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SEBI

(Substantial Acquisition of Shares & Takeovers)


Regulation 2011

SEBI (SAST, 2011)

23rd September, 2011


Powers conferred U/Sec. 30 r/w
Sec. 11 (2) (h), SEBI Act, 1992
Dr. Dayananda Murthy C P
History
 Key Element of Corporate Governance ?
 Existence of an efficient & well administered set of Takeover
Reg’s
 Protection of the interests of Minority SH’s
 SH’s of a Listed Co’s are treated fairly & equitably in
the takeover process & in Transparent Manner
 SH’s of TC are mandatorily offered an exit opportunity
at the best possible terms in case of a substantial
acquisition / change in control.
 Balance between - Interests of – SH’s - Acquirers - TC
 Code - Designed to promote (with other regulatory
regimes)
Maintaining stability in the Securities Markets &
Integrity of the Financial Markets
Dr. Dayananda Murthy CP
History
 SEBI (SAST) Regulations, 1994
Made way for hostile takeovers & competitive offers
– 1st time
Nov. 4, 1994)
 SEBI (SAST) Regulations, 1997
Justice P N Bhagwati Committee
Introduced & notified - Feb. 20, 1997
 Takeover Regulations Advisory Committee (TRAC)
C. Achuthan
Sept. 2009
SAST Regulations 2011 –
Notified on Sept. 23, 2011
Dr. Dayananda Murthy C P
Nirvana Holdings Pvt. Ltd. v SEBI
2011 Indlaw SAT 48
 Primary object of - Takeover code is to provide - An exit route to
Public SH’s…
 This right to exit is an invaluable right & SH’s cannot be
deprived of this right lightly.
 It is only when larger interest of investor protection / that of SM
demands that this right could be taken away.
 Therefore, as a normal rule, a direction to make a PA to acquire
shares of TC should issue to an acquirer who fails to do that.
 SEBI need not give reasons as to why such a direction is being
issued because that is the mandate of Reg’s 10, 11 & 12. (1997)
 However, if the issuance of such a direction is not in the interest
of SM / for the protection of interest of investors - SEBI may
deviate from the normal rule & issue any other direction as
envisaged in Reg. 44. In that event - SEBI should record reasons
for deviation.”
 In Re, Joseph Varghese and another, 2017 Indlaw SEBI 134
In Re, Adnan’s Clothing Ltd.
2017 Indlaw SEBI 216
 Statutory duty of ensuring orderly market compels SEBI to
strictly interpret & apply rules & regulations & initiate action /
proceedings against entities found to be in default, whether such
default is intentional / otherwise.
 Promoters / Lenders / Other persons dealing in shares of listed
Co., at all times, need to be mindful of significance & impact of
their actions in SM including unintended legal consequences,
likely to arise out of their failure to adhere to procedures laid
down under laws pertaining to SM
 No matter however bonafide their intentions might be.
 Strict compliance with provisions of law, in letter & spirit, by
market participants in all situations is ideal solution for avoiding
all such legal & regulatory complications & for ensuring orderly
SM.
In Re, Refex Industries Ltd.
2017 Indlaw SEBI 12
Opposite View ?
There is a violation of regulation 11(2) of the
Takeover Regulations, 1997 by the Noticee;
Violation is un-intentional & not for
consolidation.
Violation is technical & venial in nature; &
There are clear mitigating circumstances in the
form of subsequent amendments to “Takeover
Reg’s” which further lessens the gravity of the
violation.
In Re, Gitanjali Gems Ltd. & others,
2017 Indlaw SEBI 22
 Choksi Group entities were only interested in - scrip of Gitanjali
Gems.
 Such huge concentration raised serious suspicion - Importantly,
considering the connection with the Promoters of Gitanjali
Gems, it also indicated that Choksi Group was acting as front for
the Promoters of Gitanjali Gems &
 While acting as such - Promoters remained invisible to the public
in so far as their trades were concerned.
 For different expiry periods of derivative contracts of Gitanjali
Gems - Counter parties to the trades of Choksi Group (more
than 80%) were a select set of FII’s.
 Choksi Group was found to have been periodically rolling over
their positions in the derivative contracts of Gitanjali Gems with
a common set of counterparties.
In Re, Dr. Vijay Mallya & others
2017 Indlaw SEBI 8

