer requirements according to the regulations.
The document discusses preferential allotment of securities under Indian law. It defines preferential allotment as an issue of equity shares, securities convertible to equity, or other instruments like FCDs/warrants/PCDs by a company to select investors through private placement under section 81(1A) of the Companies Act, 1956. It covers topics like pricing of shares under preferential allotment, lock-in periods for allotted shares, limits as per takeover regulations, and procedural requirements under SEBI guidelines.
The document summarizes key aspects of the evolution and framework of SEBI's Takeover Code in India, which regulates mergers & acquisitions. It outlines objectives to protect shareholder interests while facilitating takeovers. Key definitions include acquirer, control, and persons acting in concert. It describes periodic and continual disclosure requirements. Trigger points that require open offers are acquiring over 15%, 15-55%, 55-75%, or gaining control. Exemptions are provided. The public announcement and letter of offer timeline and minimum offer price and payment terms are summarized.
The document summarizes key aspects of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, also known as the Takeover Code. It outlines the objectives of the code to protect shareholder interests while facilitating legitimate takeovers. It defines important terms like acquirer, control, and persons acting in concert. It also describes provisions regarding periodic disclosures, open offer triggers, exemptions, public announcement requirements, minimum offer size and price, payment terms, and timelines that must be followed for takeover bids.
The document summarizes key aspects of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 or the SEBI Takeover Code. It outlines the objectives of protecting shareholder interests and ensuring adequate disclosure in M&A transactions. It defines important terms like acquirer, control and persons acting in concert. It also describes provisions around periodic disclosures, open offer triggers, exemptions and timelines that must be followed for open offers.
The document summarizes key aspects of the evolution and framework of SEBI's Takeover Code in India. It discusses objectives to protect shareholder interests while facilitating takeovers. Key definitions include acquirer, person acting in concert, control. It outlines periodic and continual disclosure requirements. Trigger points for open offers are outlined, such as acquiring over 15% or consolidating holdings between 15-55%. Exemptions and requirements for public announcements, offer size, pricing and timing are summarized.
The document discusses various Indian laws and regulations related to mergers and acquisitions, including the Companies Act, Competition Act, Foreign Exchange Management Act, SEBI Takeover Code, and Income Tax Act. It outlines provisions around arrangements, amalgamations, mergers, foreign investment, tax treatment of mergers, and SEBI regulations governing disclosure of shareholdings and acquisition of shares/voting rights above certain thresholds. The document notes that SEBI has modified its takeover regulations over time to protect shareholder and economic interests.
The document summarizes the evolution of SEBI's Takeover Code regulations in India from 1994 to 2011. It provides key definitions related to acquisitions and control under the regulations. The purpose of the Takeover Code is to ensure fair exit opportunities for shareholders and fair disclosure regarding changes in shareholding and control of companies. The regulations govern direct and indirect acquisitions of shares and control in listed companies. They specify requirements for public announcements, open offers, offer size, price and exemptions. Key aspects include minimum offer sizes, methods for determining offer price, disclosure obligations, and exemptions for inter-se promoter transfers and other specified cases.
This document provides definitions and explanations related to takeovers and the Takeover Code in India. It defines key terms like acquirer, control, shares, promoter, person acting in concert, target company. It summarizes regulations around disclosures for acquisition of shares above certain thresholds and the requirement for open offers when acquisition of shares takes the holding above certain levels like 15% and 55%. It also discusses judgements around interpretation of some of these terms.
SEBI guidelines for Merger and Acquisition
Legal measures against takeovers
Refusal to register the transfer of shares
Protection of minority shareholders interests
Disclosure of share acquisitions/holding
Public announcement and open offer
Offer price
Disclosure
Offer document
SEBI Guidelines for Merger and Acquisition.
SEBI (Security Exchange Board of India)
Merger - Combination of two companies
Acquisition - When one company purchase most or all the company assets/shares.
Guidelines - Government body described some rules and regulations to follow.
The document discusses key aspects of India's Takeover Code such as definitions of acquirer, control, promoter, target company, shares, and substantial acquisition. It provides details on disclosure requirements for substantial shareholding and control. It also discusses SAT judgements related to concepts like acquirer, PAC, promoter, shares. The document compares promoter definitions before and after 2004 amendments and raises queries on forfeiture of shares and treatment of partly paid shares.
The document discusses key concepts related to takeover regulations in India. It defines terms like acquirer, target company, control, shares, thresholds for compliance, and inter-se transfers. It explains the different categories of inter-se transfers such as between relatives, group companies, and qualifying promoters. It also discusses the checks and balances in the takeover code as well as issues around preferential allotment of shares and its interaction with the takeover regulations.
The document discusses key concepts related to preferential allotment of shares under Indian law. It explains the governing regulations, pricing and timeline requirements, lock-in periods, limits on allotment to existing shareholders to avoid triggering open offer obligations under takeover regulations. Preferential allotment is presented as a simple way for companies to raise capital with minimum formalities, but strict compliance with pricing, lock-in and other norms is required.
The TRAC report provides key recommendations to amend the existing SEBI Takeover Regulations, including:
1) Providing more clarity in various definitions, inclusion of judicial decisions, and SEBI views in the regulations.
2) Increasing protections for small shareholders and opportunities for private equity investors.
3) Aligning regulations with global M&A practices, simplifying provisions around control changes, and reducing non-compete fees.
4) Addressing concerns around triggering open offer obligations.
This material is for PGPSE / CSE students of AFTERSCHOOOL. PGPSE / CSE are free online programme - open for all - free for all - to promote entrepreneurship and social entrepreneurship
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After completing 10+2, commerce students have three career options - degree courses like B.Com, LLB which provide only academic knowledge; professional courses like CA, CS, CWA which provide both academic and in-depth expertise knowledge through intensive training; and professional degree courses like BBA, BBE, BBM, BFIA. While a degree course is not sufficient on its own in today's environment, becoming a Company Secretary (CS) provides expertise in areas like corporate compliance, governance, mergers and acquisitions, taxation, and valuations. The CS qualification involves foundation, executive and professional levels and covers subjects like company law, taxation, corporate and management accounting, and securities law. After qualifying as a CS
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CLAUSE 35B & 49 OF LISTING AGREEMENT OF SEBI ANAND KANKANI
SEBI HAS AMENDED THE CLAUSE 35B & 49 OF THE LISTING AGREEMENT FOR THE LISTED COMPANIES.
CLAUSE 35B HAS MANDATED THE E-VOTING FOR PASSING THE RESOLUTION
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12. PRE CONDITION / APPLICABILITY
ACQUISITION OF
SHARES,
CONTROL,
or
VOTING RIGHTS
TARGET
COMPANY
WHOSE SHARES
CONTROL
VOTING RIGHTS
ARE ACQUIRED
MUST BE LISTED
ON STOCK
EXCHANGE IN
INDIA
26. DEFINITIONS
• TARGET COMPANY : means & includes body corporate or a company which is
listed on a stock exchange in India and whose shares are acquired or intended to be acquired
by any acquirer.
27. DEFINITIONS
• ACQUIRER : means any person who directly or indirectly acquires or agrees to acquire
whether by himself or through or with person acting in concert with him, shares or voting
rights or control over target company.
28. DEFINITIONS
• PERSON ACTING IN CONCERT : means persons who, with a common objective
or purpose of acquisition of shares or voting rights in, or exercising control over a target company,
pursuant to an agreement or understanding, formal or informal, directly or indirectly co-operate for
acquisition of shares or voting rights in, or exercise of control over the target company.
29. DEFINITIONS
• DEEMED PERSON ACTING IN CONCERT:
i. Company, its holding company, subsidiary company & companies under
same management or control
ii. a company, its directors, and any person entrusted with the management of
the company
iii. promoters and members of the promoter group
iv. immediate relatives
v. MF/ VCF/ CIS / AIF, its sponsor, trustees, trustee company, and asset
management company
vi. a merchant banker / portfolio manager and its client, who is an acquirer
vii. Investment Co. / Fund and such person who has an interest @ 10% of the
paid up capital or unit – NA for Mutual Funds registered with SEBI
viii. banks, financial advisors and stock brokers of the acquirer*
* not apply to a bank whose sole role is that of providing normal commercial banking services
30. DEFINITIONS
• SHARES:
MEANS ~ EQUITY SHARE
CAPITAL OF TARGET COMPANY
INCLUDES ~ ANY SECURITY
WHICH ENTITLES THE HOLDER
TO EXERCISE VOTING RIGHTS
31. DEFINITIONS
• CONTROL:
includes the right to appoint majority of the directors or to
control the management or policy decisions exercisable by a
person or persons acting individually or in concert, directly or
indirectly, including by virtue of their shareholding or
management rights or shareholders agreements or voting
agreements or in any other manner.
Provided that a director or officer of a target company shall not
be considered to be in control over such target company,
merely by virtue of holding such position;
36. Made by ACQUIRER only
@
EVERY STOCK EXCHANGE WHERE THE
SHARES ARE LISTED
&
REGISTERED OFFICE OF THE TARGET
COMPANY
Within 2 working days of the receipt of
intimation of allotment of shares or the
acquisition of shares or voting rights
EVENT BASED DISCLOSURE
37. Reg. 30 CONTINUAL DISCLOSURES
DISCLOSURE OF SHAREHOLDING
as on 31st March
i.e. at the end of Financial year
38. Within 7 working days
from the end of each financial year
to be given to
Every Stock exchange where the shares of the Target Company
are listed
&
Registered Office of the TARGET COMPANY
Reg. 30 CONTINUAL DISCLOSURES
39. To be made by
PROMOTERS NON
PROMOTERS
IRESPECTIVE
OF THE
SHAREHOLDING
ANY PERSON
along with PAC
Holding more than
25% shares
Reg. 30 CONTINUAL DISCLOSURES
40. Reg. 31 ENCUMBERED SHARES
• A claim against a property by another party.
• Encumbrance usually impacts the transferability of
the property and can restrict its free use until the
encumbrance is removed.
• For TAKEOVER REGULATION - It includes a
pledge, lien, or any transaction which creates a the
risk on the ownership of shares of the promoters
41. Reg. 31 ENCUMBERED SHARES
PROMOTER of every target company shall disclose details of
shares in such target company:
Creation of Encumbrance of shares of Target Company
Invocation or Release of the encumbrance of shares
42. Reg. 31 ENCUMBERED SHARES
Disclosure is to be made
Within 7 working days from the date of creation/invocation
of pledge
TO
Every stock exchange where the shares of the target
company are listed
Registered office of the target company
43. DISCLOSURE REQUIRED OR NOT ?
P
XYZ
Ltd.
Q
1. Already holds 4% shares
2. Already holds 3% shares
3.
Loan of Rs. 5 Crore
For 3 months
4.
Pledges
3% shares
of XYZ
Ltd.
YE
S
44. DISCLOSURE REQUIRED OR NOT ?
SBI
XYZ
Ltd.
Q
1. Already holds 4% shares
2. Already holds 3% shares
3.