 United Spirits Limited


 Dr. Vijay Mallya - Ashok Capoor - P.A. Murali – Sowmiyanarayanan - S.N.
Prasad - Paramjit Singh Gill - Ainapur S. R. - Restrained from
accessing SM & are further prohibited from buying, selling /
otherwise dealing in securities in any manner whatsoever, either
directly / indirectly
 Dr. Vijay Mallya - Ashok Capoor - Restrained from holding position as
Directors / KMP of any listed Co.
 USL shall
 Within 21 days from the date of receipt of this Order, provide SEBI with the
following information -
 i. Action(s) taken against the persons mentioned at paragraph 4.1(i);
 ii. Steps taken to recover the following amounts from Dr. Vijay Mallya &
Co’s to whom such funds were wrongly diverted), which have been
reported as diversion -
 a. Under PWC-UK Report (Rs. 655.55 Crores)
 b. Under E & Y Report (Rs. 1225.24 Crores)
(3) T / Reg’s shall apply to direct & indirect
acquisition of shares / voting rights in / control
over TC:
P… T / Reg’s shall not apply to direct &
indirect acquisition of shares / voting rights in,
/ control over a Co. listed without making a
public issue, on the institutional trading
platform (ITP) of a RSE
 (E-commerce - Data analytics - Bio-technology &
Startups)
2013 - ITP for SME’s to continue
Reg 2 Reg. 2(a) - Acquirer means:
(B) Any Person
Who
Directly or Indirectly

Acquires or Agrees to Acquire

Shares or Voting Rights or Control


In
Target Company
Whether
By Himself Through / With
or
Person Acting in Concert (PAC)
Acquisition - Sec. 2 (b)
Means, directly / indirectly –
►Acquiring
Shares / Voting rights in /
►Agreeing to acquire
Shares / Voting rights
► In, / control over, a TC;
Reg. 2(z) Target Co. means
A Co. & includes a body corporate / Corp.
established U / A Central legislation, State
legislation / Provincial legislation for the time
being in force, whose shares are listed on a
SE;
Reg 2(v) “Shares” means
 Shares in ESC
 of a TC carrying voting rights, &
 Includes any security which entitles the holder
thereof to exercise voting rights;
 Explanation - For T/P/O/T/Cl. shares will include all
depository receipts carrying an entitlement to exercise
voting rights in TC’
Reg 2(f) - Convertible Security means
A security which is convertible into /
exchangeable with equity shares of the issuer at
a later date
With / without the option of the holder of security, &
Includes convertible debt instruments & convertible
PS;
Reg 2 (c)
Control Sec. 2 (e)
Includes
Right to Appoint Control of Control - Policy
Majority of Directors Management Decisions
Exercisable
Individually OR
+ PAC
Directly OR Indirectly
By virtue of
o Management SH’s Voting In any
SH’ing o o o Other
r Right r Agreement r Agreement r Manner
Reg 2 (c)
Control Sec. 2 (e)
P… a Director / Officer of a TC shall not be
considered to be in control over such TC, merely
by virtue of holding such position;

Control can be acquired even without acquisition


of shares /voting rights?
Triggering of the
Open Offer

Initial threshold
limit for Creeping Indirect
triggering of an Acquisition Acquisition
open offer
Takeover Code 2011 – SH’ing Thresholds
Trigger Point ?

Regulation Regulation Maximum Permissible


Non- Public SH’ing
3(1) 3(2)

Reg. 29 Creeping Black Zone


Green Zone Amber Zone 75 -100
0 – 25 % 25 – 75

Divestment of the
Only Tender Offer – excess shares within 1
Disclosure – Year.
No tender
Creeping
Acquisitions Delisting U / T / De-
offer listing Reg’s
Takeover Code, 1997 - Shareholding Thresholds

Maximum
Regulation Permissible Non-
Regulation
11(2) & Public SH’ing
10
11(2)A

Green Zone Creeping Red Zone Black Zone


Amber Zone 55 – 75 - 90 90 - 100
0- 15
15 – 55

Only disclosure Tender Offer – Tender offer for


– No tender Creeping even a Delisting
offer Acquisitions single share
United Spirits & Diageo 9th Nov. 2012
Jet Airways & Etihad
Announced on 24thApril, 2013
RegPerson
2 (E) Acting in Concert Sec. 2 (q) (PAC)
Persons
Who For a Common Objective / purpose
Co-operate for acquisition

Shares / VR’s or Exercise of Control


Whether
Directly Indirectly
or
Formally Informally
Pursuant to an

Agreement or Understanding
 (2) Without prejudice to the generality of the foregoing - Persons
falling within the following categories shall be deemed to be PAC
with other persons Within the Same Category, Unless the
Contrary is Established,
(i) A Co. - Its Holding Co. - Subsidiary Co. & any Co. U/T same
management / control;
(ii) A Co., its directors & any person entrusted w/t management of
the Co.;
(iii) Directors of Co’s referred to in item (i) & (ii) of T/
S.Cl. & associates of such directors;
(iv) Promoters & members of the promoter group;
(v) Immediate relatives (IR) –
 - Any spouse of a person & includes parent – brother - sister /
child of such person / of the spouse (R.2 (l)))
PAC Cont….

(vi) MF its sponsor, trustees, trustee Co., & AMC;


(vii) CIS & its CI Management Co., Trustees & Trustee
Co.;

(viii) VCF & its sponsor, Trustees, Trustee Co. & AMC;
(viiia) An alternative investment fund & its sponsor,
Trustees, Trustee Co. & manager;
(x) Merchant Banker & its client, who is an acquirer

(xi) A Portfolio Manager & its client, who is an acquirer;


PAC Cont….

(xii) Banks - Financial advisors & Stock brokers


of the acquirer /
Of any Co. which is a HC / SC of the acquirer &
Where the acquirer is an individual - of the
Immediate Relative of such individual:

P… T/ S.Cl. shall not apply to a bank whose sole


role is that of providing normal commercial
banking services / activities in relation to an
open offer U/T/Reg.’s;
PAC Cont….
(xiii) An investment Co. / Fund &
Any person who has an interest in such investment Co. /
Fund as a SH /
 Unit holder having not less than 10 % of paid-up
capital of IC / Unit capital of the fund & any other IC
 Fund in which such person / his associate holds not less
than 10 % of the paid-up capital of that IC / unit
capital of that fund:

P…nothing contained in T/Sub-cl. shall apply to


holding of units of MF’s registered with SEBI.
 Infrastructure Development Finance Co. Ltd. – L&T MF - Tata
Investment Corp.
Explanation - For the purposes of this clause

Associate of a person means -

•►(a) Any IR of such person;