Loan of Rs. 5 Crore
For 3 months
4.
Pledges
3% shares
of XYZ
Ltd.
NO
45. CASE IN POINT CONCLUSION
Company XYZ
Ltd.
100 Equity
Share
50
PCD
10
GDR
160
Total
Share
110
Total voting rights
DISCLOSURE
Current Holding
of
A in XYZ
8
Equity
Shares
7
PCD
1
GDR
16 (8+7+1)
Shares
16/160 = 10%
9 (8 +1)
Voting rights
9/110 = 8%
N.A.
Scenario I
2
Equity
Shares
2
PCD
----
2+2=4
shares
4/160 = 2.5%
2 Voting Right
(only on Sh.)
2/110= 1.81%
Reg. 29(2)
Shareholding
> 2%
Scenario II --- 20
PCD
---
20 shares
20/160 = 12.5%
No
Change in
Voting Rights
Reg. 29(2)
Shareholding
> 2 %
Scenario III
2 Equity
Shares --- ---
2 Shares
2/160 =
1.25 %
2 Voting Right
2/110 =
1.81 %
No Disclosure
Change is
< 2%
Scenario
IV
3
Equity
Shares
--- ---
3 Shares
3/160 =
1.87%
3 Voting Right
3/110 =
2.72 %
Reg. 29(2)
Voting Rights
> 2%
46. DISCLOSURE CONCLUSION
ACQUISITION > 5%
CHANGE + 2 %
DISPOSAL
RESULTING
< 5%
PROMOTER & PAC irrespective of
shareholding
Others holding > 25%
On
CREATION
INVOCATION
RELEASE
of
ENCUMBRANCE
by
PROMOTERS
47. NO OBLIGATION ON THE TARGET COMPANY TO GIVE ANY DISCLOSURE
OBLIGATION IS ONLY ON ACQUIRER, PROMOTER & THEIR PACs
ACQUISITION INCLUDES SHARES ACQUIRED BY WAY OF ENCUMBRANCE*
* not applicable on Scheduled Commercial Banks or PFI acquiring shares by way of pledge
DISPOSAL INCLUDES SHARES GIVEN UPON RELEASE OF ENCUMBRANCE*
* not applicable on Scheduled Commercial Banks or PFI release of shares by way of pledge
DISCLOSURE to R.O. of TARGET COMPANY &
Every Stock Exchange where the shares of the Target Company are listed.
48. Reg. 3 : SUBSTANTIAL ACQUISITION OF SHARES OR
VOTING RIGHTS
TRIGGER LIMIT /
PUBLIC
AMMOUNCEMENT
1st LEVEL / INITIAL
TRIGGER
2nd LEVEL / CREEPING
ACQUISITION TRIGGER
49. 1st LEVEL TRIGGER
Any acquirer, along with PAC (if any)
Reg. 3(1)
Casts an obligation on the acquirer to make public announcement of an open
offer for acquisition of additional 26% shares of Target Company
while acquiring shares of the Target Company
where by pursuant to such acquisition
their post acquisition holding in the Target company
Reaches or Exceeds 25% of the voting rights in such target company
then initial trigger is said to be touched by such acquirer
As per Reg. 7(1)
prior acquiring such shares, entitling him to exercise 25% or more
voting rights in such Target Company.
50. CREEPING ACQUISITION
• Any acquirer who along with his PAC hold 25% or more voting rights in the Target Company can
acquire additional maximum 5% shares of the Target Company during any financial year without
attracting the obligation to make an open offer under the Takeover regulations
Ex.
Mr. Ambani hold 28 % shares in East India Hotels Ltd. (EIH) as on 01/04/2015.
Now for the financial year 2015 – 2016, he can acquire max. 5% more shares of company i.e. 28% + 5% = 33%
However in next financial year 2016 – 2017, he can further acquire additional 5% shares of EIH Ltd.
i.e. 33% + 5% = 38% & so on
51. 2st LEVEL TRIGGER
Any acquirer, along with PAC (if any)
who has already acquired 25 % or more shares of the Target Company
shall not acquire more than 5% shares of such Target company within any financial year
(starting April 1st)
without making prior public announcement of an open offer
for acquiring additional 26% shares of Target Company
As per Reg. 7(1)
PROVIDED THAT
Post acquisition holding of such acquirer together with its PAC must not exceed the
maximum permissible non – public shareholding.
Thus maintaining the minimum public float of 25% in such Target company.
As per Reg. 3(2)
52. ACQUISITION OF
ADDITIONAL VOTING RIGHTS
• For the purpose of determining the acquisition of additional voting rights
GROSS ACQUISITIONS made by the acquirer along with PAC must be
taken into consideration.
Ex.
Rajiv’s stake in Bajaj Ltd. was 42% as on 01/04/2015
He purchased 3% shares in April’15 (42 + 3 = 45%)
He sold 3% shares in May’15 (45 – 3 = 42%)
He purchased 3% shares in June’15 (42 + 3 =
45%)
Assuming that these were the only 4 transactions that were entered by Rajiv.
IS THE TRIGGER TOUCHED ?
YES. Since his gross acquisition has exceeded 5% (i.e. 3% in April & May
each) even though his aggregate holding is same.
He sold 3% shares in July’15 (45 – 3 = 42%)
53. ACQUISITION OF
ADDITIONAL VOTING RIGHTS
• in the case of acquisition of shares by way of issue of new shares by the target company
or where the target company has made an issue of new shares in any given financial
year, the difference between the pre-allotment and the post-allotment percentage
voting rights shall be regarded as the quantum of additional acquisition .
POST ALLOTMENT
PRE ALLOTMENT
CHANGE IN VOTING RIGHTS
UP TO 5 % MORE THAN 5 %
NO PUBLIC ANNOUNCEMENT
PUBLIC ANNOUNCEMENT
TRIGGER IS TOUCHED
54. Reg. 6: VOLUNTARY OPEN OFFER
Pre Conditions:
Prior holding of at least 25% or more of voting
rights in the Target Company.
No acquisition was made in the preceding 52
weeks without attracting the obligation to make an
public announcement to make an open offer.
i.e. NO CREEPING ACQUISITION
Minimum offer size of 10 %
No acquisition of shares during the offer period
except under the open offer
No further acquisition of shares for a period of 6
months after the completion of open offer except by
way of another voluntary open offer or competing
offer
55. Reg. 7: OFFER SIZE
OPEN OFFER UNDER OFFER SIZE
(% of shares of the Target Co.)
Reg. 3 & 4 –
COMPULSORY OFFER 26 %
Reg. 6 –
VOLUNTARY OFFER 10 %
SHARES AS ON THE DATE OF PUBLIC ANNOUNCEMENT IS NOT RELEVANT
BUT MAINTAIN THE MINIMUM PUBLIC FLOAT
&
IF PRIOR PUBLIC ANNOUNCEMENT WAS NOT MADE TO DELIST THE SHARES
ACQUIRER CANNOT VOLUNTARILY DELIST THE SHARES OF TARGET Co.
FOR A PERIOD OF 12 MONTHS
FROM THE DATE OF COMPLETION OF OFFER PERIOD
57. FREQUENTLY TRADED SHARES
vs.
INFREQUENTLY TRADED SHARES
Shares of a target company,
in which the traded turnover on any stock exchange
during the 12 calendar months
preceding the calendar month
in which the public announcement is made,
is at least 10% of the total number of shares
of such class of the target company
– 12
months
PUBLIC
ANNOUNCEMENT
– 1
month
JUNE
2015
JULY
2015
JULY
2014
10% of Total No. of Shares
58. OFFER PRICE
DIRECT ACQUISITION
FREQUENTLY TRADED SHARES
• highest negotiated price per share of the target company for any acquisition under the agreement
attracting the obligation to make a public announcement of an open offer
• volume-weighted average price paid or payable for acquisitions, whether by the acquirer or by any
person acting in concert with him, during the fifty-two weeks immediately preceding the date of the
public announcement
• highest price paid or payable for any acquisition, whether by the acquirer or by any person acting in
concert with him, during the twenty-six weeks immediately preceding the date of the public
announcement
• the volume-weighted average market price of such shares for a period of sixty trading days
immediately preceding the date of the public announcement as traded on the stock exchange where the
maximum volume of trading in the shares of the target company are recorded during such period
HIGHEST OF FOLLOWING
59. OFFER PRICE
DIRECT ACQUISITION
INFREQUENTLY TRADED SHARES
• highest negotiated price per share of the target company for any acquisition under the agreement
attracting the obligation to make a public announcement of an open offer
• volume-weighted average price paid or payable for acquisitions, whether by the acquirer or by any
person acting in concert with him, during the fifty-two weeks immediately preceding the date of the
public announcement
• highest price paid or payable for any acquisition, whether by the acquirer or by any person acting in
concert with him, during the twenty-six weeks immediately preceding the date of the public
announcement
• 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
HIGHEST OF FOLLOWING
60. CAN THE ACQUIRER ESCAPE OBLIGATION FOR
OPEN OFFER BY REDUCING HIS SHAREHOLDING
BELOW 25 % OR 5%
61. OPEN OFFER PROCESS
Reg. 12
PRIOR MAKING
PUBLIC ANNOUNCEMENT
Acquirer must appoint a SEBI
Registered Merchant Banker
+
P.A. of the open offer must be
made through such Merchant
Banker only
62. OPEN OFFER PROCESS
• MARKET PURCHASES
Prior placement of order with Stock Broker
• UPON CONVERSION OF CONVERTIBLE SECURITIES:
– WITHOUT FIXED DATE OF CONVERSION
on the same day as the date of conversion
– WITH FIXED DATE OF CONVERSION
2nd Working day preceding the date of such
conversion
• PREFERENTIAL ISSUE
Date on which the BOD authorizes the Pref. Issue
Reg. 13 : TIMING OF PUBLIC ANNOUNCEMENT
63. OPEN OFFER PROCESS
Reg. 13 : TIMING OF PUBLIC ANNOUNCEMENT
• DISINVESTMENT
On the SAME DAY of executing the Agreement for Acquisition of
Shares/Voting Rights/Control over the Target Co.
• CONSEQUENT TO BUY BACK
If not qualified for Exemption,
then not later than 90th day from the date of closure of Buy Back
• BEYOND THE CONTROL OF ACQUIRER
Within 2 working days from the date of receipt of intimation of having
acquired such title
64. OPEN OFFER PROCESS
Reg. 13 : TIMING OF PUBLIC ANNOUNCEMENT
• VOLUNTARY OPEN OFFER
On the same day as the date on which the acquirer takes decision to
voluntarily make a Public Announcement of an open offer for acquiring
shares of Target Co.
• INDIRECT ACQUISITION:
– Conditions of Reg. 5(2) are not met:
Within 4 working days from the date of acquisition
– Conditions of Reg. 5(2) are met:
Date of Primary acquisition is contracted / Intended
AGREEMENT
- On the same day of executing the agreement.