•►(b) Trusts of which such person / his IR
is a trustee;
•►(c) Partnership firm in which such
person / his IR is a partner; &
•►(d) Members of HUF of which such
person is a coparcener;
 Any individual being a PAC
Is a question of fact & will differ from case to case.
 Deemed PAC –
Onus to prove that the said individual was not a PAC
lies on that individual.
 Acquirer & PAC
Always be treated as a block of acquirers.
 PACs will be severally & jointly liable – obligations
(Takeover Code)
 Sec. 2 (s) Promoter
 Has the same meaning as in SEBI (Issue of Capital &
Disclosure Requirements) Reg. 2009 & includes a
member of the promoter group (PG); (Sec. 2 (t) PG)
 K. K. Modi v SAT, Mumbai, & Others, [2003] 113 Comp Cas 418
 Hitachi Home & Life Solutions Inc v SEBI ([2006] 129 Comp
Cas 247) (SAT)
 RadheyshyamTulsian v SEBI, 2006 Indlaw SAT 43 (Reg. 7)
 Re Money Matters India Pvt. Ltd. v SEBI, 2009 Indlaw SAT 10;
(Disclosure – Reg. 7, 1997)
 Mega Resourses Ltd. v SEBI, 2005 Indlaw SAT 103
 Bombay Dyeing and Manufacturing Co. Ltd. v Arun Kumar
Bajoria, 2004 Indlaw CLB 35
 In Re, Sunil Khaitan and others, 2012 Indlaw SEBI 67 (Khaitan
Electricals Ltd.)
 Creeping acquisition window of 5% per F/Y is available to an
acquirer in every F/Y subject to fulfillment of all the other
prescribed conditions.
SEBI (Issue of Capital & Disclosure Requirements)
Regulations, 2009

Reg. 2 (za) “Promoter” includes:


Person or persons

Who are instrumental


Who are in in the formulation of a Named in the
control of ►Plan / Programme offer document
the issuer ►Pursuant to which as promoters
specified securities
are offered to public
P… a director / officer of the issuer / a person, if acting
as such merely in his professional capacity, shall not be
deemed as a promoter:

P… that a FI, Scheduled Bank, FPI (otherthan


Category III) & MF shall not be deemed to be a
promoter merely by virtue of the fact that 10% / more
of ES of the issuer is held by such person;

P… such FI, Scheduled Bank & FPI


shall be treated as promoter for subsidiaries /
Co’s promoted by them / for MF sponsored by
them;
(zb) “Promoter group”
includes:

Promoter is a
An IR of the
Promoter
promoter body
corporate: C
o
n
t

Cont…
(iii) In case promoter is a body corporate:

(C) Any body Corp.


(B) Any body in which
Corp. in which A group of
Promoter holds individuals / Co’s /
(A) SC / HC combinations
of such 10% / more of ESC thereof which hold
body / 20% / more of ESC
Corp.; Which holds 10% in that body Corp.
/ more of ESC of also holds 20% /
the promoter; more of ESC of the
issuer; &
(iv) In case promoter is an individual:

(A) Any body Corp. (C) Any HUF /


in which 10% / more (B) Any body firm in which the
of ESC is held by - Corp. in which a Aggregate
►Promoter /
►An IR of Promoter
body Corp. as SH’ing of
►A firm / provided in (A) promoter & his
►HUF in which the above holds 10% IM’s is equal to /
promoter / any one / more, of ESC; more than 10%
/ more of his IR is a of the total;
member
(v) All persons whose SH’ing is aggregated for
the purpose of disclosing in the prospectus U/T
heading “SH’ing of the PG”:

P… a FI, Scheduled Bank, FPI other than Category


III FPI & MF shall not be deemed to be PG merely by
virtue of the fact that 10% / more of ESC of the issuer
is held by such person:

P…. such FI, Scheduled Bank & FPI other


than Category III FPI shall be treated as PG
for the subsidiaries / Co’s promoted by them /
for the MF sponsored by them;
R. 2 (n) - Manager to the open offer - A
merchant banker (MB) referred to in Reg. 12

R. 2 (m) - Listing Agreement -


Agreement with SE governing the conditions of listing
of shares of TC.

R. 2 (g) – Disinvestment -
Means the direct / indirect sale by CG / any SG / by a
Govt. Co., as the case may be, of shares / VR’s in /
control over, a TC, which is a PSU;
Qualified Institutional Buyer” Reg. 2 (zd)
means
(i) a MF - VCF, Alternative Investment Fund & FVCI registered
with SEBI;

(ii) a FPI other than Category III FPI, registered with SEBI;

(iii) a PFI as defined in S. 4A, CA, 1956;

(iv) a Scheduled Commercial Bank;

(v) a Multilateral & Bilateral Development Financial Institution;

(vi) a State Industrial Development Corp.;


QIB - Reg. 2 (zd)

(vii) an insurance Co. registered with IRDA;

(viii) a PF with minimum corpus of Rs. 25 crore;

(ix) a Pension Fund with minimum corpus of Rs. 25 crore;

(x) National Investment Fund set up by Resolution no. F. No.


2/3/2005 - DDII dt. Nov. 23, 2005 of GOI published in the Gazette
of India;
(xi) Insurance funds set up & managed by army, navy / air force
of the UOI;

(xii) Insurance funds set up and managed by the Dept. of Posts,


India;
Maximum Permissible Non-Public SH’g (Reg. 2 (o))
 Means such % SH’ing in TC excluding the minimum
public SH’ing (MPS) required U/T/SCR Rules, 1957;
(25% minimum SH’ing)
 19(2)(b) & 19A SCRR
 Reg. 38, SEBI (Listing Obligations & Disclosure
Requirements) Regulations, 2015
 Reg. 7(4), SEBI - Takeover Code
 In Re, Swaraj Automotives Ltd., 2018 Indlaw SEBI 30
 In Re, Vintron Informatics Ltd., 2017 Indlaw SEBI 44
Sec. 2 (k) Identified Date (Specified Date):
 Date falling on 10th working day - Prior to the
commencement of the tendering period –
For the purposes of determining SH’s to whom the
letter of offer shall be sent;
Reg. 2(p) Offer Period: Means the period
 Between the date of entering into an agreement (Formal
/ Informal)
 To acquire shares, voting rights in / control over a TC
 Requiring a PA / Date of PA - as the case may be, &
 Date on which the payment of consideration to SH’s
who have accepted the open offer is made /
 Date on which open offer is withdrawn - as the case
may be.
Reg. 2(za) Tendering Period means
Period within which SH’s may tender their
shares in acceptance of an open offer to acquire
shares made U/T/Reg.
OPEN OFFER PROCESS
1. Triggering Event
2. Appointment of MB
3. Preparation of P.A.
4. Opening of Escrow Account
5. Publication of P.A.
6. Filing of Copy of P.A.
7. Letter of offer
8. Dispatch of Letter of Offer
9. Opening of Special Bank Account & Escrow depository
account
10. Opening & Closing of Offer
11. Payment of Consideration
12. Transfer of Shares in the name of Acquirer
OPEN OFFER ACTIVITY
CHART –
SEBI TAKEOVER CODE, 2011
Open offer time frame reduced

Maximum time allowed under


the Takeover Code (in terms of working days)
 Appointment of Merchant
Bank (not an associate) Before making a PA
 Short P.A. to SE – X Date of agreeing to acquire
 R. 13 R/W R.14(1) & 14(2)] voting rights / control
 Detailed P.A. in newspapers, Not later than 5 working days
sending to SEs, SEBI, TC
 R. 13(4) R / W R.14(3) R. 14(4) from PA

Draft letter of offer (LO) to be Not later than 5 working


submitted to SEBI (R. 16(1)) &
Sent to TC (R. 18 (1)) days from Detailed P.A.

 Comments on LO to be Not later than 15 working days


received from SEBI (R. 16(4)) from filing the draft LO with
SEBI
Identified Date [R. 2(1) (k)]
10th working days prior to start
To determine SH’s to whom
of the tendering period
LO shall be sent
Not later than 7 working days
Dispatch of LO to SH’s (R. from the date of receipt of
18(2)) comments from SEBI

 Upward revision in offer  Up to 3 working days prior to


(R. 18(4)) commencement of tendering
period
 Independent Directors 2 working days prior to
recommendation of TC to be commencement of the tendering
published (R. 26(7)) period