66. OPEN OFFER PROCESS
Public Announcement
• All Stock Exchanges where the shares of the Target Co. are
listed
• SEBI
• Registered office of the Target Company
67. OPEN OFFER PROCESS
DPS
• All Stock Exchanges where the shares of the Target Co. are
listed
• SEBI
• Registered office of the Target Company
– One English National Daily
– One Hindi National Daily
– One Regional Lang. where the R.O. of Target Co. is
situated
– One Regional Lang. of Stock Exchange where the max.
volume of trading in the shares of the Target Co. are
recorded.
FOLLOWING NEWSPAPER:
68. OPEN OFFER PROCESS
CONTENT OF PUBLIC ANNOUNCEMENT
– Name & Identity of Acquirer and PAC
– Name & Identity of the sellers
– Nature of proposed acquisition of shares/control/voting rights of Target Co.
– Consideration for the proposed acquisition that attracted the obligation to make an open
offer
– Offer Price & mode of payment of consideration
– Offer size, and conditions as to minimum level of acceptances, if any
Detailed Public Statement shall contain such information as may be specified in order
to enable shareholders to make an informed decision with reference to the open offer
PA /DPS shall not omit any relevant information, or contain any misleading info.
69. OPEN OFFER PROCESS
Reg. 16: FILING OF DRAFT LETTER OF OFFER TO SEBI
• WITHIN 5 WORKING DAYS
• from the DATE OF Detailed Public Statement / Upward Revision
• Along with Non Refundable Fees calculated as per the consideration payable including any upward
revision (if any)
CONSIDERATION PAYABLE FEES (₹)
Upto ₹10 Crore 1,25,000
More than 10 Crore
BUT
Upto ₹ 1,000 Crore
1,25,000
+
0.025 % of offer size above ₹ 10 Crore
More then ₹1,000 Crore
BUT
Upto ₹ 5,000 Crore
1,25,00,000
+
0.03125 % of offer size above ₹1,000 Crore
More than ₹5,000 Crore
2,50,00,000
+
0.01 % of offer size above ₹5,000 Crore;
Subject to max. of ₹ 3,00,00,000
70. OPEN OFFER PROCESS• SEBI shall give its comments on the draft letter of offer
within 15 days
• If no Comments is received – assume no comments
• If SEBI specifies any changes
– the period for issuance of comments shall be extended to 5th
working day
&
– manager to open offer shall carry out such changes in the
Letter of Offer before it is dispatched to the shareholders.
In case of Competing offer : Same day
71. OPEN OFFER PROCESS
Reg. 18 (1)
Simultaneously file the Draft Letter of Offer to:
• Registered Office of the TARGET COMPANY
• All Stock Exchanges where the shares of the Target Co. are listed
72. Reg. 17
ECROW ACCOUNT
• To be opened at least 2 working days PRIOR to Detailed Public Statement
• Objective : Security Performance of his obligations under Takeover Regulations
• Can be deposited in any of the following form:
• CASH deposited with Scheduled Commercial Bank
• BANK Guarantee issued in favour of the manager of the Open Offer
• Deposit of Frequently Traded & Free transferable equity shares or other freely transferable securities
with appropriate margin
• In case of Bank Guarantee / Deposit of Securities : Acquirer shall deposit in CASH with scheduled
commercial bank at least 1% of total consideration.
• In case of Shares / Securities – in the event of any shortfall in the amount required to be
maintained in the ESCROW A/C – Manager to the open offer shall be liable to make good such
shortfall.
73. QUANTUM OF ESCROW
CONSIDERATION PAYABLE UNDER THE
OPEN OFFER ESCROW AMOUNT
UP TO ₹500 Crore
25% of the amount of consideration
On Balance Consideration
₹ 125 Cr.
+
10% of the consideration above ₹ 500 Cr.
In case of
CONDITIONAL OFFER
100% of the Minimum Level of Acceptance
OR
50% of the Consideration Payable
(Whichever is Higher)
74. RELEASE OF ESCROW
The manager to the open offer shall not release the escrow account until the expiry of thirty days
from the completion of payment of consideration to shareholders.
The money deposited in the ESCROW A/C shall be released only in the
following manner:-
1) Withdrawal of offer in terms of Regulations 23
2) For transfer of an amount not exceeding 90% of Escrow to Special Escrow Account
3) Balance 10% to the acquirer on the expiry of 30 days from the completion of all
obligations under the offer
4) The entire amount to the acquirer on the acquirer on the expiry of 30 days from the
completion of all obligation under the offer where the open offer is for exchange of
shares or other secured instruments.
75. FORFEITURE OF ESCROW FOR NON-FULFILLMENT
OF ANY OF THE OBLIGATIONS UNDER THESE
REGULATIONS
1/3
Each to:
TARGET COMPANY
IPEF ACCOUNT
SHARE HOLDERS on
Pro Rata Basis
76. DISPATCH OF LETTER OF OFFER
• to the Shareholders whose name appear on the Register of
Members of Target Company as on the “identified date”
• Within 7 working days from the receipt of comments from
SEBI as per Reg. 16(4)
• the acquirer shall send the letter of offer to the custodian of
shares underlying depository receipts, if any, of the target
company
77. TENDERING PERIOD
means
the period within which shareholders may tender their
shares in acceptance of an open offer to acquire
shares made under these regulations
&
Must commence
Within 12 Days from the
Date of Receipt of Comments
from SEBI Under Reg. 16(4)
78. 3 days Prior to Tendering Period
Acquirer shall not BUY / SELL shares of Target Company
No Upward Revision
TO DO
PRE -TENDERING PERIOD
79. TO DO
PRE -TENDERING PERIOD
– 2 day Prior to Tendering Period
Release of opinion of Independent Directors of Target company
80. TO DO
PRE -TENDERING PERIOD
– 1 day Prior to Tendering Period
Acquirer shall give newspaper advertisement for
the commencement of Tendering Period
Schedule of activities for open offer
Status of Statutory & other approvals
Any other conditions ( if any )
Procedure for Tendering Acceptances
Any other material disclosure w.r.t Tendering process
82. DURING TENDERING PERIOD
DAY 1 to DAY 10
– Share holders of the Target Company
&
– Any other person holding shares
Can surrender / tender shares to acquirer pursuant to
open offer.