 Issue of advertisement  1 working day prior to


announcing – Schedule of commencement of the tendering
activities for open offer (R. period
18(7))
 Not later than 12 working days
 Date of opening of Offer (R. from the date of receipt of
18(8)) comments from SEBI
Tendering
Period
 Last date for withdrawal of
tendered shares by SH’s  Withdrawal not permitted

Date of closure of offer 10 working days from the


R. 18(8)) opening of the tendering period

 Payment to SH’s Not later than 10 working days


 (R. 18(10)) from the close of tendering
period
 Report to be sent by MB  Within 15 working days from
to SEBI (R. 27 (7)) the close of the tendering period

 Before making P.A. - Acquirer has to open an escrow account in


the form of cash deposited with a scheduled commercial bank /
bank guarantee in favour of MB. R. 17(1)
The Takeover Process
An Acquirer’s SH’ing of TC reaches the initial acquisition limit
Acquirer makes a PA for open offer

Any other person may make PA to 15 days after the date of PA


Public offer is actually made to SH’s

SH’s may Accept / Reject the public offer


Acquirer makes the payment to SH’s who accept the offer &
completes the offer
If the acquirer acquirers in a F/Y more than 5% of voting rights
in TC – Then again he has to make an open offer in the same
manner.
R. 2 (u) Public A TC in which, directly / indirectly - Majority of
Sector shares / VR’s / control - is held by CG / any SG /
Govt’s, / Partly by CG & Partly by one / more SG’s;
Undertaking

R. 2 (r) Postal Ballot A postal ballot as provided for U/T Co’s


(Passing of the Resolution by Postal Ballot)
Rules, 2001 made U/T CA. 1956;
R. 2 (y) SE Means A SE which has been granted recognition
U/S 4, SCRA, 1956
R. (w) Specified Means as specified by SEBI;
R. (x) State-level A Fin. Corp. established U/SS 3 / 3A &
Financial institutions notified U/S 46, SFC Act, 1951
Institution & includes a development Corp. Estd. as a
means - Co. by a SG with the object of development
of industries / agricultural activities in the
state;
 Reg. 2(zb) “Volume Weighted Average Market Price” means -
 Product of the No. of Equity Shares (ES) traded on a SE & Price
of each ES
 Divided by the total No. of ES traded on SE;
No. of Shares Traded x Share Price
Total Shares Traded = VWAMP
X1*Y1 + X2*Y2 + X3*Y3…
X1 + X2 + X3…
 Reg. 2 (zc) “Volume Weighted Average Price” means
 Product of the No. of ES bought & price of each such ES
divided by the total No. of ES bought;
No. of Shares Bought x Share Price
Total Shares Bought = VWAP
A1*B1 + A2*B2 + A3*B3…
A1 + A2 + A3…
R. 2 (zd) Weighted Average No. of Total Shares
means
No. of shares at the beginning of a period,
adjusted for shares cancelled, bought back /
issued during the aforesaid period x Time-
weighing factor;
Reg. 2 (h) - Enterprise Value – Means Value calculated as
market capitalization of a Co. + debt, minority interest &
preferred shares, - total cash & cash equivalents;
Market value of common stock + Market value of
preferred equity + Market value of debt + Minority
interest - Cash & Investments
Reg. 2 (ze) Working day – means - Any working
day of SEBI
Reg. 2(2) - All other expressions unless defined
herein shall have the same meaning as have
been assigned to them
U/T/A or
SCRA, 1956, or
CA, 1956, (2013) or
Any statutory modification or re-enactment
thereto, as the case may be.
Frequently Traded Shares Reg. 2 (j)
Means shares of a TC in which - The traded
turnover on any SE during 12 calendar months
preceding the calendar month in which PA is
made,
Is at least 10% of the total No. of shares of such class
of TC:
P… where - SC of a particular class of shares of
TC is not identical throughout such period, the
weighted average No. of total shares of such
class of TC shall represent the total No. of
shares;
Swraj Paul v Esorts, DCM Shriram
 Early-80s - UK-based NRI business magnate,
Swraj Paul made a hostile bid for Indian Co’s
Escorts & DCM Shriram,
 But had to eventually backtrack in the face of
political opposition.

BAT v ITC - Mid 90s


 Global tobacco major BAT tried to take
control of ITC, in which it already owned a
stake.
Political opposition & regulatory
hurdles forced BAT to give up its
ambitious plan to strengthen its
presence in India.
Financial institutions v Modi Rubber
1998
FI’s threatened to sell their holdings in
Modi Rubber to any interested buyer, for
non-repayment of loans.
Brothers BK Modi & VK Modi averted a hostile
takeover by repaying the loans, & later buying
out FIs stake.

ICI v Asian Paints - 1997


Indian arm of UK-based paint major ICI
bought 9.1% in Asian Paints from
investment bank Kotak Mahindra.
FIPB refused to approve the deal, forcing
ICI to sell the stake
India Cements v Raasi Cements
 Only case of a successful hostile takeover in
corporate India
Tamil Nadu - based India Cements bought out
Hyderabad - based Raasi Cements (1998) after
winning over key SH’s - Public as well as some
members of the promoter group.

Arun Bajoria v Bombay Dyeing – 2000, Kolkata - based

Arun Bajoria bought 15% in


Bombay Dyeing, & threatened to
make an open offer to public SH’s.
Finally, sold out his stake to Wadias -
Promoters of Bombay Dyeing - at a
profit.
Abhishek Dalmia v GESCO - 2000
 Abhishek Dalmia cornered 10.5% in - Sheths
- Controlled GESCO Corp & made an open
offer for another 20%.
 Without dislodging the existing promoters -
Dalmia sold his stake to them for a profit of
Rs 9 crore.

RK Damani v VST Industries - 2001


Radhakishen Damani (Stockbroker)
made an open offer for BAT - controlled
VST Industries,
Foiled by ITC (as a white knight) with
support from BAT.
Damani still holds 26% in VST.
 Harish Bhasin v DCM Shriram
Industries - 2007
 Harish Bhasin (Stock broker) bought 25% in
DCM Shriram Industries through a
combination of open market purchases & an
open offer.
 Promoters countered the move by issuing
warrants to themselves & increasing their
stake.

ITC vs EIH - 2010


 ITC group gradually raised its stake in
EIH to 14.8% over the years
 RIL played white knight to the
promoters of EIH by buying 14.1% in
the flagship hotel chain.
 Advantage - Private Equity & Institutional Investors
may invest upto 24.99 % without making an open offer.
 Non-compete fees / control premium to be included in
the Offer Price
 Period for calculating the average price is fixed at 60
days.
 Obligation is cast on BOD of TC to constitute a
committee of ID’s after the issuance of the detailed
public announcement (DPA) to provide the written
reasoned recommendations on the Open Offer to the
SH’s of TC & such recommendations shall be published
in newspapers.
DISCLOSURES.

Regulations 28 to 31
Continual
disclosures
Disclosures
Event based in case of
disclosures encumbered
shares

Disclosures
Reg.Disclosure
Event of Acquisition
Disclosu& Disclosure
Disposal- Event
Time Based
Disclosures
re by to
29(1) Acquiring 5% Acquirer TC at its Within 2 working
& shares / VR’s RO days of receipt of
29(3) Every SE intimation of
where TC allotment of
is listed shares

29(2) Acquiring / Acquire TC & SE Within 2 working


& Disposing 2% / / days of the
29(3) more shares / Seller acquisition of
VR’s by the shares
acquirer
already holding
5% / shares /
VR’s
Continual Disclosures
Reg. Nature of Disclosure by Disclosure Time
disclosure to
30(1) Aggregate Every person TC & Within 7
SH’ing & who together SE days of
VR’s as of with PAC end of
31st day of with him - each FY.
March every 25% / more
year VR’s