Once the shares are tendered under the Open offer,
the share holder will not be entitled to
withdraw such acceptance.
83. DURING TENDERING PERIOD
DAY 1 to DAY 10
ACQUIRER has to disclose
Within 24 hours
of
acquisition of shares
of Target Company
to
Every STOCK EXHANGE where the shares of the Target Company
are listed
&
Registered Office of Target Company
86. POST OFFER PERIOD
WITHIN 5 WORKING DAYS
POST OFFER ADVERTISEMENT
Aggregate number of shares tendered
Aggregate number of shares accepted
Date of Payment of Purchase Consideration
Simultaneously,
File the same to
i. SEBI
ii. STOCK EXCHANGES, where the shares are listed
iii. Registered Office of the Target Company
87. Reg.19
CONDITIONAL OFFER
CONDITION : Minimum Level of Acceptance
If the obligation to make an open offer is attracted pursuant to an agreement
then
In case minimum acceptance is not received
Acquirer shall not acquire any shares under the open offer
&
The agreement attracting the obligation to make the open offer stand rescinded.
In case of CONDITIONAL OFFER
the Acquirer & PAC
shall not acquire any shares of the Target Co.
EXCEPT
Under the open offer & the underlying agreement
88. Reg. 20
COMPETING OFFER
Meaning of Competing Offer OFFER made by a person other than the acquirer who has made the
first Public announcement.
Who can ? Any Person
When ? Within 15 working days from the date of the Detailed Public Statement
(DPS) made by acquirer who has made the first PA.
Quantum ? Equal to the holding of Acquirer & PAC who has first made the PA,
Including the number of shares proposed to be acquired under the Share
Purchase agreement pursuant to which the open offer is made.
Any Condition ? Only if the acquirer has stipulated a minimum level of acceptance
Schedule of Activities Schedule of activities & the offer opening & closing of all competing offer
shall be carried out with identical timeliness.
89. Reg. 9 : MODE OF PAYMENT
ANY OF THE FOLLOWING – JOINTLY or SEPERATELY :-
Cash
Issue, exchange or transfer of listed shares in the equity share capital of the acquirer or
of any PAC
Issue, exchange or transfer of listed secured debt instruments issued by the acquirer or
any person acting in concert with a rating not inferior to investment grade as rated by a
credit rating agency registered with the SEBI
Issue, exchange or transfer of convertible debt securities entitling the holder thereof to
acquire listed shares in the equity share capital of the acquirer or of any PAC
90. Reg. 9 : MODE OF PAYMENT
SHARE ACQUISITION in CASH
in Previous 52 Weeks
from the date of Public
Announcement
By ACQUIRER / PAC
Constituting >10 % of Voting Rights
in the Target Company
Shareholders of Target Co.
can demand the Consideration
to be paid in CASH ONLY
even if the Acquirer / PAC intends to
pay the offer price in exchange / by
issue of any other security
91. Reg. 9 : MODE OF PAYMENT
IN CASE OF UPWARD REVISION OF OFFER PRICE
THE CASH COMPONENT OF THE OFFER PRICE
MUST NOT BE REDUCED
Original
Offer
Price
Upward
Revision
1
Upward
Revision
2
Upward
Revision
3
Upward
Revision
4
Total 150 170 190 210 225
to be paid in
Equity Share of
₹10 each
50 70 80 90 110
CASH 100 100 110 120 115
ALLOWED YES YES
100 110
YES
110 120
NOT
ALLOWED
92. Reg. 9 : MODE OF PAYMENT
Such shares are listed on a stock exchange and frequently traded at the time of the public
announcement
Such shares have been listed for a period of at least 2 years preceding the date of the
public announcement
Issuer of such class of shares has redressed at least 95% of the complaints received from
investors by the end of the calendar quarter immediately preceding the calendar month in
which the public announcement is made
Issuer of such class of shares has been in material compliance (as per SEBI) with the
listing agreement for a period of at least 2 years immediately preceding the date of the
public announcement
Impact of Auditors’ Qualifications (if any) on the audited accounts of the issuer of such
shares for 3 immediately preceding financial years does not exceed 5% of the net profit or
loss after tax of such issuer for the respective years
SEBI has not issued any direction against the issuer of such shares not to access the
capital market or to issue fresh shares
CONVERSION OF OTHER SECURITIES
TOWARDS PAYMENT OF THE OFFER PRICE
93. VALUE OF SECURITIES FOR CONVERSION
average of the weekly high and low of the closing prices of such securities quoted on the stock
exchange during the six months preceding the relevant date
average of the weekly high and low of the closing prices of such securities quoted on the stock
exchange during the two weeks preceding the relevant date
volume-weighted average market price for a period of sixty trading days preceding the date of the
public announcement, as traded on the stock exchange where the maximum volume of trading in
the shares of the company whose securities are being offered as consideration, are recorded
during the six-month period prior to relevant date
Exchange Ratio shall be duly certified by:
an Independent Merchant Banker (other than the manager to the open offer)
OR
an Independent Chartered Accountant having a minimum experience of 10 years
Higher of the following:–
94. Reg. 21 : Payment of Purchase Consideration
• AMOUNT OF PURCCHASE CONSIDERATION payable in
CASH
• transferred to SPECIAL ESCROW A/C
• with a banker to an Issue
• and deposit entire sum due & payable to shareholders as
consideration.