30(2) Aggregate Promoter of TC &


SH’ing & TC SE
VR’s
Disclosure of encumbered shares
Re Event Disclosure Disclosur Time
g. by e to
31 Shares Promoter TC & SE Within 7
(1) encumbered working days
by the of creation of
promoter encumbrance
31 Invocation or Promoter TC & SE Within 7
(2) release of working days
such from the
encumbrance invocation/
release of
encumbrance
United Breweries (Holdings) Limited, Bangalore v SEBI
2017 Indlaw SAT 79
 Penalty of Rs. 15 Lakh - For failure to make disclosures
regarding creation / invocation / release of 4 pledge transactions
made by UBL & thereby violating Takeover Code
 SEBI conducted suo moto investigation relating to trading /
dealing in the shares of United Spirits Ltd. (USL), a listed Co.,
during Jan. 2, 2012 to Nov. 30, 2012.
 During the investigation period - noticed that UBL (& another
entity - Exonerated in the impugned order) had made certain
pledge transactions of their USL SH’ing & disclosures as
required were not done.
 In respect of UBL herein the transactions include invocation of 3
pledges of 34,528 shares on Feb. 15, 2012,
 2,20,000 shares on March 24, 2012,
 50,000 shares on March 26, 2012 &
 Creation of a pledge of 1,50,000 shares on March 26, 2012.
 Appeal Dismissed
P.A. Compliance Chart…Timelines
Event Triggering Time of compliance
Obligation to Make a PA
Preferential issue Date on which Spl. Res. is passed
for allotment of shares
Increase in VR’s Not later than 19th day from date
consequential to Buy of such increase
Back not qualifying
for exemption
Voluntary open offer Same date on which such an
offer is made
Acquisition of shares Prior to placement of purchase
through market order with the stock broker to
purchases
acquire share
Event Triggering Obligation to Time of Making PA
Make a PA
Acquiring shares / VR’s / Same day as the date of
Control upon conversion of exercise of the option to
Convertible securities convert such securities
(without fixed date of into shares of TC
conversion)/upon conversion
of Depository Receipts for
underlying shares
Acquiring shares / VR’s / On - 2nd working day
Control upon conversion of preceding – Sch. date of
convertible securities (with a conversion of such
fixed date of conversion) securities.
Acquisition pursuant to On - Date of executing the
disinvestment. agreement for acquisition.
In case of an indirect Any time within 4 working days from
acquisition which is the earlier of:
(a) Date on which primary
not a Deemed Direct
acquisition is contracted /
Acquisition. (b) Date on which intention / decision
Reg. 5(2) r/w to make primary acquisition is
(See R. 13 (2)(e) made public.

In case of Deemed Earlier of:


Direct Acquisition (a) Date on which primary
Reg. 5(2) r/w acquisition is contracted, /
(See R. 13(2)(f)) (b)Date on which intention /
decision to make primary
acquisition is made public.
Acquisition under On the date of passing Spl. Res. U/S
preferential issue 81 (1A) of CA, 1956.
Acquisition wherein the Not later than 2
specific date of working days from
acquisition of title of the date of receipt of
Shares, VR / Control is
intimation of having
beyond the control of
the Acquirer. acquired such title.

Such PA shall be made to all - SE on which the


shares of TC are listed so that these SE’s
disseminate the information to the public –
Within 1 day of PA -
Copy - shall be sent to SEBI & TC.
Details that have to be provided
in PA are as follows:
Name & identity of the Acquirer & PAC
Name & identity of the sellers, if any
Nature of the proposed Acquisition, such as purchase
of shares / allotment of shares
Consideration for the proposed acquisition that
attracted the obligation to make an open offer for
acquiring shares & the price per share, if any
Offer price & mode of payment of consideration
Offer size & conditions as to minimum levels of
acceptance, if any

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