• The acquirer shall complete payment of consideration within
10 working days.
• At the end of 7 years: Unclaimed balance lying the credit of
Special Escrow Account must be transferred to IPEF
established under the SEBI (IPEF) Regulations, 2009.
95. Reg. 22 : Completion of Acquisition
• Acquirer not to complete Acquisition of Shares & Voting Rights in Target Company until the
expiry of offer period
• Preferential Allotment / Block deal / Bulk deal :
Share to be kept in ESCROW ACCOUNT
Acquirer shall have no control over them
Transferred to acquirer upon complying with the Provision of Escrow
• Open Offer pursuant to Agreement:
Complete the acquisition within 26 weeks
Extension may be granted by SEBI in the interest of investors
96. Reg. 23 : Withdrawal of Offer
PERMITTED CONDITIONS:
• Statutory approvals required have been refused
• Acquirer being a natural person has died
• Any condition stipulated in the agreement for acquisition attracting the obligation to
make the open offer is not met for reasons beyond the control of the acquirer and such
agreement is rescinded.
― However such conditions were disclosed in the detailed public announcement & Letter of
offer.
• Any such circumstances as in the opinion SEBI merits withdrawal
97. SITUATION
Statutory approvals required have been refused
Acquirer being a natural person has died
Any condition stipulated in the agreement for
acquisition attracting the obligation to make
the open offer is not met for reasons beyond
the control of the acquirer and such
agreement is rescinded
Disclosed in the detailed public announcement
NOT disclosed in the detailed public
announcement
Preferential allotment is not successful
Reg. 23 : Withdrawal of Offer
98. Reg. 23 : Withdrawal of Offer
Within 2 working days
MERCHANT BANKER ( manager to open offer )
Make an announcement in Newspapers
Providing reasons & grounds for withdrawal of
offer
Simultaneously inform
SEBI
Stock Exchanges
Registered Office of the Target Company
99. Reg. 23 : Withdrawal of Offer
In case of PREFERENTIAL ISSUE:
NO Withdrawal of offer if the open offer was made
pursuant to Preferential Allotment
even if the proposed acquisition via preferential allotment
is not successful.
The rationale for this amendment is that the day Board approves the preferential allotment, the market comes to know about the same and the share price
becomes volatile on account of the knowledge about the preferential allotment in spite of the fact that the shareholders have not approved the preferential
allotment. To plug this loophole resulting in volatility in share price, SEBI has changed the date for making a public announcement from date of passing of
shareholders resolution to date of passing of Board resolution
100. • Notwithstanding anything contained in these regulations,
• in the event the acquirer makes a public announcement of an open offer for
acquiring shares of a target company in terms of regulations 3, 4 or 5,
• he may delist the company in accordance with provisions of the Securities and
Exchange Board of India (Delisting of Equity Shares) Regulations, 2009
• Provided that the acquirer shall have declared upfront his intention to so
delist at the time of making the detailed public statement.
DELISTING OF SHARES
101. DELISTING OF SHARES
DUE TO :
i. Non receipt of prior approval of shareholders u/r 8
ii. Acquirer rejecting the discovered price u/r 16
iii. Non receipt of minimum number of equity shares u/r 17
of SEBI Delisting Regulations, 2009
102. DELISTING OF SHARES
ACQUIRER SHALL -
Give a Public Announcement within 2 working days in respect of such failure in all the
newspapers in which the detailed public statement was made
Within 5 working days from the date of such Public Announcement, file with SEBI, a Draft
Letter of Offer
Offer Price shall stand enhanced by an amount equal to a sum determined @ 10% p.a. for the
period between the scheduled date of payment till the actual date of payment of Purchase
Consideration
Any Competing Offer shall not be entitled to delist the company
No extra interest for the delay due to competing offer
Shareholders who tendered their shares under this process shall be entitled to withdraw such
shares tendered, within 10 working days from the date of the public announcement
103. EXEMPTIONS FROM OPEN OFFER
Reg.10
Automatic Exemption
Reg. 11
Exemption By SEBI
Relaxation from Procedural
requirements of Open Offer
105. EXEMPTIONS FROM OPEN OFFER
INTER SE TRANSFER amongst
immediate relatives
promoters (as per shareholding patters filed with Stx. In the last 3 years)
PAC of Acquirer / Target Company
a company, its subsidiaries, its holding company, other subsidiaries of
such holding company, persons holding not less than fifty per cent of the
equity shares of such company, other companies in which such persons
hold not less than fifty per cent of the equity shares, and their subsidiaries
subject to control over such qualifying persons being exclusively held by
the same persons
106. EXEMPTIONS FROM OPEN OFFER
ACQUISITION IN THE ORDINARY COURSE OF BUSINESS BY
Underwriter registered with SEBI
Stock Broker registered with SEBI on behalf of client in exercise of lien over the shares
purchased on behalf of the client
merchant banker registered with the Board or a nominated investor in the process of market
making
any person acquiring shares pursuant to a scheme of safety net in terms of regulation 44 of
the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements)
Regulations, 2009
a merchant banker registered with the Board acting as a stabilising agent
a Scheduled Commercial Bank, acting as an escrow agent
invocation of pledge by Scheduled Commercial Banks or Public Financial Institutions as a
pledgee
107. EXEMPTIONS FROM OPEN OFFER
ACQUIRING SHARES PURSUANT
• to an AGREEMENT OF DISINVESTMENT
• U/S 18 OF SICA,1985
• to Reconstruction / Merger / Amalgamation / Demerger under order of Court NCLT
• to provisions of Securitization and Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002
• to provisions of Delisting of shares
• to Acquisition by way of transmission, succession or inheritance
• acquisition of voting rights or preference shares carrying voting rights arising out of the
operation of Sec. 47(2) of Companies Act, 2013
• Conversion of debt into equity under Corporate Debt Restructuring Scheme
• Upon Share Forfeiture of Equity Shares by a Company
108. EXEMPTIONS FROM OPEN OFFER
POST BUY BACK OF SHARES
If the shareholding increases and the trigger is touched,
then the Regulations exempt from the obligation to make an open offer
Provided such shareholder reduces his shareholding such that his voting rights fall to below the
threshold
within 90 days from the date of the closure of the said buy-back offer
Such shareholder should not have voted in favour of the resolution authorizing the buy-back of
securities
109. EXEMPTIONS FROM OPEN OFFER
Mr. A already
holds 24% shares
of PQR Ltd.
Mr. Z promoter of Zoo Ltd.
holds 66% shares of Zoo
Ltd. since incorporation
PQR Ltd. ZOO Ltd.
16% Shares of PQR Ltd.
26% Shares of ZOO Ltd.
Mr. A made a
DPS &
acquired
further 18%
shares of PQR
Ltd.
Is Mr. A required to give PA for the open offer for
the acquisition of 26% shares of ZOO Ltd. ?
110. EXEMPTIONS FROM OPEN OFFER
Mr. A already
holds 24% shares
of PQR Ltd.
Mr. Z promoter of Zoo Ltd.
holds 66% shares of Zoo
Ltd. since incorporation
PQR Ltd. ZOO Ltd.
16% Shares of PQR Ltd.
26% Shares of ZOO Ltd.
Mr. A made a
DPS &
acquired
further 18%
shares of PQR
Ltd.
Is Mr. A required to give PA for the open offer for
the acquisition of 26% shares of ZOO Ltd. ?
111. EXEMPTIONS FROM OPEN OFFER
Mr. A already
holds 24% shares
of PQR Ltd.
Mr. Z promoter of Zoo Ltd.
holds 66% shares of Zoo
Ltd. since incorporation
PQR Ltd. ZOO Ltd.
19% Shares of PQR
Ltd.
26% Shares of ZOO Ltd.
Mr. A made a
DPS &
acquired
further 18%
shares of PQR
Ltd.
Is Mr. A required to give PA for the open offer for
the acquisition of 26% shares of ZOO Ltd. ?
112. EXEMPTIONS FROM OPEN OFFER
Mr. A already
holds 24% shares
of PQR Ltd.
Mr. Z promoter of Zoo Ltd.
holds 66% shares of Zoo
Ltd. since incorporation
PQR Ltd. ZOO Ltd.
16% Shares of PQR Ltd.
26% Shares of ZOO Ltd.
Mr. A made a
DPS &
acquired
further 18%
shares of PQR
Ltd.
Is Mr. Z required to give PA for the open offer for
the acquisition of 16% shares of PQR Ltd. , if he
was previously holding 14% shares of PQR Ltd.
?
113. EXEMPTIONS FROM OPEN OFFER
• VCF
• SFC & its subsidiaries
• AIF
• Foreign VCF
PROMOTERS
115. Can the acquisitions, resulting from any
agreement attracting the obligation to make an
open offer, be completed by way of transactions
settled on Stock exchange such as bulk/block
deals?
No. Since the same would result in completion of the triggering acquisition
before the expiry of the offer period and would be against the provisions of
regulation 22(1).
118. PACKMAN DEFENCE
The Target firm then tries to acquire the company
that has made the hostile takeover attempt.
The Pac-Man defence is an expensive strategy
that may increase debts for the target company.
Shareholders may suffer losses or lower dividends
in future years.
Possible only when the company is cash rich and
the acquiring company’s share prices are available
at cheaper rate
The Pac-Man defence may be used alone or in
conjunction with other takeover defences, such as
the white knight.
119. CROWN JEWEL DEFENCE
The target company spins off its major attractive
assets to new company specially formed for this
purpose.
This makes the target company less attractive for
the hostile acquirer.
Crown jewel defence is a useful tactic to avoid
hostile takeover especially for those companies
where its assets backing is major strength.
This defence is not practical in India because of
Reg. 26(2)(a) of Takeover Regulations, which
restricts the BODs of Target Company & any of its
subsidiary from alienating any material assets
outside the ordinary course of business without the
approval of shareholders of the Company by
Special resolution.
120. GREEN MAIL
Promoters of the Target Company make an
offer at an attractive price to the acquirer, to
surrender his holding in Target Company
back to the promoters of the Target
company.
This tactic shall be used only after a cost-
benefit analysis.
Abhishek Dalmia vs GESCO
Arun Bajoria vs Bombay Dyeing
121. WHITE KNIGHT
White Knight is the person who helps
promoters of the Target company in making
the counter bid within 15 working days
against the acquirer. As a result, promoters
of the Target company are able to get rid of
the acquirer.
White Knight and Promoters of the Target
Company jointly give the counter bid to
acquire the shares of the Target Company at
a price higher than the price offered by
acquirer.